See Publication 51(Circular A), Agricultural Employer’s Tax Guide, for information on agricultural employees, including types of agricultural work subject to social security and Medicare taxes.

See Publication 15(Circular E), Employer’s Tax Guide, Publication 15-A, Employer’s Supplemental Tax Guide, and Publication 15-B, Employer's Tax Guide to Fringe Benefits, for classes of employment and types of payments subject to social security and Medicare taxes.

See Publication 926, Household Employer's Tax Guide, for information on household employment taxes.

See Publication 80, (Circular SS), Federal Tax Guide for Employers in US Virgin Islands, Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands which summarizes responsibilities to collect, pay and report social security and Medicare taxes for employers whose principal place of business is in - or who have employees who are subject to income tax withholding for - the U.S. Virgin Islands, Guam, American Samoa, or the Commonwealth of the Northern Mariana Islands.

The amount of income tax withheld from wages is based on the following information shown on Form W-4, Employee’s Withholding Allowance Certificate:

All wages (except household employment wages now reported on Schedule H) which are subject to FICA tax are also generally subject to income tax withholding. An employer is not required to withhold federal income tax from wages paid to a household employee. An employer should withhold federal income tax only if the household employee asks the employer to withhold it and the employer agrees. (See IRM 21.7.4.4.1.11, Social Security Domestic Employment Reform Act (SSDERA) of 1994 and BMF Schedule H.)

When unable to determine the proper tax correction on employment tax returns, see IRM 21.7.2.4.6.3.2.

The taxes under the Federal Insurance Contributions Act (FICA) taxes are social security and Medicare.

Social security taxes are withheld at a combined tax rate of 12.4% (6.2% contributed by the employer and 6.2% contributed by the employee). However, it is withheld from wages and tips only up to a wage limit. The table below shows the social security wage limits from year to year.

Section 101 of the Hiring Incentives to Restore Employment (HIRE) Act, enacted March 18, 2010, created a payroll tax exemption for the employer's share of social security taxes on wages paid to certain previously unemployed workers from March 19, 2010 through December 31, 2010. The employee's 6.2% share of social security tax (figured up to the wage limit), and the employer and employee's shares of Medicare tax still applied to all wages. See IRM 21.7.2.5.20, HIRE — Payroll Tax Exemption, for more information.

Section 601 of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 reduced the employee tax rate for social security taxes from 6.2% to 4.2% for wages paid January 1, 2011 through December 31, 2011. The employer's social security tax rate remained 6.2% and the employer and employee Medicare tax rates remained unchanged. Due to late passage of the legislation, employers may have had difficulty in promptly implementing the reduced employee social security tax rate. Employers were instructed to implement the new 4.2% employee social security tax rate as soon as possible but not later than January 31, 2011. Employers were further instructed to correct any over withholding of social security taxes on a subsequent pay period but not later than March 31, 2011. Employment tax returns for calendar year 2011 reflected a combined employer/employee social security tax rate of 10.4% (the reduced employee tax rate of 4.2% plus the unchanged employer tax rate of 6.2%) and no special adjustment procedures were needed to account for the tax rate reduction.

Section 101 of the Temporary Payroll Tax Cut Continuation Act of 2011 temporarily extended the two percentage point payroll tax cut for employees discussed in (4) above through February 29, 2012. Subsequently, Section 1001 of the Middle Class Tax Relief and Job Creation Act of 2012 further extended the two percentage point payroll tax cut for employees discussed in (4) above through December 31, 2012. Employment tax returns for calendar year 2012 reflect a combined employer/employee tax rate of 10.4%.

Medicare taxes are withheld on all wages and tips. There is no wage limit for Medicare taxes (since 1994). The combined tax rate is 2.9% (1.45% contributed by employer and 1.45% contributed by employee).

Taxpayers who file Form 941, Form 943, Form 944, or Form 945 are required to pay the tax on these returns by making Federal Tax Deposits (FTD's) if the liability equals or exceeds a designated threshold amount during the tax period for which the return is filed. See the table below for the applicable thresholds:

Beginning January 2010, employers who file Form 941 will not have to make deposits during a quarter if all the following requirements are met:

Beginning January 1, 2011, all these deposits were required to be made by means of Electronic Funds Transfer (EFT). See IRM 20.1.4.2.1, Electronic Funds Transfer (EFT), for more information. Prior to January 1, 2011, many employers were permitted to make their federal tax deposits at an authorized financial institution accompanied by an FTD coupon.

Penalties are imposed if deposits are made late, not made in sufficient amounts, made directly to the IRS (e.g. sending a check with a tax return or paying by credit card), or not made using EFT. See IRM 20.1.4, Failure to Deposit Penalty, for more information.

Input Computer Condition Code "J" if you are reprocessing a document and no FTD penalty is to be assessed. Edit the "J" in the bottom middle margin of the return. Do not "J" code the re-input document, unless IDRS is unable to correctly figure the penalty, or if reasonable cause is being allowed.

