IRS Notice CP136

[Lion EA]

Client's bookkeeper copied me on their Notice CP136 re payroll tax deposits.  (I try to avoid payroll preparation.)  Does anyone have any familiarity with CP136?

[rfassett]

Understanding Your CP136 Notice

The CP136 explains your deposit requirements for your Form 941 filings for next year, which may be different from your requirements for last year. We base your deposit requirement on the total tax you reported on your Forms 941 for the four previous consecutive quarterly periods (the lookback period).

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What you need to do

• If your total tax liability for the lookback period was $50,000 or less, you will be a monthly depositor next year. Monthly depositors must deposit taxes on wages paid during the month by the 15th of the following month.
• If your tax liability for the lookback period was over $50,000, you will be a semi-weekly depositor. Semi-weekly depositors must deposit taxes on wages paid on Saturday, Sunday, Monday, or Tuesday by the following Friday. Taxes on wages paid on Wednesday, Thursday, or Friday are due the following Wednesday.
• If the tax amounts we used to determine your deposit requirement differ from your tax records, then you should determine the appropriate deposit schedule.
• If the tax amount we used is zero for any tax period, then we have no record of receiving Form 941 for that period. Please file any missing Form 941 as soon as possible.

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  You may want to

  • Visit www.irs.gov for tax forms, instructions, and publications.
  • Check your records to verify that they show the same liability amount as the CP136.

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  Answers to Common Questions

  How do I show my payments when I file Form 941?
  We have a record of your payments. We don’t need you to show your payments. Show only the tax liabilities.

  How do I show the tax liabilities?
  If you are a monthly depositor, enter the taxes due for each month on Part 2 of Form 941. If you are a semi-weekly depositor, use Schedule B (Form 941) to enter the tax due for each date you paid your employees.

  What do I do if the tax liability on the notice is incorrect?
  The tax on the notice includes only the tax liability on your original Forms 941 during the lookback period. Don’t include amended returns. Base your deposit requirements on the original tax liability for the lookback period.

  Do I have to file electronically?
  You must pay all deposits electronically unless one of the two conditions applies:

  • Your tax liability is less than $2,500
  • The tax for the prior tax period was less than $2,500 and you did not have a $100,000 liability due the next day

  If your tax for the quarterly tax period is less than $2,500, you can pay with the payment voucher attached to Form 941.

  What if my accumulated tax liability reaches $100,000?
  You must deposit the next business day. Once your accumulated tax liability reaches $100,000 for any month, you immediately become a semi-weekly depositor for the rest of the current year and the next year.

[Lion EA]

Thank you, thank you, thank you.  Trying to get two EINs for a client who needs them TODAY and do multiple years of tax returns for my late clients.  And, then this payroll question....

[David Worsham]

I received the same notice.  I am curious about the phrasing "Semi-weekly depositors must deposit taxes on wages paid on Saturday, ..."

I run payroll monthly, so do I estimate taxes twice a week to submit, or do I still submit the taxes once per month when payroll is run and employees are paid?

[Lion EA]

The Pay Day, the day of the week you pay wages, then triggers the Due Day for submitting IF you are a semi-weekly depositor in your example, and that is determined by your look-back tax liability.  I read that as if you pay the last Saturday of the month, for instance, you deposit the following Friday.  But, if you pay the last Friday of the month, you deposit the following Wednesday instead.  If you paid every Friday, you would be depositing each Wednesday for the previous Friday.

Do I have that right?

(This is why I don't do payroll.)

[Catherine]

The semi-weekly stuff is totally obnoxious.  

If you pay employees any time between Saturday and Tuesday (inclusive), the taxes must by paid by the Friday of that week.  E.g., pay employees between Dec 31 and Jan 3, taxes are due by Jan 6.  

If you pay employees on Wednesday through Friday (also inclusive), the taxes must be paid by Wednesday of the following week.  E.g., pay employees between Jan 4 and Jan 6, taxes are due by Jan 11.

Either way, you get a maximum of a half-week between paychecks and tax payment due dates.

[Abby Normal]

2 hours ago, David Worsham said:

I received the same notice.  I am curious about the phrasing "Semi-weekly depositors must deposit taxes on wages paid on Saturday, ..."

I run payroll monthly, so do I estimate taxes twice a week to submit, or do I still submit the taxes once per month when payroll is run and employees are paid?

You submit once a month. You don't have any liability until a paycheck is issued.

[Abby Normal]

You can check a client's deposit schedule every July after the 6/30 941 is filed by adding up the total liability of the prior 4 941s (9/30, 12/31, 4/30 & 6/30). We have it on our calendar to do this every year.