[Federal Register Volume 75, Number 162 (Monday, August 23, 2010)]
[Proposed Rules]
[Pages 51707-51713]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-20737]
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Parts 1, 31, 40, and 301
[REG-153340-09]
RIN 1545-BJ13
Electronic Funds Transfer of Depository Taxes
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Notice of proposed rulemaking and notice of public hearing.
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SUMMARY: This document contains proposed regulations relating to
Federal tax deposits (FTDs) by Electronic Funds Transfer (EFT). The
proposed regulations affect all taxpayers that currently use FTD
coupons. In response to the decision of the Financial Management
Service to discontinue the system that processes FTD coupons, the
proposed regulations provide rules under which depositors must use EFT
for all FTDs and eliminate the rules regarding FTD coupons. This
document also provides notice of a public hearing on these proposed
regulations.
DATES: Written or electronic comments must be received by September 22,
2010. Outlines of topics to be discussed at the public hearing
scheduled for September 21, 2010, must be received by September 20,
2010.
ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-153340-09), Room
5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station,
Washington, DC 20044. Submissions may be hand delivered Monday through
Friday between the hours of 8 a.m. and 4 p.m. to: CC:PA:LPD:PR (REG-
153340-09), Courier's Desk, Internal Revenue Service, 1111 Constitution
Avenue, NW., Washington, DC, or sent electronically via the Federal
eRulemaking Portal at http://www.regulations.gov (IRS REG-153340-09).
The public hearing will be held in the IRS Auditorium, Internal Revenue
Building, 1111 Constitution Avenue, NW., Washington, DC.
FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations,
Michael E. Hara, (202) 622-4910; concerning submissions of comments,
the hearing, and/or to be placed on the building access list to attend
the hearing, Regina Johnson, (202) 622-7180 (not toll-free numbers).
SUPPLEMENTARY INFORMATION:
Background
This document contains proposed amendments to the Income Tax
Regulations (26 CFR part 1), the Employment Tax and Collection of
Income Tax at the Source Regulations (26 CFR part 31), the Excise Tax
Procedural Regulations (26 CFR part 40), and the Procedure and
Administration Regulations (26 CFR part 301), to require that all FTDs
be made by EFT.
These proposed regulations are expected to be finalized by the end
of 2010. The final regulations are expected to apply to remittances
made after the date that final regulations are published in the Federal
Register, but in no event earlier than January 1, 2011.
Explanation of Provisions
1. Requirement To Make Deposits by Electronic Funds Transfer
Section 6302(h) of the Internal Revenue Code (Code) authorizes the
Secretary to prescribe regulations as may be necessary for the
development and implementation of an EFT system that is required to be
used for the collection of depository taxes. On July 14, 1997, final
regulations under section 6302(h) relating to the collection of Federal
tax deposits (FTDs) by EFT (TD 8723, 62 FR 37490) were issued. These
final regulations phased in depositors to the EFT system through 1999.
In the final stages of the phase-in under those regulations, depositors
with more than $50,000 in employment tax deposits during calendar year
1995, 1996, or 1997, and depositors that, in any of those years, had no
employment tax deposits but made deposits of other FTDs exceeding
$50,000, were required to begin to deposit by EFT.
On July 13, 1999, final regulations amending TD 8723 (TD 8828, 64
FR 37675) were issued. Under those regulations, which are currently in
effect, depositors whose aggregate annual FTDs exceed $200,000
generally must use EFT. Depositors that exceed the $200,000 threshold
have an initial one-year grace period after which they must use EFT in
all later years even if their FTDs fall below the threshold.
The Electronic Federal Tax Payment System (EFTPS) is the EFT system
currently used by the Treasury Department to collect FTDs. More than
97.5 percent of all FTDs are currently deposited electronically through
EFTPS. Depositors not currently required to use EFTPS for deposits may
instead use the paper-based FTD coupon system to make a deposit by
presenting a check and an FTD coupon to a bank teller at one of
approximately 8,000 financial institutions authorized as a government
depositary or to a financial agent, a process that dates back to World
War I.
These proposed regulations are being issued to effectuate system
changes made by the Financial Management Service (FMS), a Bureau of the
Treasury Department. Beginning in 2011, FMS is eliminating the system
that enables the processing of FTD coupons. Accordingly, these proposed
regulations require the use of EFT for all FTDs, effective January 1,
2011. The proposed regulations remove references to ``banking'' days
and provide that, if the day an FTD would otherwise be due is a
Saturday, Sunday, or legal holiday under section 7503, the taxes will
be treated as timely deposited if deposited on the next succeeding day
which is not a Saturday, Sunday, or legal holiday. The proposed
regulations do not change existing rules for determining a depositor's
status as either a monthly or semi-weekly depositor for employment
taxes. The proposed regulations also do not change existing rules on
whether a taxpayer can remit taxes with a return in lieu of making an
FTD.
