Next-day deposit rule
The IRS rule requiring a payroll tax deposit the next business day whenever a single payroll triggers $100,000 of accumulated federal tax liability.
The next-day deposit rule requires any employer (regardless of monthly or semi-weekly classification) to deposit federal payroll taxes by the next banking day whenever a single payroll triggers $100,000 or more of accumulated unpaid federal tax liability. The rule is triggered by accumulated liability for the current deposit period, not by the size of a single paycheck and not by year-to-date totals.
Once triggered, the next-day rule converts the employer to semi-weekly status for the remainder of that calendar year and the entire following year. This is sometimes a surprise to employers who expected the rule to apply only to the single triggering payroll.
Common triggers: one-time bonus payrolls funded from a Series A or Series B close; year-end performance bonus pools; executive sign-on bonuses; stock-option exercise payroll tax events; large settlement payments paid on a single check. See the next-day deposit rule guide for the full mechanics.