Alert to your Payroll department: Remember IRS’ promised “safe harbor” tax deposit rule? Well, the promise doesn’t hold for shortfall amounts to more than $100,000. IRS’ well-known rule says you won’t be penalized if:
- you deposit less than your full tax liability, as long as you make the rest of the deposit on time,
- the shortfall isn’t more than the greater of $100 or 2% of the entire amount due, and
- you deposit the shortfall by the appropriate make-up date.
However, if your shortfall is more than $100,000, the one-day deposit rule applies — and overrides the safe harbor.
Multiple deposits may = disaster, too
Watch out: This exception to the rule is also true if you have to make multiple deposits and the shortfalls accumulate to $100,000 or more. The one-day deposit rule applies in this case as well.