For example, under the proposed regulations, employers must deposit
income taxes withheld from wages and taxes under the Federal Insurance
Contributions Act (FICA) (collectively, ``employment taxes'') by EFT
unless the
[[Page 51708]]
existing de minimis rule under Sec. 31.6302-1T(f)(4) applies.
Generally, the de minimis rule for employment taxes allows employers
with a deposit liability of less than $2,500 for a return period to
remit employment taxes with their quarterly or annual return. Employers
below the $2,500 threshold may remit the employment taxes with their
tax return, may voluntarily make deposits by EFT, or may use other
methods of payment as provided by the instructions relating to the
return.
2. Taxes Required To Be Deposited by EFT
Because the FTD coupon system will be eliminated by FMS, the
proposed regulations require all FTDs of the following taxes to be made
by EFT:
1. Corporate income and corporate estimated taxes pursuant to Sec.
1.6302-1;
2. Unrelated business income taxes of tax-exempt organizations
under section 511 pursuant to Sec. 1.6302-1;
3. Private foundation excise taxes under section 4940 pursuant to
Sec. 1.6302-1;
4. Taxes withheld on nonresident aliens and foreign corporations
pursuant to Sec. 1.6302-2;
5. Estimated taxes on certain trusts pursuant to Sec. 1.6302-3;
6. FICA taxes and withheld income taxes pursuant to Sec. 31.6302-
1;
7. Railroad retirement taxes pursuant to Sec. 31.6302-2;
8. Nonpayroll taxes, including backup withholding pursuant to Sec.
31.6302-4;
9. Federal Unemployment Tax Act (FUTA) taxes pursuant to Sec.
31.6302(c)-3; and
10. Excise taxes reported on Form 720, Quarterly Federal Excise Tax
Return, pursuant to Sec. 40.6302(c)-1.
3. Benefits of EFTPS
The benefits to taxpayers using EFTPS are substantial. According to
IRS data, depositors using EFTPS are 31 times less likely to make an
error resulting in a penalty than depositors using an FTD coupon.
Depositors can schedule an EFTPS transaction 120 days in advance of the
desired payment date at their convenience, 24 hours a day, 365 days a
year. EFTPS also provides a confirmation number, called an ``EFT
Number,'' which guarantees depositors that the tax deposit has been
scheduled and allows the transaction to be traced if necessary. EFTPS
processes over 100 million transactions per year, totaling nearly $2
trillion dollars, with an error rate of 0.18 percent. In addition, many
financial institutions are no longer accepting FTD coupons through
their branch infrastructure. Eliminating FTD coupons will also result
in projected cost savings for the Federal Government of at least $65
million over the first five years, with an estimated savings of $13
million each year thereafter.
These proposed regulations also align with the Treasury
Department's broad initiative to significantly increase the number of
electronic transactions between taxpayers and the Federal Government.
In addition to greatly reducing costs, enhancing customer service, and
minimizing Treasury's environmental impact, the move from paper to
electronic transactions will increase reliability, safety, and security
for taxpayers.
Special Analyses
It has been determined that this notice of proposed rulemaking is
not a significant regulatory action as defined in Executive Order
12866. Therefore, a regulatory assessment is not required.
It also has been determined that section 553(b) of the
Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to
these regulations and because this regulation does not impose a
collection of information on small entities, the Regulatory Flexibility
Act (5 U.S.C. chapter 6) does not apply. Pursuant to section 7805(f) of
the Code, these regulations have been submitted to the Chief Counsel
for Advocacy of the Small Business Administration for comment on their
impact on small business.
Comments and Public Hearing
Before these proposed regulations are adopted as final regulations,
consideration will be given to any written (a signed original and eight
(8) copies) or electronic comments that are submitted timely to the
IRS. Comments are requested on the clarity of the proposed regulations
and how they can be made more understandable. Comments are also
requested on the accuracy of the certification that the regulations in
this document will not have a significant economic impact on a
substantial number of small entities. All comments will be available
for public inspection and copying.
A public hearing has been scheduled for September 21, 2010, at 10
a.m. in the IRS Auditorium, Internal Revenue Building, 1111
Constitution Avenue, NW., Washington, DC. Due to building security
procedures, visitors must enter at the Constitution Avenue entrance. In
addition, all visitors must present photo identification to enter the
building. Because of access restrictions, visitors will not be admitted
beyond the immediate entrance area more than 30 minutes before the
hearing starts. For information about having your name placed on the
building access list to attend the hearing, see the FOR FURTHER
INFORMATION CONTACT section of this preamble.
The rules of 26 CFR 601.601(a)(3) apply to the hearing. Persons who
wish to present oral comments at the hearing must submit written or
electronic comments by September 22, 2010 and an outline of the topics
to be discussed and the time to be devoted to each topic (a signed
original and eight (8) copies) by September 20, 2010. A period of 10
minutes will be allotted to each person for making comments. An agenda
showing the scheduling of the speakers will be prepared after the
deadline for receiving outlines has passed. Copies of the agenda will
be available free of charge at the hearing.
