Form 944 was designed to reduce burden on small employers by permitting those employers to file one employment tax return to report their social security, Medicare, and withheld federal income taxes for an entire taxable year instead of four employment tax returns (one for each quarter). It is very important to file Form 944 on a timely basis in order to avoid paying large penalties. The IRS is very active in enforcing penalties in this area.
Form 944 Program for Small Employers
If you have been filing Form 941, Employer’s QUARTERLY Federal Tax Return, and believe your employment taxes for the calendar year will be $1,000 or less and would like to file Form 944, Employers ANNUAL Federal Tax Return, instead of Form 941, you must contact the IRS to request to file Form 944 rather than Form 941.
Qualified employers and Opting in to Form 944
Qualified employers are generally those with an estimated annual employment tax liability (Social Security, Medicare, and withheld federal income taxes) of $1,000 or less for the entire calendar year. The rule of thumb for eligibility is that the estimated annual $1,000 threshold is met when income tax withholding, FICA and FUTA taxes are applied to being based on about $4,000 or less in salaries.
Who must file IRS Form 944
You must file Form 944 if the IRS has notified you to do so, unless you contact the IRS to request, and receive written notice, to file quarterly Form 941 instead
Upon request by qualified employers, the IRS will notify employers in writing of their qualification to file Form 944. Employers may also take the initiative and request to file Form 944 by contacting the IRS by telephone or by mail by the applicable due date. In all cases, employers should not file Form 944 until the IRS notifies them of their eligibility to do so.
Opting out of Form 944
Beginning in tax year 2010, qualified employers who want to file Form 941, Employer’s Quarterly Federal Tax Return, instead of Form 944 are able to opt out of filing Form 944 for any reason if they follow the procedures established in Revenue Procedure 2009-51. Unless you have received notice from the IRS that you are required to file Form 944, you file Form 941. If you are required to file Form 944 in lieu of Form 941, you should receive notice of your filing requirement through the U.S. mail in the first week of February.
Employers who previously were notified by the IRS to file Form 944 but want to file Forms 941 instead must call or write the IRS stating that they want to opt out of filing Form 944 before the applicable due set out in Rev. Proc. 2009-51 (or any successor). The IRS will send written notification to employers that their filing requirement was changed to Forms 941. This return is due once a year, by January 31, after the end of the calendar year. If you made timely deposits in full payment of your taxes by January 31, you have 10 additional calendar days to file your Form 944. You may file Form 944 electronically
IRS Form 944 of IRS Form 941
Employers who were notified of their qualification to file Form 944 but do not receive notification that their filing requirement was changed to Forms 941 must file Form 944 rather than Forms 941. We can assist you with determining the dates for opting in or opting out of Form 944 and what alternative would be better for your situation.
Form 944 and New Employers
New employers who complete form SS-4 on paper will estimate first-year tax liability and can be accepted in the 944 filing program. New employers who complete form SS-4 online are not be reviewed for 944 status and are 941 filers. However, text on the online registration site gives a brief description of the 944 program.
IRS Form 944 Program Information
The IRS released final and temporary regulations (TD 9239) to implement the Form 944 Program. You can download the regulatory guidance in PDF format (25 pages) at: Employers’ Annual Federal Tax Program (Form 944) TD 9239.