WASHINGTON - The Internal Revenue Service issued a final regulation proposing to ease small businesses' tax payments by raising the quarterly threshold from $1,000 to $2,500 for those required to pay monthly employment taxes.
The regulation, issued Dec. 5, was effective Dec. 6, and the IRS estimates the change will allow 1 million businesses to shift from monthly to quarterly employment tax payments.
A small business had been required to pay employment taxes monthly unless it owed less than $1,000 each quarter. Under the new regulation, businesses owing less than $2,500 in employment taxes each quarter can pay those taxes quarterly. Businesses still will be required to pay monthly if they owe more than $2,500.
The IRS is accepting public comments on REG-114423-00 submitted by March 6. The regulation applies to quarterly and annual return periods beginning on or after Jan. 1.