Drafting Information
The principal author of these proposed regulations is Michael E.
Hara, Office of the Associate Chief Counsel (Procedure and
Administration).
List of Subjects
26 CFR Part 1
Income taxes, Reporting and recordkeeping requirements.
26 CFR Part 31
Employment taxes, Income taxes, Penalties, Pensions, Railroad
retirement, Reporting and recordkeeping requirements, Social Security,
Unemployment compensation.
26 CFR Part 40
Excise taxes, Reporting and recordkeeping requirements.
26 CFR Part 301
Employment taxes, Estate taxes, Excise taxes, Gift taxes, Income
taxes, Penalties, Reporting and recordkeeping requirements.
Proposed Amendments to the Regulations
Accordingly, 26 CFR parts 1, 31, 40, and 301 are proposed to be
amended as follows:
PART 1--INCOME TAXES
Paragraph 1. The authority citation for part 1 is amended by
revising the entry for Section 1.1461-1 and 1.6302-1 through 1.6302-4
to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Section 1.1461-1, 1.6302-1, 1.6302-2, 1.6302-3 and 1.6302-4 also
issued under 26 U.S.C. 6302(h). * * *
Par. 2. Section 1.1461-1 is amended by revising paragraph (a)(1),
first sentence, to read as follows:
[[Page 51709]]
Sec. 1.1461-1 Payment and returns of tax withheld.
(a) Payment of withheld tax--(1) Deposits of tax. Every withholding
agent who withholds tax pursuant to chapter 3 of the Internal Revenue
Code (Code) and the regulations under such chapter shall deposit such
amount of tax as provided in Sec. 1.6302-2(a). * * *
* * * * *
Par. 3. Section 1.6302-1 is amended by:
1. Revising the heading.
2. Revising paragraph (a).
3. Removing paragraph (b)(1) and redesignating paragraph (b)(2) as
paragraph (b).
4. Removing paragraph (c).
5. Redesignating paragraph (d) as paragraph (c).
6. Adding paragraph (d).
The revisions and additions read as follows:
Sec. 1.6302-1 Deposit rules for corporation income and estimated
income taxes and certain taxes of tax-exempt organizations.
(a) Requirement. A corporation, any organization subject to the tax
imposed by section 511, and any private foundation subject to the tax
imposed by section 4940 shall deposit all payments of tax imposed by
chapter 1 of the Internal Revenue Code (or treated as so imposed by
section 6154(h)), including any payments of estimated tax, on or before
the date otherwise prescribed for paying such tax. This paragraph (a)
does not apply to a foreign corporation or entity that has no office or
place of business in the United States.
(b) Deposits by electronic funds transfer. * * *
* * * * *
(d) Effective/applicability date. This section applies to deposits
and payments made after the date that final regulations are published
in the Federal Register, but no earlier than January 1, 2011.
Par. 4. Section 1.6302-2 is amended by:
1. Revising the heading.
2. Revising paragraphs (a)(1)(i), (ii), and (iv).
3. Revising the heading for paragraph (b).
4. Revising paragraph (b)(1).
5. Removing paragraph (b)(6).
6. Adding a sentence to the end of paragraph (g).
The revisions and additions read as follows:
Sec. 1.6302-2 Deposit rules for tax withheld on nonresident aliens
and foreign corporations.
(a) Time for making deposits--(1) Deposits--(i) Monthly deposits.
Except as provided in paragraphs (a)(1)(ii) and (iv) of this section,
every withholding agent that, pursuant to chapter 3 of the Internal
Revenue Code, has accumulated at the close of any calendar month an
aggregate amount of undeposited taxes of $200 or more shall deposit
such aggregate amount within 15 days after the close of such calendar
month. However, the preceding sentence shall not apply if the
withholding agent has made a deposit of taxes pursuant to paragraph
(a)(1)(ii) of this section to a quarter monthly period that occurred
during such month. With respect to section 1446, this section applies
only to a publicly traded partnership described in Sec. 1.1446-4.
(ii) Quarter-monthly deposits. If at the close of any quarter-
monthly period within a calendar month, the aggregate amount of
undeposited taxes required to be withheld pursuant to chapter 3 of the
Internal Revenue Code is $2,000 or more, the withholding agent shall
deposit such aggregate amount within 3 business days after the close of
such quarter-monthly period. Business days include every calendar day
other than Saturdays, Sundays, or legal holidays under section 7503. If
any of the three weekdays following the close of a quarter-monthly
period is a legal holiday under section 7503, the withholding agent has
an additional day for each day that is a legal holiday by which to make
the required deposit. For example, if the Monday following the close of
a quarter-monthly period is New Year's Day, a legal holiday, the
required deposit for the quarter-monthly period is not due until the
following Thursday rather than the following Wednesday.