Research IDRS to determine if a CP 194 or CP 207 was generated whenever tax or periodic liability information is being adjusted. If so, coordinate with the FTD Penalty Function, if necessary, to prevent erroneous FTD penalty assessments.

For more information on deposits and penalties, see:

Balance due payments for Form 941, Form 943, Form 945 (including balances that are up to ten years past due) and Form 944 (including two prior years) can be made over the phone or by internet using a credit card. These payments can be made through one of three authorized third-party service providers who will obtain card authorization during the transaction and provide a confirmation number as proof of payment. Taxpayers currently required to make FTD's, must still make deposits. FTD's cannot be paid by credit card. For specific information on business payments made by credit card, see IRM 21.2.1.48.4, Credit or Debit Card Payments (Pay by Phone or Internet).

Currently, IRS can process Forms 941 and Forms 944 electronically. Several Program Options are available which businesses can select.

An original filed electronic return cannot be requested. Instead, a TRPRT print must be requested, if a disallowance needs to be input. Use the TRPRT print and Blocking Series 99. Use Blocking Series (BS) 15 for all other adjustments.

This is a file of taxpayers and Reporting Agents who file Forms 940, 941 and/or 944 electronically (e-file). Taxpayer prepares and signs Form 8655, Reporting Agent Authorization, or Service Approved Form. This authorizes the Reporting Agent to:

See IRM 21.3.9, Processing Reporting Agents File Authorizations, and IRM 21.1.3.5, Reporting Agents File (RAF) and Form 8655, Reporting Agent Authorization, for more information.

An employer may designate an agent under IRC Section 3504 to withhold, report and pay Federal employment taxes. All provisions of law applicable to an employer apply jointly to both the agent and the employer. For example, a corporation may designate another entity to handle its Federal employment tax obligations. For claims for refund of employment taxes made by the agent, treat the agent as an employer for purposes of employment tax deposits and payments made by the agent.

To request approval to act as a Section 3504 agent for an employer, the agent files Form 2678, Employer/Payer Appointment of Agent, with the IRS.

Specific rules apply to an Section 3504 agent acting on behalf of disabled and elderly welfare recipients who hire persons to provide home care services (home care service recipients). See IRM 21.7.2.4.11.3 , Household Employment Taxes and Section 3504 Fiscal/Employer Agents, for more information.

Attributed Tip Income Program (ATIP) was a voluntary tip reporting program that promotes tip income reporting and reduces record keeping burden. This program is an expansion of the Service's Tip Rate Determination and Education Program (TRD/EP) and is administered through Rev. Proc. 2006-30.

This reporting alternative for employers in the food and beverage industry is designed to promote tip income reporting and provide benefits to employers and employees similar to those offered under previous tip reporting agreements without requiring one-on-one meetings with IRS to determine tip rates or eligibility.

ATIP expired as of December 31, 2011 pursuant to Rev. Proc. 2009–53.

The Voluntary Classification Settlement Program (VCSP) is a voluntary program described in Announcement 2011-64 that provides an opportunity for taxpayers to reclassify their workers as employees for employment tax purposes for future tax periods with partial relief from federal employment taxes.

To participate in this new voluntary program, the taxpayer must meet certain eligibility requirements, apply to participate in the VCSP by filing Form 8952, Application for Voluntary Classification Settlement Program, and enter into a closing agreement with the IRS.

Additional information, including Frequently Asked Questions (FAQs), may be found on the IRS website at: Voluntary Classification Settlement Program.

Telephone assistors should not attempt to assist callers with questions regarding this new program. Instead, direct any caller making inquiries regarding the VCSP to the IRS website information which may be located by searching for “Voluntary Classification Settlement Program” on irs.gov.

Use Item Reference Numbers (IRN's) to adjust tax, wages, and advance earned income tax credit (AEITC) on employment tax returns.

The valid reference numbers for 2004 and prior Form 941 accounts and 2005 and subsequent are listed below, including Form 944.

Generally, sick pay is any amount paid under a plan to an employee-participant because of the employee's temporary absence from work due to disability, sickness, or injury. This plan may be paid by the employer or a third party, such as an insurance company.

Generally, sick pay is subject to:

Employers include total sick pay in taxable social security and Medicare wages paid on Form 941, on Form 944, or (rarely) on Form 943 as appropriate:

See Publication 15-A, Employer's Supplemental Tax Guide, for more information on sick pay.

Although sick pay can be reported on original employment tax returns, employers and reporting agents often choose to file an adjusted Form 94XX to report sick pay and the associated taxes and adjustment amounts. See the appropriate form specific processing instructions found later in this IRM when addressing a Form 94XX reporting a correction to sick pay amounts.

Substantiation is not required for sick pay adjustments reported on the appropriate adjustment line of an original employment tax return or a related Form 94XX adjusted return.

