When is the shortfall due for a semiweekly depositor whose payday is on Friday, and deposits 98% of its accumulated payroll tax liability the following Wednesday?

The correct answer is based on the regulations governing semiweekly depositors and the timing of payroll tax liabilities. For a semiweekly depositor, if payroll is made on a Friday, the employer is generally required to make deposits for that payroll on the following Wednesday.

In this specific scenario, the employer has made a deposit that only covers 98% of its accumulated payroll tax liability, which creates a shortfall. According to IRS rules, if there is a shortfall in the payment of employment taxes, that shortfall must be corrected in a timely manner.

Thus, the shortfall should be addressed on or before the first Wednesday or Friday on or after the 15th of the following month, which is when the employer’s next payment cycle begins. The timing ensures that the employer complies with IRS requirements while also providing a method to remedy any underpayment.

This means that in the context of payroll tax obligations and due dates, the correct timing for addressing the shortfall necessitates action by the specified date, which aligns precisely with the chosen option. Understanding this process emphasizes the importance of compliance and timely reporting in payroll tax management for semiweekly depositors.