* * * * *
(iv) Annual deposits. If at the close of December of each calendar
year, the aggregate amount of undeposited taxes required to be withheld
pursuant to chapter 3 of the Internal Revenue Code is less than $200,
the withholding agent may deposit such aggregate amount by March 15 of
the following calendar year. If such aggregate amount is not so
deposited, it shall be remitted in accordance with paragraph (a)(1) of
Sec. 1.1461-1.
* * * * *
(b) Manner of payment--(1) Payments not required by electronic
funds transfer. A payment that is not required to be deposited by this
section shall be made separately from a payment required by any other
section. The payment may be submitted with the filed return. The
timeliness of the payment will be determined by the date payment is
received by the Internal Revenue Service at the place prescribed for
filing by regulations or forms and instructions, or if section 7502(a)
applies, by the date the payment is treated as received under section
7502(a). Each withholding agent making payments under this section
shall report on the return, for the period to which such payments are
made, information regarding such payments according to the instructions
that apply to such return.
* * * * *
(g) * * * Paragraph (b)(1) of this section applies to payments made
after the date that final regulations are published in the Federal
Register, but no earlier than January 1, 2011.
Par. 5. Section 1.6302-3 is amended by:
1. Revising the heading.
2. Revising paragraph (a).
3. Revising paragraph (c).
4. Adding paragraph (d).
The revisions and additions read as follows:
Sec. 1.6302-3 Deposit rules for estimated taxes of certain trusts.
(a) Requirement. A bank or other financial institution described in
paragraph (b) of this section shall deposit all payments of estimated
tax under section 6654(l) with respect to trusts for which such
institution acts as a fiduciary by the date otherwise prescribed for
paying such tax in the manner set forth in published guidance, forms
and instructions.
* * * * *
(c) Cross-references. For the requirement to deposit estimated tax
payments of taxable trusts by electronic funds transfer, see Sec.
31.6302-1(h) of this chapter.
(d) Effective/applicability date. This section applies to payments
made after the date that final regulations are published in the Federal
Register, but no earlier than January 1, 2011.
Par. 6. Section 1.6302-4 is revised to read as follows:
Sec. 1.6302-4 Voluntary payments by electronic funds transfer.
(a) Electronic funds transfer. Any person may voluntarily remit by
electronic funds transfer any payment of tax imposed by subtitle A of
the Internal Revenue Code, including any payment of estimated tax. Such
payment must be made in accordance with procedures prescribed by the
Commissioner.
(b) Effective/applicability date. This section applies to payments
made after the date that final regulations are published in the Federal
Register, but no earlier than January 1, 2011.
[[Page 51710]]
PART 31--EMPLOYMENT TAXES AND COLLECTION OF INCOME TAX AT THE
SOURCE
Par. 7. The authority citation for part 31 is amended by removing
the entries for Sec. Sec. 31.6302-1 through 31.6302-3, 31.6302-4, and
31.6302(c)-2A and adding entries in numerical order to read in part as
follows:
Authority: 26 U.S.C. 7805 * * *
Section 31.6302-1 also issued under 26 U.S.C. 6302(a) and (h).
Section 31.6302-1T also issued under 26 U.S.C. 6302(a).
Section 31.6302-2, 31.6302-3, and 31.6302-4 also issued under 26
U.S.C. 6302(a) and (h).
Section 31.6302(c)-2A also issued under 26 U.S.C. 6157(d) and
6302(a) and (h).
Section 31.6302(c)-3 also issued under 26 U.S.C. 6302(a) and
(h). * * *
Sec. 31.6302-0 [Amended]
Par. 8. Section 31.6302-0 is amended by removing the entries for
Sec. 31.6302-1T.
Par. 9. Section 31.6302-1 is amended by:
1. Revising the heading.
2. Revising paragraphs (c)(1), (c)(2), (c)(3), and (c)(4).
3. Revising paragraph (d) Example 1, Example 2, Example 3, Example
4, and Example 5.
4. Revising paragraph (h)(2)(ii).
5. Redesignating paragraph (h)(2)(iii) as paragraph (h)(2)(iv) and
revising newly-designated paragraph (h)(2)(iv).
6. Adding new paragraph (h)(2)(iii).
7. Revising paragraph (i)(1) and (i)(3).
8. Removing paragraphs (i)(4), (i)(5) and (i)(6).
9. Adding paragraph (o).
The revisions and additions read as follows:
Sec. 31.6302-1 Deposit rules for taxes under the Federal Insurance
Contributions Act (FICA) and withheld income taxes.
* * * * *
(c) Deposit rules--(1) Monthly rule. An employer that is a monthly
depositor must deposit employment taxes accumulated with respect to
payments made during a calendar month by electronic funds transfer by
the 15th day of the following month. If the 15th day of the following
month is a Saturday, Sunday, or legal holiday, taxes will be treated as
timely deposited if deposited on the next succeeding day which is not a
Saturday, Sunday, or legal holiday under section 7503.