The appropriate Item Reference Numbers (IRNs) must be used when completing corrections to sick pay reporting:

In some situations, employers may believe a Third Party Payor (Insurance Company) has made payment of the employer's share of FICA taxes for them and they may request the third party's payment of the employee's share to be applied to the employer's tax account. In that situation:

Advance Earned Income Tax Credit (AEITC) was legislatively eliminated for tax periods after December 31, 2010.

Prior to January 1, 2011, employees who expected to be eligible to claim EITC (Earned Income Tax Credit) could choose to receive advance payments (AEITC) during the year from their employer.

If AEITC is claimed on amended returns, and:

Do not allow a credit for payments which exceed ≡ ≡ ≡ of the total cash wages for 1994 and ≡ ≡ for 1995 through 2010.

If the adjustment to AEITC is allowable:

Loose schedules are those that have inadvertently been detached from a return or received from taxpayers without sufficient information to indicate why they have been sent or to allow them to be associated with the proper return. These include, but are not limited to Schedule B (Form 941), Form 945-A, Schedule D (Form 941) and Schedule R (Form 941). See the subsections which follow for guidance on handling the most common loose employment tax schedule situations.

A new set of multi-purpose forms for adjustments and claims was created to reduce burden for employers. These forms include Form 941-X, 943-X, 944-X, 945-X, and CT-1X. The entire set of forms was made available in 2009 for use in correcting errors on previously filed employment tax returns. The effective date for the new forms and process was for errors ascertained on or after January 1, 2009. With the implementation of these new forms, Form 941c was made obsolete and employers will no longer use Form 843 to claim refunds of employment taxes. See IRM 21.7.2.4.6, Adjusted Employer's Federal Tax Return or Claim for Refund, for more information.

The following two subsections previously contained procedures for issues that were commonly encountered in handling Forms 941c. At this time, the references are being retained for research purposes (only).

A new set of multi-purpose forms was developed for adjustments and claims with the intention of reducing burden for employers. These forms include Form 941-X, Form 943-X, Form 944-X, Form 945-X and Form CT-1X (see IRM 21.7.2.4.6.1, Employment Tax Returns — Stand Alone Forms) and must be used to correct errors ascertained on or after January 1, 2009.

New category codes were established for these forms as shown in the following table. These forms age 45 days from the IRS received date and are not subject to Action 61 criteria.

With the introduction of these multi-purpose Forms 94XX, employers are no longer permitted to use Form 843 to submit a claim for refund of employment taxes. Form 941c is also obsolete for tax periods ending after December 31, 2008. See IRM 21.7.2.4.6.7.5, Stand Alone Form 941c (including incorrectly filed Form 843), for handling instructions if an employer files using one of these forms instead of the required Form 94XX.

Procedures and requirements for use of the new forms were published in Treasury Decision (T.D.) 9405 along with the revised regulations. The revised procedures allow employers to use either a claim process or an adjustment process to make corrections:

If the employer selects the adjustment process by checking Box 1 in Part 1 of Form 94XX, the amount of any resulting overpayment will be applied as a credit to the tax period in which the adjustment form was filed.

If the employer selects the claim process by checking Box 2 in Part 1 of Form 94XX, the amount of any resulting overpayment will be refunded to the employer from the period being adjusted along with any allowable overpayment interest.

Per the regulations, employers who are making a correction for over reported amounts within 90 days of the expiration of the period of limitations on credit or refund (RSED) on the period being corrected, must submit a claim instead of an adjustment request. See IRM 21.7.2.4.6.5, 90 Day — Claim, for more information on when to convert adjustment requests to claims and the form specific procedures found later in this IRM for handling instructions.

Employers who need to make corrections for both under reported and over reported amounts on the same tax period have two filing options:

≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

A set of certifications is included on Forms 94XX. Employers are required to certify that they have filed, or will file, Forms W-2, or Forms W-2c, as required. In addition, employers must complete all certifications that apply to the type of return they are filing and the corrections being made.

Treasury regulations require the employer to explain in detail the grounds and facts relied upon to support each correction. The taxpayer is instructed to describe the events that caused the under reported or over reported wages, administrative errors or payroll errors.

When scanned into Correspondence Imaging System (CIS), the TC 971 AC 010 systemically generates on all of these new forms. The input of this transaction sets the -A or E- freeze, which must be addressed:

A unique blocking series (200-289) was validated for MFT 01, 09, 11, 14 and 16. Blocking series "20" must be used when adjusting an account as a result of a Form 941-X, 943-X, 944-X, 945-X or CT-1X being filed.

Since the taxpayer has the option to have overpayments refunded or applied to the current period, the AM clerical function (or other function or employees designated at the campus) should review any of the new "X" forms received during the last month of a tax period to identify those that are requesting overpayments be applied to the current tax period. Unless processing of these Forms 94XX is expedited, there is a strong possibility that the original return for the current period will post before the credit arising from the Form 94XX can be applied resulting in the issuance of an unnecessary balance due notice.

For claims involving IRC 6020(b), see IRM 21.7.9.4.1.6 , Duplicate Filing Conditions Involving Returns Prepared Under IRC Section 6020(b).