Form 720 Semimonthly Deposits Explained

Form 720 deposits are the payments you make during the quarter, before the return is due. Generally, if your Part I taxes come to more than $2,500 net for the quarter, you deposit twice a month by electronic funds transfer. A semimonthly period is the 1st through the 15th or the 16th through the last day of a month.

The form is quarterly, but this money isn’t. A business that waits and pays everything with the return can face a penalty even if the full amount is paid by the due date. Here are the rules from the instructions and Publication 510.

When is no deposit required?

The instructions list these cases. In each one, the tax is paid with the return.

• Net liability for Part I taxes doesn’t exceed $2,500 for the quarter.
• The gas guzzler tax is paid on a one-time filing.
• The PCORI fee is paid with a second-quarter Form 720.
• The liability is for Part II taxes. The ozone-depleting chemicals floor stocks tax is the exception, generally needing a single deposit, with payment due by June 30.

Publication 510 adds that the stock repurchase tax is a single annual payment, and that you generally don’t have to deposit for a period in which you incurred no tax liability.

When are semimonthly deposits due?

There are two methods. Under the regular method, which covers Part I taxes generally, a deposit is due by the 14th day after the period ends. That is usually the 29th of the same month for the first period and the 14th of the next month for the second. Unlike the return, a date on a Saturday, Sunday, or legal holiday moves back to the preceding business day.

Applying that rule to the current quarter gives these dates. We worked them out from the rule, so compare them with Pub. 509, the IRS tax calendar, if you rely on them.

The alternative method is open only to communications and air transportation taxes (IRS Nos. 22, 26, 27, and 28) based on amounts billed or tickets sold. Tax billed in a semimonthly period is treated as collected during the first 7 days of the second following semimonthly period. The deposit is due by the third business day after that seventh day. For example, tax billed October 16 to 31, 2026, is considered collected November 16 to 22. Counting three business days from Sunday, November 22, gives Wednesday, November 25, 2026.

If you deposit more than one tax under a method, combine them into one deposit for the period.

How much do you have to deposit?

There are two tests, and you need to meet one.

The 95% test. Each deposit must be at least 95% of the net tax liability for that period. Net tax liability is the total for the period minus any claims allowed on Schedule C. You may figure it by dividing the month’s net liability by two, as long as you do that for all semimonthly periods in the calendar quarter. So on $10,000 of net liability for a period, you would deposit at least $9,500.

The safe harbor rule. If you filed Form 720 for the lookback quarter, which is the second calendar quarter before the current one, you meet the requirement by depositing at least 1/6 (16.67%) of that quarter’s net tax liability each period. This is useful when your tax is uneven. It applies separately to each method.

Here is a made-up example. A filer reported $60,000 of net tax liability for the April to June 2026 quarter, which is the lookback quarter for October to December 2026.

To use the safe harbor, you must pay any underpayment by the due date of the return and check the box on line 5 of Form 720. Publication 510 adds that each deposit must be timely. The IRS may withdraw the right to use the safe harbor from anyone not complying.

The safe harbor has limits. It doesn’t apply in the following situations.

• The first and second quarters on or after a tax rate increase, unless each deposit is at least 1/6 of what the lookback liability would have been at the increased rate.
• Any quarter where your liability includes a tax not in effect throughout the lookback quarter.
• Under the alternative method, any quarter where your liability includes a tax not in effect throughout the lookback quarter and the month before it.

For September’s additional deposit period, the instructions set the extra deposit at 11/90 (12.23%) of the lookback quarter’s net liability. The total for that period must still reach 1/6.

How do you make the deposit?

• By electronic funds transfer. The instructions say you must deposit depository taxes this way, and not to mail deposits to the IRS.
• EFTPS. You must start the transaction at least one day before the due date, before 8:00 p.m. Eastern time. So for a November 13 deposit, that means by the evening of November 12.
• IRS Direct Pay. Publication 510 says that as of October 2024, taxpayers can use IRS Direct Pay to make payments directly from a checking or savings account without enrolling in EFTPS.
• Same-day wire. If you missed the EFTPS cutoff, you can still deposit on time through a same-day wire, which needs arranging with your bank ahead of time. Your bank may charge a fee.
• Someone else. A tax professional, bank, or payroll service can deposit for you, possibly for a fee.

How do deposits show up on the return?

Three places on Form 720 connect to your deposits. Schedule A records net liability by period. Part III, line 5 shows the deposits you made for the quarter, with the safe harbor box beside it. Line 10 shows any balance still due, and line 11 shows an overpayment. Our guide to Form 720 due dates in 2026 shows how deposit and return dates sit together.

Remittance transfer providers should note that the IRS announced limited deposit penalty relief for the first three quarters of 2026 only, so the October to December 2026 quarter is outside it. The remittance transfer tax page covers that tax.

When the quarter ends, you can file Form 720 online with EasyFile720. Schedule A is part of the guided filing, rates for the return are built in, and validations catch common mistakes before you submit. An account is free to create, and you pay $39.95 per filing when you file. The deposits themselves remain your job, through the IRS options above.

FAQ

Sources: Instructions for Form 720 (Rev. June 2026); Publication 510 (Rev. December 2025); Form 720 (Rev. June 2026); IRS remittance transfer penalty relief announcement (IR-2025-102). General information, not tax advice. Confirm how the rules apply to you with a qualified advisor or the IRS.