What is the primary criterion for determining if an employer is a monthly or semi-weekly depositor?

The primary criterion for determining if an employer is a monthly or semi-weekly depositor is indeed the amount of accumulated 941 liability, which refers to the employer’s tax liability for payroll taxes reported on Form 941.

Employers are classified based on their total liability for federal income tax withholding, Social Security taxes, and Medicare taxes during a specific look-back period. If an employer has a liability of $50,000 or more during this period, they are required to deposit their payroll taxes on a semi-weekly basis. Conversely, if their liability is less than that threshold, they can opt for monthly deposits. This classification is crucial as it dictates the frequency with which the employer must make tax deposits to the IRS, ensuring compliance with federal payroll tax regulations.

In this context, while factors such as the number of employees, the size of the business, and the location of the business may influence various operational aspects, they do not play a direct role in determining the deposit schedule based on payroll tax liability. The focus is specifically on the accumulated 941 liability, making it the correct criterion for establishing the deposit frequency.