Tax News Archive:

Eliminating Monthly Tax Deposits for Small Businesses

Small businesses with less than $2500 in employment taxes in a three-month period no longer have to make monthly deposits of those taxes. They can make them quarterly with form 941. Previously the threshold for employment taxes in a quarter was $1000. With this change in the amount of employment taxes that need to be deposited, over 1 million small businesses will be affected.

IRS feels that this change is in keeping with its "modernization" efforts. This will reduce paperwork for both sides. Small businesses won’t be hassled each month to prepare their tax deposits. This will also help with their cash flow. The reduction in paperwork being sent out to the IRS will also prompt fewer mistakes.

This in effect will save IRS time and manpower in sending out notices to these businesses for mistakes that some of them make when they send out the tax deposits each month in haste. Obviously the smaller the business is fewer the employees it has. The owner has to do a lot more work and he is bound to make a few mistakes with his tax deposits. This is a very good move because it shows that someone at IRS is now thinking for the people.