Rev. Rul. 76-561

For the quarter-monthly period July 1 through July 7, a taxpayer withheld $1,000 from employees' wages. On July 11, the taxpayer deposited $5,000 which represented the entire amount of taxes withheld on bonuses paid on that date. No deposit was made at the close of the quarter-monthly period ending July 15 because no other wages were paid during that period and the aggregate amount of undeposited taxes withheld as of the close of such period was only $1,000.

Section 6302(c) of the Internal Revenue Code of 1954 provides that the Secretary or the Secretary's delegate may authorize Federal Reserve banks, and incorporated banks or trust companies that are depositaries or financial agents of the United States, to receive any tax imposed under the Internal Revenue laws in such manner, at such times, and under the conditions prescribed.

Section 31.6302(c)-1(a)(1)(i)(b) of the Employment Tax regulations states that an employer must deposit withheld taxes within three banking days after the close of any quarter-monthly period if, at the close of that period, the aggregate amount of undeposited taxes required to be withheld is $2,000 or more. The regulation defines the term "quarter-monthly period" to mean the first 7 days of a calendar month, the 8th day through the 15th day, the 16th day through the 22nd day, and any portion of the calendar month following the 22nd day.

Held, the taxpayer is not subject to the deposit requirements prescribed by section 31.6302(c)-1(a)(1)(i)(b) of the regulations because the amount of undeposited taxes withheld as of the close of the quarter-monthly period ending July 15 was less than $2,000.