(2) Semi-Weekly rule--(i) In general. An employer that is a semi-
weekly depositor for a calendar year must deposit employment taxes by
electronic funds transfer by the dates set forth below:
------------------------------------------------------------------------
Payment dates/semi-weekly periods Deposit date
------------------------------------------------------------------------
(A) Wednesday, Thursday and/or Friday..... On or before the following
Wednesday.
(B) Saturday, Sunday, Monday and/or On or before the following
Tuesday. Friday.
------------------------------------------------------------------------
(ii) Semi-weekly period spanning two return periods. If the return
period ends during a semi-weekly period in which an employer has two or
more payment dates, two deposit obligations may exist. For example, if
one quarterly return period ends on Thursday and a new quarterly return
period begins on Friday, employment taxes from payments on Wednesday
and Thursday are subject to one deposit obligation, and taxes from
payments on Friday are subject to a separate deposit obligation. Two
separate federal tax deposits are required.
(iii) Special rule for computing days. Semi-weekly depositors have
at least three business days following the close of the semi-weekly
period by which to deposit employment taxes accumulated during the
semi-weekly period. Business days include every calendar day other than
Saturdays, Sundays, or legal holidays under section 7503. If any of the
three weekdays following the close of a semi-weekly period is a legal
holiday under section 7503, the employer has an additional day for each
day that is a legal holiday by which to make the required deposit. For
example, if the Monday following the close of a Wednesday to Friday
semi-weekly period is Memorial Day, a legal holiday, the required
deposit for the semi-weekly period is not due until the following
Thursday rather than the following Wednesday.
(3) Exception--One-Day rule. Notwithstanding paragraphs (c)(1) and
(c)(2) of this section, if on any day within a deposit period (monthly
or semi-weekly) an employer has accumulated $100,000 or more of
employment taxes, those taxes must be deposited by electronic funds
transfer in time to satisfy the tax obligation by the close of the next
day. If the next day is a Saturday, Sunday, or legal holiday under
section 7503, the taxes will be treated as timely deposited if
deposited on the next succeeding day which is not a Saturday, Sunday,
or legal holiday. For purposes of determining whether the $100,000
threshold is met--
(i) A monthly depositor takes into account only those employment
taxes accumulated in the calendar month in which the day occurs; and
(ii) A semi-weekly depositor takes into account only those
employment taxes accumulated in the Wednesday-Friday or Saturday-
Tuesday semi-weekly period in which the day occurs.
(4) Deposits required only on business days. No taxes are required
to be deposited under this section on any day that is a Saturday,
Sunday, or legal holiday. Deposits are required only on business days.
Business days include every calendar day other than Saturday, Sundays,
or legal holidays. For purposes of this paragraph (c), legal holidays
shall have the same meaning provided in section 7503.
* * * * *
(d) * * *
Example 1. Monthly depositor. (i) Determination of status. For
calendar year 2011, Employer A determines its depositor status using
the lookback period July 1, 2009 to June 30, 2010. For the four
calendar quarters within this period, A reported aggregate
employment tax liabilities of $42,000 on its quarterly Forms 941.
Because the aggregate amount did not exceed $50,000, A is a monthly
depositor for the entire calendar year 2011.
(ii) Monthly rule. During December 2011, A (a monthly depositor)
accumulates $3,500 in employment taxes. A has a $3,500 deposit
obligation that must be satisfied by the 15th day of the following
month. Since January 15, 2012, is a Sunday, and January 16, 2012,
Dr. Martin Luther King, Jr.'s Birthday, is a legal holiday, A's
deposit obligation will be satisfied if the deposit is made by
electronic funds transfer by the next business day, January 17,
2012.
Example 2. Semi-weekly depositor. (i) Determination of status.
For the calendar year 2011, Employer B determines its depositor
status using the lookback period July 1, 2009 to June 30, 2010. For
the four calendar quarters within this period, B reported aggregate
employment tax liabilities of $88,000 on its quarterly Forms 941.
Because that amount exceeds $50,000, B is a semi-weekly depositor
for the entire calendar year 2011.
(ii) Semi-weekly rule. On Friday, January 7, 2011, B (a semi-
weekly depositor) has a pay day on which it accumulates $4,000 in
employment taxes. B has a $4,000 deposit obligation that must be
satisfied on or before the following Wednesday, January 12, 2011.
(iii) Deposit made within three business days. On Friday,
January 14, 2011, B (a semi-weekly depositor) has a pay day on which
it accumulates $4,200 in employment taxes. Generally, B would have a
required deposit obligation of employment taxes that must be
satisfied by the following Wednesday, January 19, 2011. Because
Monday, January 17, 2011, is Dr. Martin Luther King, Jr.'s Birthday,
a legal holiday, B has an additional day to make the required
deposit. B has a $4,200 deposit obligation that must be satisfied on
or before the following Thursday, January 20, 2011.
