IRS Simplifies Tax Deposit Rules For Small Businesses
Under the new rules, which went into effect Jan. 1, employers are required to make a quarterly deposit for unemployment taxes if the accumulated tax exceeds $500. The old threshold was $100.
"The IRS is committed to reducing burden on taxpayers whenever we can," said IRS Commissioner Mark W. Everson. "The new rules will help cut paperwork for millions of small businesses. The IRS Office of Taxpayer Burden Reduction is continually reviewing what other steps we might take that will save money and time for businesses."
The maximum amount the IRS collects from employers per employee is $56 per year, if the employer made timely state unemployment tax payments. The $100 threshold required most employers with two or more employees to make at least one federal tax deposit per year.
Raising the requirement to $500 will reduce the burden for employers with eight employees or less by eliminating their requirement to make up to four FUTA tax deposits yearly, according to the IRS.
The $100 minimum deposit threshold was established in 1970.
Publication date: 01/10/2005
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