Simplifying Payroll Tax Deposit Rules

T-GGD-91-59: Published: Jul 24, 1991. Publicly Released: Jul 24, 1991.

Additional Materials:


Office of Public Affairs
(202) 512-4800

GAO discussed proposed provisions to simplify the payroll tax deposit system. GAO noted that: (1) deposit rules are difficult to understand and to comply with because employers can be subject to more than one deposit rule during a tax period; (2) in 44 percent of 75 penalty cases examined, IRS tax examiners miscalculated the flat-rate penalty due to improper application of deposit requirements; (3) the proposed changes would require employers to make deposits on Tuesdays and Fridays following paydays, permit small employers with small quarterly tax liabilities and new businesses to deposit quarterly, provide a look-back rule for employers to use in establishing the deposit requirement, and allow employers to deposit 98 percent of their accumulated taxes within 3 banking days of the end of a deposit period; (4) more employers can be excepted from the Tuesday/Friday rule without adversely affecting current federal revenues, as long as employers continue to deposit monthly, rather than quarterly; (5) shortening the look-back provision from 8 months to 4 months would be less burdensome, enable small employers to return to the slower deposit schedule more quickly, and still ensure employers' awareness in advance of the deposit requirements they must follow during the quarter; and (6) the safe-harbor provision only reduces the amount of taxes employers can delay depositing, but it does not eliminate the potential for abuse.

Jan 30, 2018

Dec 20, 2017

Dec 18, 2017

Nov 30, 2017

Nov 28, 2017

Sep 6, 2017

May 18, 2017

May 17, 2017

Apr 27, 2017

Apr 26, 2017

Looking for more? Browse all our products here