Example 3. One-Day rule. On Monday, January 10, 2011, Employer
C accumulates $110,000 in employment taxes with respect
[[Page 51711]]
to wages paid on that date. C has a deposit obligation of $110,000
that must be satisfied by the next business day. If C was not
subject to the semi-weekly rule on January 10, 2011, C becomes
subject to that rule as of January 11, 2011. See paragraph
(b)(2)(ii) of this section.
Example 4. One-Day rule in combination with subsequent deposit
obligation. Employer D is subject to the semi-weekly rule for
calendar year 2011. On Monday, January 10, 2011, D accumulates
$115,000 in employment taxes. D has a deposit obligation that must
be satisfied by the next business day. On Tuesday, January 11, D
accumulates an additional $30,000 in employment taxes. Although D
has a $115,000 deposit obligation incurred earlier in the semi-
weekly period, D has an additional and separate deposit obligation
of $30,000 on Tuesday that must be satisfied by the following
Friday.
Example 5. [Reserved].
* * * * *
(h) * * *
(2) * * *
(ii) Deposits for return periods beginning after December 31, 1999,
and made before January 1, 2011. Unless exempted under paragraph (h)(5)
of this section, for deposits for return periods beginning after
December 31, 1999, and made before January 1, 2011, a taxpayer that
deposits more than $200,000 of taxes described in paragraph (h)(3) of
this section during a calendar year beginning after December 31, 1997,
must use electronic funds transfer (as defined in paragraph (h)(4) of
this section) to make all deposits of those taxes that are required to
be made for return periods beginning after December 31 of the following
year and must continue to deposit by electronic funds transfer in all
succeeding years. As an example, a taxpayer that exceeds the $200,000
deposit threshold during calendar year 1998 is required to make
deposits for return periods beginning in or after calendar year 2000 by
electronic funds transfer.
(iii) Deposits made after December 31, 2010. Unless exempted under
paragraph (h)(5) of this section, a taxpayer that has a required tax
deposit obligation described in paragraph (h)(3) of this section must
use electronic funds transfer (as defined in paragraph (h)(4) of this
section) to make all deposits of those taxes made after December 31,
2010.
(iv) Voluntary deposits. A taxpayer that is authorized to make
payment of taxes with a return under regulations may voluntarily make a
deposit by electronic funds transfer.
* * * * *
(i) Time and manner of remittance with a return--(1) General rules.
A remittance required to be made by this section that is authorized to
be made with a return under regulations and is made with a return must
be made separately from a remittance required by any other section.
Further, a remittance for a deposit period in one return period must be
made separately from a remittance for a deposit period in another
return period.
* * * * *
(3) Time deemed paid. In general, amounts remitted with a return
under this section will be considered as paid on the date payment is
received by the Internal Revenue Service at the place prescribed for
filing by regulations or forms and instructions (or if section 7502(a)
applies, by the date the payment is treated as received under section
7502(a)), or on the last day prescribed for filing the return
(determined without regard to any extension of time for filing the
return), whichever is later. In the case of the taxes imposed by
chapter 21 and 24 of the Internal Revenue Code, solely for purposes of
section 6511 and the regulations thereunder (relating to the period of
limitation on credit or refund), if an amount is remitted with a return
under this section prior to April 15th of the calendar year immediately
succeeding the calendar year that contains the period for which the
amount was remitted, the amount will be considered paid on April 15th
of the succeeding calendar year.
* * * * *
(o) Effective/applicability date. Paragraphs (c), (d) Examples 1
through 5, (h)(2)(ii), (h)(2)(iii), (h)(2)(iv),(i)(1) and (i)(3) of
this section apply to payments made after the date that final
regulations are published in the Federal Register, but no earlier than
January 1, 2011.
Par. 10. Section 31.6302-1T is amended by:
1. Revising paragraph (g)(1).
2. Revising paragraph (n)(1).
The revisions read as follows.
Sec. 31.6302-1T Federal tax deposit rules for withheld income taxes
and taxes under the Federal Insurance Contributions Act (FICA)
attributable to payments made after December 31, 1992 (temporary).
* * * * *
(g) Agricultural employers--Special rules--(1) In general. An
agricultural employer reports wages paid to farm workers annually on
Form 943 (Employer's Annual Tax Return for Agricultural Employees) and
reports wages paid to nonfarm workers quarterly on Form 941 or annually
on Form 944. Accordingly, an agricultural employer must treat
employment taxes reportable on Form 943 (``Form 943 taxes'') separately
from employment taxes reportable on Form 941 or Form 944 (``Form 941 or
Form 944 taxes''). Form 943 taxes and Form 941 or Form 944 taxes are
not combined for purposes of determining whether a deposit of either is
due, whether the One-Day rule of Sec. 31.6302-1(c)(3) applies, or
whether any safe harbor is applicable. In addition, Form 943 taxes and
Form 941 or Form 944 taxes must be deposited separately. (See Sec.
