General Instructions

Understanding Schedule D (Form 941)

These instructions tell you about Schedule D (Form 941), Report of Discrepancies Caused by Acquisitions, Statutory Mergers, or Consolidations. Employers can use Schedule D (Form 941), to explain certain discrepancies (caused by acquisitions, statutory mergers, and consolidations) between Forms W-2, Wage and Tax Statement (Copy A), and Forms 941, Employer's QUARTERLY Federal Tax Return, for the totals of social security wages, Medicare wages and tips, social security tips, federal income tax withheld, and advance earned income credit (EIC) payments (for tax years ending before January 1, 2011).

What Is Schedule D (Form 941)?

Each year the Internal Revenue Service (IRS) and the Social Security Administration (SSA) compare the totals on your Forms 941 with the totals from your Forms W-2 (Copy A), to verify the following.

  • The wages you reported on Forms 941 match those you reported on Forms W-2 (Copy A) so that your employees' social security earnings records are complete for benefit purposes.

  • You have paid the appropriate taxes.

Generally, the totals of all your Forms W-2 (Copy A) should equal the aggregate quarterly totals you reported on Forms 941. Use Schedule D (Form 941) if discrepancies exist between the totals you reported on those forms only as a result of an acquisition, statutory merger, or consolidation.

IRS uses Schedule D (Form 941) to determine if you have reported your wages and tax liabilities correctly. In many cases, the information on Schedule D (Form 941) helps the IRS resolve discrepancies without contacting you.

Who Should File Schedule D (Form 941)?

You do not need to file a Schedule D (Form 941) for every merger, acquisition, or other reorganization that occurs. File Schedule D (Form 941) only for those acquisitions, statutory mergers or consolidations that create discrepancies between Forms W-2 (Copy A) and Forms 941 in the totals of:

  • Social security wages,

  • Medicare wages and tips,

  • Social security tips,

  • Federal income tax withheld, and

  • Advance EIC payments (for tax years ending before January 1, 2011).

Each party to an applicable transaction (see below) files its own Schedule D (Form 941).

File Schedule D (Form 941) for:

  • A statutory merger,

  • A consolidation, or

  • An acquisition for which you are using the alternate procedure under Rev. Proc. 2004-53. See Rev. Proc. 2004-53, 2004-34 I.R.B. 320, available at  
    www.irs.gov/irb/2004–34_IRB/ar13.html.

Do NOT file a Schedule D for:

  • An acquisition for which you are using the standard procedure under Rev. Proc. 2004-53, or

  • An acquisition that is not a statutory merger or consolidation and that does not qualify under the predecessor-successor rules. See Acquisitions that Qualify Under Predecessor-Successor Rules, on page 2, for a complete discussion of the predecessor-successor rules.

Types of Mergers and Acquisitions

Mergers, acquisitions, and other reorganizations generally fall into one of three categories for purposes of reporting employment taxes.

  • Statutory mergers and consolidations.

  • Acquisitions that qualify under the predecessor-successor rules (see Acquisitions that Qualify Under Predecessor-Successor Rules on 
    page 2).

  • Other acquisitions that are not statutory mergers or consolidations and that do not qualify under the predecessor-successor rules (see Acquisitions that Qualify Under the Predecessor-Successor Rules on  
    page 2).

Statutory Mergers and Consolidations

If you are the surviving corporation after a statutory merger or consolidation, you should file Schedule D (Form 941) to provide:

  • The date of the statutory merger or consolidation;

  • The name, trade name (doing business as or d/b/a), address, and employer identification number (EIN) of the acquired corporation; and

  • An explanation of any discrepancies between Forms W-2 (Copy A) and Forms 941 in the totals of social security wages, Medicare wages and tips, social security tips, federal income tax withheld, and advance EIC payments (only for tax years ending before January 1, 2011).

