11. Payment of Taxes
Generally, semimonthly deposits of excise taxes are required. A semimonthly period is the first 15 days of a month (the first semimonthly period) or the 16th through the last day of a month (the second semimonthly period).
However, no deposit is required for the situations listed below; the taxes are payable with Form 720.
The net liability for taxes listed in Part I (Form 720) does not exceed $2,500 for the quarter.
The gas guzzler tax is being paid on a one-time filing.
The liability is for taxes listed in Part II (Form 720), except for the floor stocks tax, that generally requires a single deposit.
How To Make Deposits
To avoid a penalty, make your deposits timely and do not mail your deposits directly to the IRS. Records of your deposits will be sent to the IRS for crediting to your accounts.
Electronic deposit requirement.
You must make electronic deposits of all depository taxes (such as deposits for employment tax, excise tax, and corporate income tax) using the Electronic Federal Tax Payment System (EFTPS) in 2007 if:The total deposits of such taxes in 2005 exceeded $200,000 or
You were required to use EFTPS in 2006.
Federal Tax Deposit Coupons.
If you are not making deposits by EFTPS, use Form 8109 to make the deposits at an authorized financial institution. See the instructions in the coupon book for additional information. If you do not have a coupon book, call 1-800-829-4933. You will automatically be enrolled in EFTPS when you apply for an EIN. You will receive a separate mailing containing instructions for activating your EFTPS enrollment after you receive your EIN. You will still have the option to use FTD coupons, but see Electronic deposit requirement, earlier.When To Make Deposits
There are two methods for determining deposits: the regular method and the alternative method.
The regular method applies to all taxes in Part I of Form 720 except for communications and air transportation taxes if deposits are based on amounts billed or tickets sold, rather than on amounts actually collected. See Alternative method below.
If you are depositing more than one tax under a method, combine all the taxes under the method and make one deposit for the semimonthly period.
Regular method.
The deposit of tax for a semimonthly period is due by the 14th day following that period. Generally, this is the 29th day of a month for the first semimonthly period and the 14th day of the following month for the second semimonthly period. If the 14th or the 29th day falls on a Saturday, Sunday, or legal holiday, you must make the deposit by the immediately preceding day that is not a Saturday, Sunday, or legal holiday.Alternative method (IRS Nos. 22, 26, 27, and 28).
Deposits of communications and air transportation taxes may be based on taxes included in amounts billed or tickets sold during a semimonthly period instead of on taxes actually collected during the period. Under the alternative method, the tax included in amounts billed or tickets sold during a semimonthly period is considered collected during the first 7 days of the second following semimonthly period. The deposit of tax is due by the 3rd banking day after the 7th day of that period.Example.
The tax included in amounts billed or tickets sold for the period June 16-30, 2007, is considered collected from July 16-22, 2007, and must be deposited by July 25, 2007.To use the alternative method, you must keep a separate account of the tax included in amounts billed or tickets sold during the month and report on Form 720 the tax included in amounts billed or tickets sold and not the amount of tax that is actually collected. For example, amounts billed in December, January, and February are considered collected during January, February, and March and are reported on Form 720 as the tax for the 1st quarter of the calendar year.
The separate account for each month must reflect:
All items of tax included in amounts billed or tickets sold during the month, and
Other items of adjustment relating to tax for prior months (within the statute of limitations on credits or refunds).
The separate account for any month cannot include an adjustment resulting from a refusal to pay or inability to collect unless the refusal has been reported to the IRS. See Uncollected Tax Report in chapter 4.
The net amount of tax that is considered collected during the semimonthly period must be either:
The net amount of tax reflected in the separate account for the corresponding semimonthly period of the preceding month, or
One-half of the net amount of tax reflected in the separate account for the preceding month.
Special rule for deposits of taxes in September 2007.
If you are required to make deposits, see the chart below. The special rule does not apply to taxes not required to be deposited (see Payment of Taxes, earlier). See Regulations sections 40.6302(c)-2 and 40.6302(c)-3 for rules to figure the net tax liability for the deposits due in September.Additional deposit of taxes in September 2007
| For the Period | ||||
| Type of Tax | Beginning on | Ending on | Due Date | |
| Regular method taxes | ||||
| EFTPS 1 | Sept. 16 | Sept. 26 | Sept. 28 | |
| Non-EFTPS | Sept. 16 | Sept. 25 | Sept. 28 | |
| Alternative method taxes (IRS Nos. 22, 26, 27, and 28) (based on amounts billed) | ||||
| EFTPS 1 | Sept. 1 | Sept. 11 | Sept. 28 | |
| Non-EFTPS | Sept. 1 | Sept. 10 | Sept. 28 | |
| 1See Electronic deposit requirement, earlier. | ||||
Amount of Deposits
Deposits for a semimonthly period generally must be at least 95 percent of the net tax liability for that period unless the safe harbor rule (discussed later) applies. Generally, you do not have to make a deposit for a period in which you incurred no tax liability.
Net tax liability.
Your net tax liability is your tax liability for the period minus any claims on Schedule C (Form 720) for the period. You may figure your net tax liability for a semimonthly period by dividing your net liability incurred during the calendar month by two. If you use this method, you must use it for all semimonthly periods in the calendar quarter. Do not reduce your liability by any amounts from Form 720X.Safe Harbor Rule
The safe harbor rule applies separately to deposits under the regular method and the alternative method. Persons who filed Form 720 for the look-back quarter (the 2nd calendar quarter preceding the current quarter) are considered to meet the semimonthly deposit requirement if the deposit for each semimonthly period in the current quarter is at least ⅙ (16.67%) of the net tax liability reported for the look-back quarter.
For the semimonthly period for which the additional deposit is required, the additional deposit must be at least 11/90 (12.23%), 10/90 (11.12%) for non-EFTPS, of the net tax liability reported for the look-back quarter. Also, the total deposit for that semimonthly period must be at least ⅙ (16.67%) of the net tax liability reported for the look-back quarter.
Exceptions.
The safe harbor rule does not apply to:The 1st and 2nd quarters beginning on or after the effective date of an increase in the rate of tax unless the deposit of taxes for each semimonthly period in the calendar quarter is at least ⅙ (16.67%) of the tax liability you would have had for the look-back quarter if the increased rate of tax had been in effect for that look-back quarter,
Any quarter if liability includes any tax not in effect throughout the look-back quarter, or
For deposits under the alternative method, any quarter if liability includes any tax not in effect throughout the look-back quarter and the month preceding the look-back quarter.
Requirements to be met.
For the safe harbor rule to apply, you must:Make each deposit timely at an authorized financial institution, and
Pay any underpayment for the current quarter by the due date of the return.
