SECTION 8. DRAFTING

INFORMATION

The principal author of this revenue procedure is Charles A. Hall of the Office of Associate Chief Counsel, Procedure and Administration (Administrative Provisions and Judicial Practice Division). For further information regarding this revenue procedure, contact Charles A. Hall at (202) 622–4940 (not a toll-free call).

.04 Example 4—Safe Harbor Deposits. (1) Facts. This example will show how the application of employment tax deposits to the most recently ended deposit period or periods will be accomplished in situations where the depositor is also making a deposit by the shortfall make-up date in order to qualify for the safe harbor in section 31.6302–1(f) of the regulations. For the second calendar quarter of 2002, D, a semi-weekly employment tax depositor, pays its employees every Friday. D accumulates $10,000 in employment tax deposit liability for each of its weekly pay dates. D makes timely deposits of employment taxes in the amount of $9,800 on April 10, 17, and 24, 2002. Under section 31.6302–1(f), D must make a deposit of $600 by the shortfall make-up date, May 15, 2002. D also must make a deposit of employment taxes for the deposit period May 8–10, 2002, on or before May 15, 2002.

(2) Deposit made on shortfall make-up date. D deposits $9,800 on May 1 and May 8, 2002, and $10,200 on May 15, 2002. The May 1 deposit is applied to the deposit period April 24–26, 2002, and the May 8 deposit is applied to the deposit period May 1–3, 2002. Because the May 15 deposit is made on the shortfall make-up date, under section 4.03 of this revenue procedure, the Service first applies $600 to the shortfall liability for April. Accordingly, D has satisfied section 31.6302–1(f) of the regulations for the three deposits in April and owes no penalty with respect to those deposits. The Service applies the remaining $9,600 to the deposit period ending May 10, 2002, leaving an underdeposit of $400. As this amount is greater than 2 percent of the deposit liability, D will not satisfy section 31.6302–1(f), and will be subject to the failure-to-deposit penalty. The amount of the penalty will depend on when D satisfies the underdeposit.

(3) Deposit made prior to shortfall make-up date. Instead of making the

deposit on May 15, 2002, as in (2) above, D makes the $10,200 deposit on May 14, 2002. Because the deposit is made prior to the shortfall make-up date, under section 4.03 of this revenue procedure, the Service first applies $10,000 to the deposit liability for the deposit period ending May 10, 2002. This liability is fully satisfied. The Service applies the remaining $200 to satisfy the remainder of the deposit liability for the deposit period ending May 3, 2002. D will not satisfy section 31.6302–1(f) of the regulations for the three deposits in April, and will be subject to the failure-to-deposit penalty. The amount of the penalty will depend on when D satisfies the underdeposits.

(4) Designation. In either situation described in this example, D may timely contact the Service under the procedures in section 4.02 of this revenue procedure and designate the deposit periods (including the make-up period) to which the deposits are to be applied.

.05 Example 5—Deposits Made Under the One-Day Rule.

This example will show how the application of deposits to the most recently ended deposit period or periods will be accomplished in situations where the depositor becomes subject to the one-day rule of section 31.6302–1(c)(3) of the regulations. For the second calendar quarter of 2002, E, a semi-weekly employment tax depositor, makes a timely deposit of employment taxes on April 10, 2002, for the deposit period April 3, 2002, through April 5, 2002. On Monday, April 8, 2002, E accumulates $110,000 in employment taxes with respect to wages paid on that date. Under section 31.6302– 1(c)(3), E deposits those taxes by the end of the next business day, April 9, 2002. Under this revenue procedure, the deposit required by section 31.6302–1(c)(3) is treated as a liability for a deposit period ending on the day in which E accumulates in excess of $100,000 in employ

2001–50 I.R.B 582 December 10, 2001