Lookback period
The 12-month window the IRS uses to classify an employer as a monthly or semi-weekly depositor — July 1 through June 30 of the second prior year.
The lookback period is the 12-month window the IRS uses to classify an employer as a monthly or semi-weekly depositor for the upcoming calendar year. The window runs from July 1 of the second prior year through June 30 of the prior year. If the employer's total federal payroll tax liability during that window was $50,000 or less, the employer is a monthly depositor for the upcoming year; if more than $50,000, semi-weekly.
The lookback period for a brand-new employer is empty, so new employers default to monthly until their first full lookback period accumulates. The IRS notifies employers of any change in classification by mail in the fall; the notice typically arrives in October or November and applies to the following calendar year.
The next-day deposit rule (a single payroll over $100,000 of accumulated liability) overrides the lookback classification for the rest of that calendar year and the entire following year, regardless of where the employer would otherwise have fallen in the lookback math.