The IRS has issued procedures for eligible small employers to elect out of filing Form 944, Employers ANNUAL Federal Tax Return, but instead to continue to file Form 941, Employer's QUARTERLY Federal Tax Return. Guidance is also provided on how employers can contact the IRS to receive notification of their eligibility for Form 944. The guidance is effective as of January 1, 2009.
Form 944
Generally, employers are required to file returns quarterly on Form 941 to report income and employment taxes withheld from employee wages. Certain exceptions to the reporting requirement exist for agricultural employers and for wages paid for domestic service. To alleviate the reporting burden on eligible small employers, the IRS issued rules in 2006 that permit eligible employers to file annual employment tax returns on Form 944, rather than quarterly returns. Revised temporary and proposed regulations relating to Form 944 were released by the IRS on December 29, 2008 (T.D. 9440;
NPRM REG-148568-04; TAXDAY, 2008/12/29, I.8). Under the regulations, an employer is eligible for file Form 944 beginning in 2009 if its estimated annual tax liability is $1,000 or less. Once notified, the employer is required to file Form 944 for the tax year. However, temporary regulations permit an employer to elect out of filing Form 944 after notification from the IRS and to continue to file Form 941 quarterly.
Election Out
Effective for tax year 2009, an employer is eligible to opt out of filing Form 944 if it timely notifies the IRS that it either: (1) anticipates that its employment tax liability for the year will be more than $1,000; or (2) it wants to file electronically quarterly Form 941 for the year. An employer who satisfies one of these conditions must notify the IRS by either calling or writing the IRS before an applicable due date. In the case of an employer who filed a Form 941 or Form 944 for a tax year prior to 2009, a call to opt-out of filing Form 944 must be made on or before April 1, 2009. A written notification by such an employer must be postmarked on or before March 15, 2009.
In the case of a new employer or an employer who was not previously required to file Form 941 or Form 944 prior to 2009, a telephone call to the IRS to elect out of filing Form 944 for the 2009 tax year must be made before the first day of the month that its first required Form 941 is due (i.e., April 1, July 1, October 1, 2009, or January 1, 2010). A written notification by a new employer must be postmarked on or before the 15th day of the month before its first required Form 941 would be due (i.e., March 15, June 15, September 15, or December 15, 2009).
Requests for Notification
Beginning in 2009, the IRS will send notification of eligibility to file Form 944 only upon request by a qualified employer. The employer may request to receive the notification by calling the IRS at the telephone numbers identified in procedure. An employer who previously received notification of qualification to file Form 944 must continue to file Form 944 unless an election out is filed.
Rev. Proc. 2009-13, 2009FED ¶46,213
Other References:
Code Sec. 6011
CCH Reference - 2008FED ¶35,141.51
Code Sec. 6302
CCH Reference - 2008FED ¶38,070.115
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