This item focuses on how payroll tax accruals might be deducted in 2017 rather than 2018 without additional costs for the employer and no adverse tax consequences for the employees.
Rev. Rul. 2007-12 holds that if the all-events test and recurring-item exception of Sec. 461 are otherwise met, an accrual-method taxpayer may deduct FICA and FUTA tax expenses (payroll taxes) in the year that the deferred compensation to which they relate is earned, regardless of whether that deferred compensation is deductible in a later year under Sec. 404.
A recent ruling states that accrual-method taxpayers may deduct payroll tax liability incurred in the current year, for compensation deferred and deductible in the following year, under Sec. 404, provided the all-events test and recurring-item exception of Sec. 461 are met. Facts X, a corporation, uses an accrual method of