Hi Schmerold ~
There are two pertinent documents regarding your payroll tax deposits,
1. Instructions for Form 941 (Rev. January 2004)
2. Circular E, Employer's Tax Guide (Publ 15) (Rev. January 2004)
Although both have been revised in January, the deposit rules have not
changed (see Circular E's Changes to Note on page 1)
You are right in that by the terms of the Lookback Period you are a
monthly depositor, and equally correct that you can send in a payment
if the amount is under $2500 (any amount up to $2499).
See page 2 of Instructions for Form 941, "Depositing Taxes",
"If your net taxes (line 13) are $2,500 or more for the
quarter, you must deposit your tax liabilities at an
authorized financial institution with Form 8109, Federal
Tax Deposit Coupon, or by using the Electronic Federal
Tax Payment System (EFTPS). You may pay the taxes with
Form 941 instead of depositing if your total taxes for
the quarter (line 13) are less than $2,500 and you pay
in full with a timely filed return."
Because the amount was over $2,500 and you mailed it with the return
amounts to a late deposit, in any case, and if the form was not mailed
at least two days before its due date, the return would be considered
filed late as well.
This means that
1. The taxes should have been deposited by January 31 (which is
a Sunday, so by February 2nd. (See "When To File, page 1);
2. Or if the amount was under $2,500 in order to qualify for mailing,
would need to have been mailed two days prior to that, or by
Friday, January 30th.
The information about paying on time can be found in Circular # on
Page 28 under "Depositing On Time",
"The IRS determines whether deposits are on time by the
date that they are received by an authorized depository.
To be considered timely, the funds must be available to
the depository on the due date before the institution's
daily cutoff deadline ... However, a deposit received by
the authorized depository after the due date will be
considered timely if the taxpayer establishes that it
was mailed in the United States at least two days before
the due date."
Information regarding penalties can be found in the Instructions for
Form 941 on page 2 under "Penalties and Interest",
"There are penalties for filing a return late and paying
or depositing taxes late ... (b) deposit taxes when
Page 22 of Circular E also has information regarding penalties and the
amount assessed (from 2-15%) under "Deposit Penalties".
"Penalties may apply if you do not make required deposits
on time, if you make deposits for less than the required
amount, or if you do not use EFTPS when required. The
penalties do not apply if any failure to make a proper
and timely deposit was due to reasonable cause and not
to willful neglect. For amounts not properly or timely
deposited, the penalty rates are:
2% - Deposits made 1 to 5 days late.
5% - Deposits made 6 to 15 days late.
10% - Deposits made 16 or more days late. Also applies
to amounts paid within 10 days of the date of the
first notice the IRS sent asking for the tax due.
10% - Deposits made at an unauthorized financial
institution, paid directly to the IRS, or paid with
your tax return (but see Depositing without an EIN
on page 21 and Payment with return on page 18 for
10% - Amounts subject to electronic deposit requirements
but not deposited using EFTPS..."
Had the deposit been made either electronically or using the coupon
(Form 8109, Federal Tax Deposit Coupon) in a financial institution by
the cutoff time on February 2nd, no penalty would have been assessed.
By sending in the check in an amount over $2,500 with your return, you
incurred the penalties.
You can download Form 941 Instruction in PDF format here,
and Circular E (Publ 15), here,
If your tax liability is going to over $2,500, now would be a good
time to arrange for deposit via the coupon or electronic transfer on a
regular basis in order to avoid penalties again.
Search Terms ~
* employer's tax deposits
By the way, it never hurts to ask if they will waive the penalty,
explaining that hitherto your tax liability had never exceeded $2,500.
Who knows, you might find a kindly IRS representative who is willing
to do that. And what's the worst that can happen? They'll say no.
Best of luck,
Google Answers Researcher