Reminder: Inauguration day is a payroll holiday

Friday, January 20, 2017, is a legal holiday for federal tax purposes (Code Sec. 7503) and that means an extended deadline for payroll tax deposits.

Under the tax law, if the last day for performing any act required by the tax law falls on a Saturday, Sunday, or a legal holiday, the deadline is generally extended to the next business day that isn’t a Saturday, Sunday, or a legal holiday (Code Sec. 7503). For this purpose, holidays include all legal holidays in the District of Columbia—including Inauguration Day every fourth year.

In the case of payroll taxes, if a deposit is due on a day that is not a business day, the deposit will be treated as having been made on time if it is made by the close of the next business day. For example, if a deposit is due on a Wednesday and that day is a legal holiday, the deposit will be considered timely if it is made on Thursday.

However, semiweekly schedule depositors always have at least three business days to make a deposit. Therefore, if any of the three weekdays after the end of a semiweekly period is a legal holiday, an employer will have one additional business day to deposit. For example, if a semiweekly schedule depositor accumulated taxes for payments made on Friday, and the following Monday is a legal holiday, the deposit normally due on Wednesday may be made on Thursday. This allows three banking days to make the deposit (Treas. Reg. §31.6302-1(c)).

Delayed deposit date

Under the semiweekly deposit schedule, an employer must deposit accumulated taxes on payments made from Saturday through Tuesday by the following Friday. Therefore, the deposit due date for the semiweekly period from Saturday, January 14, 2017, through Tuesday, January 17, 2017, would normally fall on Friday, January 20, 2017. However, since that is Inauguration Day, required tax deposits will be timely if made by Monday, January 23, 2017.

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