What happens when a monthly depositor accumulates $100,000 in tax liability on any day during a month?

When a monthly depositor accumulates $100,000 in tax liability on any day during a month, their status changes to semiweekly for the rest of the current calendar year and the entire next calendar year. This change in status reflects the obligation to deposit taxes more frequently because a tax liability of this amount indicates a higher risk of underpayment, necessitating more timely remittances.

In addition to the increased frequency, the requirement to deposit on the next business day ensures that the tax obligations are met promptly, reducing potential penalties that can arise from late payments. This proactive approach of adjusting deposit schedules based on the accumulation of tax liability is designed to enhance compliance and cash flow management for the IRS as well as the taxpayer.

This transition from monthly to semiweekly depositor status aligns with IRS guidelines, which specify that once a taxpayer hits this thresholds, the change in frequency remains in effect to maintain a consistent cash flow in tax collections.