31.6302-1(b) for rules for determining an agricultural employer's
deposit status for Form 941 taxes.) Whether an agricultural employer is
a monthly or semi-weekly depositor of Form 943 taxes is determined
according to the rules of this paragraph (g).
* * * * *
(n) Effective/applicability dates--(1) In general. Sections
31.6302-1 through 31.6302-3 apply with respect to the deposit of
employment taxes attributable to payments made after December 31, 1992.
To the extent that the provisions of Sec. Sec. 31.6302-1 through
31.6302-3 are inconsistent with the provisions of Sec. Sec.
31.6302(c)-1 and 31.6302(c)-2, a taxpayer will be considered to be in
compliance with Sec. Sec. 31.6301-1 through 31.6302-3 if the taxpayer
makes timely deposits during 1993 in accordance with Sec. Sec.
31.6302(c)-1 and 31.6302(c)-2. Paragraphs (b)(4), (c)(5), (c)(6), (d)
Example 6, (e)(2), (f)(4)(i), (f)(4)(iii), (f)(5) Example 3, and (g)(1)
of this section apply to taxable years beginning on or after December
30, 2008. Paragraph (f)(4)(ii) of this section applies to taxable years
beginning on or after January 1, 2010. The rules of paragraphs (e)(2)
and (g)(1) of this section that apply to taxable years beginning before
December 30, 2008, are contained in Sec. 31.6302-1 in effect prior to
December 30, 2008. The rules of paragraphs (b)(4), (c)(5), (c)(6), (d)
Example 6, (f)(4)(i), (f)(4)(iii), and (f)(5) Example 3 of this section
that apply to taxable years beginning on or after January 1, 2006, and
before December 30, 2008, are contained in Sec. 31.6302-1T in effect
prior to December 30, 2008. The rules of paragraphs (b)(4) and (f)(4)
of this section that apply to taxable years beginning before January 1,
2006, are contained in Sec. 31.6302-1 in effect prior to January 1,
2006. The rules of paragraph (g) eliminating use of Federal tax deposit
coupons apply to deposits and payments made after the date that final
regulations are published in the Federal Register, but no earlier than
January 1, 2011.
* * * * *
Par. 11. Section 31.6302-2 is amended by:
1. Revising the heading.
2. Revising paragraph (d).
[[Page 51712]]
The revisions read as follows.
Sec. 31.6302-2 Deposit rules for taxes under the Railroad Retirement
Tax Act (RRTA).
* * * * *
(d) Effective/applicability date. This section applies to payments
made after the date that final regulations are published in the Federal
Register, but no earlier than January 1, 2011.
Par. 12. Section 31.6302-4 is amended by:
1. Revising the heading.
2. Revising paragraph (d).
3. Adding paragraph (e).
The revisions and additions read as follows:
Sec. 31.6302-4 Deposit rules for withheld income taxes attributable
to nonpayroll payments.
* * * * *
(d) Special rules. A taxpayer must treat nonpayroll withheld taxes,
which are reported on Form 945, ``Annual Return of Withheld Federal
Income Tax,'' separately from taxes reportable on Form 941,
``Employer's QUARTERLY Federal Tax Return'' (or any other return, for
example, Form 943, ``Employer's Annual Federal Tax Return for
Agricultural Employees''). Taxes reported on Form 945 and taxes
reported on Form 941 are not combined for purposes of determining
whether a deposit of either is due, whether the One-Day rule of Sec.
31.6302-1(c)(3) applies, or whether any safe harbor is applicable. In
addition, taxes reported on Form 945 and taxes reported on Form 941
must be deposited separately. (See paragraph (b) of Sec. 31.6302-1 for
rules for determining an employer's deposit status for taxes reported
on Form 941.) Taxes reported on Form 945 for one calendar year must be
deposited separately from taxes reported on Form 945 for another
calendar year.
(e) Effective/applicability date. Section 31.6302-4(d) applies to
payments made after the date that final regulations are published in
the Federal Register, but no earlier than January 1, 2011.
Sec. 31.6302(c)-2A [Removed]
Par. 13. Section 31.6302(c)-2A is removed.
Par. 14. Section 31.6302(c)-3 is amended by:
1. Revising the heading.
2. Revising paragraph (a)(1), introductory text.
3. Revising paragraph (a)(1)(i).
4. Revising paragraph (a)(1)(ii), introductory text.
5. Removing paragraph (a)(3).
6. Revising paragraph (b).
7. Revising paragraph (c).
8. Removing paragraph (d).
The revisions read as follows:
Sec. 31.6302(c)-3 Deposit rules for taxes under the Federal
Unemployment Tax Act.
