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Next-Day-Deposit Rule

Under this rule, once accrued payroll tax liability exceeds $100,000, a company must submit withheld federal taxes to the IRS on the following business day. Otherwise, an employer's tax-deposit schedule is typically monthly or semi-weekly, depending on the average amount of employment tax paid during a particular period. In general, employment tax liability is triggered on the date when compensation is paid to an employee.

See related FAQs on the application of the next-day-deposit rule to income withheld at stock option exercise and restricted stock/RSU vesting.

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