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Withholding Procedures – Deposits

If withholding is required of a U.S. presenter, agent, or manager (or anyone else in the U.S. making payments for the services of foreign artist), certain procedures must be followed with regard to depositing and remitting the tax withheld to the IRS.  Withholding agents are required to pay the tax withheld on an annual, monthly, or quarter-monthly basis, depending on the amount withheld.  The tax must be deposited electronically through the Electronic Federal Tax Payment System (EFTPS) from a U.S. bank.  The EFTPS system is fairly simple to use.  To register for EFTPS, a withholding agent must provide its name and address, Employer Identification Number (EIN), and bank account information (account and routing numbers).  After registering, the withholding agent must wait a week or so to receive a PIN number in the mail. So, if you are required to make a deposit, be sure to register with EFTPS several weeks in advance.

A quarter-monthly period means one of the following: (1) the first day of the month through the seventh day; (2) the eighth through the fifteenth; (3) the sixteenth through the twenty-second; or (4) the twenty-third through the end of the month.  If at the end of any quarter-monthly period, the total amount of accumulated undeposited tax is greater than $2,000, such tax must be paid within three (3) business days of the end of such quarter-monthly period.  The quarter-monthly deposit requirement will be considered as having been satisfied if the withholding agent deposits 90 percent of the tax withheld during the period within three banking days after the close of the period.  The remainder of the deposit must be made with the first deposit required after the fifteenth day of the following month.

Monthly deposits are required if, at the end of any month, the total amount of accumulated undeposited tax is more than $200 but less than $2,000.  The aggregate amount of withheld tax is required to be deposited within fifteen days after the close of the calendar month.

Annual deposits are required if at the close of the calendar year the total amount of accumulated undeposited tax is less than $200.  The deposit of such amount may be remitted with Form 1042 or by the due date for the Form 1042.