(a) Requirement--(1) In general. Except as provided in paragraph
(a)(2) of this section, every person that, by reason of the provisions
of section 6157, computes the tax imposed by section 3301 on a
quarterly or other time period basis shall--
(i) If the person is described in section (a)(1) of section 6157,
deposit the amount of such tax by the last day of the first calendar
month following the close of each of the first three calendar quarters
in the calendar year; or
(ii) If the person is other than a person described in section
(a)(1) of section 6157, deposit the amount of such tax by the last day
of the first calendar month following the close of--
* * * * *
(b) Manner of deposit--(1) In general. A deposit required to be
made by an employer under this section shall be made separately from a
deposit required by any other section. An employer may make one, or
more than one, remittance of the amount required to be deposited. An
employer that is not required to deposit an amount of tax by this
section may nevertheless voluntarily make that deposit. For the
requirement to deposit tax under the Federal Unemployment Tax Act by
electronic funds transfer, see Sec. 31.6302-1(h).
(2) Time deemed paid. For the time an amount deposited by
electronic funds transfer is deemed paid, see Sec. 31.6302-1(h)(9).
For the time an amount remitted with a return is deemed paid, see Sec.
31.6302-1(i)(3).
(c) Effective/applicability date. This section applies to payments
made after the date that final regulations are published in the Federal
Register, but no earlier than January 1, 2011.
PART 40--EXCISE TAX PROCEDURAL REGULATIONS
Par. 15. The authority citation for part 40 continues to read in
part as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 16. Section 40.6302(c)-1 is amended by:
1. Revising the heading.
2. In paragraph (b)(2)(v), removing the language ``that failure may
be reported to the appropriate IRS office and''.
3. Revising paragraphs (d) and (f).
The revisions read as follows:
Sec. 40.6302(c)-1 Deposits.
* * * * *
(d) Deposits required by electronic funds transfer. All deposits
required by this part must be made by electronic funds transfer, as
that term is defined in Sec. 31.6302-1(h)(4) of this chapter.
* * * * *
(f) Effective/applicability date. This section applies to deposits
made after the date that final regulations are published in the Federal
Register, but no earlier than January 1, 2011.
* * * * *
Sec. 40.6302(c)-2 [Amended]
Par. 17. Section 40.6302(c)-2, paragraph (c), is amended by
removing the language ``2001'' and adding ``2001, except that paragraph
(b) of this section does not apply on and after the date described in
Sec. 40.6302(c)-1(f)'' in its place.
Par. 18. Section 40.6302(c)-3 is amended as follows:
1. The heading is revised to read as set forth below.
2. In paragraph (c), the language ``banking'' is removed in both
places it appears and ``business'' is added in its place.
3. In paragraph (g), the language ``2004'' is removed and ``2004,
except that paragraph (f)(5) of this section does not apply on and
after the date described in Sec. 40.6302(c)-1(f)'' is added in its
place.
Sec. 40.6302(c)-3 Special rules for deposits under chapter 33.
* * * * *
PART 301--PROCEDURE AND ADMINISTRATION
Par. 19. The authority citation for part 301 is amended to read in
part as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 20. Section 301.6302-1 is revised to read as follows:
Sec. 301.6302-1 Manner or time of collection of taxes.
(a) Employment and excise taxes. For provisions relating to the
manner or time of collection of certain employment and excise taxes and
deposits in connection with the payment thereof, see the regulations
relating to the particular tax.
(b) Income taxes. (1) For provisions relating to the deposits of
income and estimated income taxes of certain corporations, see Sec.
1.6302-1 of this chapter (Income Tax Regulations).
(2) For provisions relating to the deposits of tax required to be
withheld under chapter 3 of the Code on nonresident aliens and foreign
corporations and tax-free covenant bonds, see Sec. 1.6302-2 of this
chapter.
(c) Effective/applicability date. This section applies to payments
made after
[[Page 51713]]
the date that final regulations are published in the Federal Register,
but no earlier than January 1, 2011.
Par. 21. Section 301.6656-1 is amended by:
1. Revising paragraph (b).
2. Revising paragraph (c).
The revisions read as follows:
Sec. 301.6656-1 Abatement of penalty.
* * * * *
(b) Deposit sent to Secretary. The Secretary may abate the penalty
imposed by section 6656(a) if the first time a depositor is required to
make a deposit, the amount required to be deposited is inadvertently
sent to the Secretary rather than deposited by electronic funds
transfer.
(c) Effective/applicability date. This section applies to deposits
made after the date that final regulations are published in the Federal
Register, but no earlier than January 1, 2011.
Sec. 301.7502-2 [Removed]
Par. 22. Section 301.7502-2 is removed.
Steven T. Miller,
Deputy Commissioner for Services and Enforcement.
[FR Doc. 2010-20737 Filed 8-19-10; 4:15 pm]
BILLING CODE 4830-01-P