Withholding Tax at Source Deposits

On December 10, 2018, the PRTD issued Administrative Determination Number 18-14, to simplify the rules for the deposit of income taxes withheld on wages standardizing them to those established by the IRS and repealing Internal Revenue Circular Letter 07-05 (“CC RI 07-05”).  An Employer shall be classified under 3 categories:

 

Monthly Depositor: New Employers and/or Employers whose aggregated income taxes withheld from July 1 to June 30 of the previous year (“Base Period”), is $50,000 or less. The deposits shall be made no later than the 15th day of the following month in which the withholding took place.

 

Biweekly Depositor: Employers whose aggregated income taxes withheld for the Base Period is more than $50,000. The deposits will be determined as follows:

 

Payment Date                               Deposit Date

Wednesday – Friday                       No later than the following Wednesday

Saturday – Tuesday                         No later than the following Friday

 

Exceptions to the Monthly or Biweekly Depositor Rules:

 

  • Employers with quarterly tax withholdings of $2,500 or less – The deposit date can be the Quarterly Return’s due date.
  • Employers with tax withholdings any day of the period of more than $100,000 – The deposit date should not be later than the closing time of the next working day.
  • Depositor Classification – The classification of an Employer as biweekly or monthly depositor will be done in an annual basis, based on the aggregated tax withholdings on wages for the last twelve (12) months ended on June 30 of the prior year.

 

These new rules will apply to payments made after January 1, 2019. Payments made prior to December 31, 2018, will be considered under the rules established by CC RI 07-05.

 

 

This post is part of FPVG Pulse | Issue 1.

 

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