If you are the acquired corporation after a statutory merger or consolidation and you are filing a final Form 941, you should file Schedule D (Form 941) to provide:

  • The date of the statutory merger or consolidation;

  • The name, trade name (doing business as or d/b/a), address, and EIN of the surviving corporation; and

  • An explanation of any discrepancies between Forms W-2 (Copy A) and Forms 941 in the totals of social security wages, Medicare wages and tips, social security tips, federal income tax withheld, and advance EIC payments (only for tax years ending before January 1, 2011).

Rev. Rul. 62-60, 1962-1 C.B. 186, provides that, for employment tax purposes, the “resultant” corporation (now called a “surviving” corporation) resulting from a statutory merger or consolidation is the same employer and taxpayer as the “absorbed” corporation (now called an “acquired” corporation). The predecessor-successor rules described in Rev. Proc. 2004-53 do not apply to these transactions.

However, Rev. Proc. 2004-53 provides guidance for using Schedule D (Form 941) by a surviving corporation or an acquired corporation to report information after a statutory merger or consolidation only where there is a discrepancy. If the surviving corporation completes and files Schedule D (Form 941) to explain discrepancies between the totals on Forms W-2 (Copy A) and the totals on Forms 941, filing Schedule D (Form 941) will also provide notice of a statutory merger or consolidation under Rev. Rul. 62-60.

Acquisitions that Qualify Under the Predecessor-Successor Rules

Acquisitions that qualify under the predecessor-successor rules are acquisitions in which a successor employer:

  • Acquires substantially all the property used in a trade or business of another employer (predecessor) or in a separate unit of a trade or business of a predecessor, and

  • In connection with and directly after the acquisition (but during the same calendar year) employs individuals who immediately before the acquisition were employed in the trade or business of the predecessor.

These acquisitions satisfy the conditions for predecessor-successor status set forth in section 3121(a)(1) and Regulations section 31.3121(a)(1)-1(b).

Rev. Proc. 2004-53 contains the rules that apply to employment tax reporting in a predecessor-successor situation. Two procedures can be used in an acquisition that qualifies as a predecessor-successor situation.

  • Standard procedure—Do not file Schedule D (Form 941). No discrepancies should exist between the totals of the Forms W-2 (Copy A) and the totals of the Forms 941 as a result of the acquisition.

  • Alternate procedure—Each party in the transaction should file Schedule D (Form 941). Forms W-2 (Copy A) filed by the successor may include amounts reported on Forms 941 filed by the predecessor.

Other Acquisitions

If you completed other acquisitions that are not statutory mergers or consolidations and that do not qualify under the predecessor-successor rules, no discrepancies should exist as a result of the acquisition. Rev. Rul. 62-60 and Rev. Proc. 2004-53 do not apply to such transactions. Do not file Schedule D (Form 941) for such transactions.

When Should You File?

If your business is continuing to operate, you should file Schedule D (Form 941) with your Form 941 no later than the due date of your Form 941 for the first quarter of the year after the calendar year of the transaction.

If your business is not continuing to operate, you should file Schedule D (Form 941) with your final Form 941.

For example, if the transaction occurred in the third quarter of 2010 and your business is continuing to operate, you would file Schedule D (Form 941) with your Form 941 no later than the due date for the first quarter of 2011. However, if your business is not continuing to operate during 2010, you would file Schedule D (Form 941) with your final Form 941 no later than the due date for the third quarter of 2010.

How Should You File?

Schedule D (Form 941) was designed to be filed electronically with your electronic submission of Form 941. Electronic filing of Schedule D (Form 941) enables IRS to process information on the form more efficiently and accurately.

However, you may file Schedule D (Form 941) on paper if necessary. When filing on paper, do not attach Schedule D (Form 941) to your Form 941. Instead, file Schedule D (Form 941) separately using the following address.

IRS Philadelphia Campus 
Mail Stop 4-G08 151 
2970 Market Street 
Philadelphia, PA 19104

Do not use this address to file Form 941. See Where Should You File? in the Instructions for Form 941 for the filing address of Form 941.


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