This is a very good question and an often debated one.
Practically most accountants accrue the payroll tax liability and take a deduction for it in the year the payroll checks are issued even if the taxpayer is a cash basis taxpayer but there are rulings/ out there that restrict the deduction to the year the payment is made. I am surprised why the IRS has not come out with a clear guidance on this issue.
The safest way to handle this is to deduct it as a expense in the year it is paid.
There is a very good discusstion on this issue at a website at the link below-
Let me know if you have any question.
Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases. Nothing contained in this reply was intended or written to be used, can be used by any taxpayer, or may be relied upon or used by any taxpayer for the purposes of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code of 1986, as amended.
In order to be able to defend your position in an audit or any examination you should not take the deduction until the payment is made as that is the true cash basis accounting.
There are Revenue rulings cited on the link that I provided earlier which also provides for claiming deduction for expenses when paid.