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Part 3. Submission Processing

Chapter 11. Returns and Documents Analysis

Section 13. Employment Tax Returns (Cont. 1)

3.11.13  Employment Tax Returns (Cont. 1)

3.11.13.14 
Form 941, 941-PR and 941-SS (Rev. 2005 and subsequent) Return Perfection and Line Editing

3.11.13.14.11  (01-01-2008)
Line 9, Advance Earned Income Credit (Domestic Only)

  1. The Earned Income Credit (EIC) is a tax credit for certain employees in the United States. Eligible employees can choose whether to claim all of the credit on their tax returns (Forms 1040) or to receive part of the credit in advance with their pay during the year and claim the remainder of the credit on their tax returns (Forms 1040). The employer may or may not have to make a tax deposit during the quarter. Therefore, do not assume that AEIC is a misplaced entry if there is no deposit(s). This largely applies to small dollar returns. If the Total Taxes minus the EIC equals the Net Taxes do not move the EIC entry.

  2. Process a line 9 entry as follows:

    IF THEN
    The line 9 entry is negative and is other than for Advance Payment of Earned Income Credit (EIC), (e.g. Net Tax entered on line 9 rather than line 10) Step 1 - Review the return to determine if there is an incorrect line entry.
    Step 2 - If so, place an asterisk (SCRIPS) or "X" (ISRP FOREIGN) along side the amount and , if needed, edit the entry to the correct line.
    Step 3 - If the entry is correct, but should not have parenthesis or brackets , delete the incorrect editing.
    The line 9 entry is equal to line 8 and line 10, and is clearly a misplaced entry, Place an asterisk (SCRIPS) to or "X" (ISRP FOREIGN) next to the entry. See Figure 3.11.13-39, shows the amount for Total Taxes erroneously entered on line 9.
    Line 9 shows the correct entry, but the amount is larger than the entry on line 8, Total Taxes, Step 1 - Asterisk (SCRIPS) or "X" (ISRP FOREIGN) the amount on line 9. To the left, edit the same amount appearing on line 8, Total Taxes.
    Step 2 - Determine the difference between the amount on line 8, Total Taxes and the taxpayer's entry on line 9, AEIC.
    Step 3 - Add the calculated amount to the taxpayer's entry on line 11, Total deposits for the quarter. Edit the new amount to line 11. See figure 3.11.13-40.
    Line 8 is larger than line 10, and line 9 is blank, Compute line 9 by subtracting line 10 from line 8. Enter the total on line 9.
    The Line 9 entry is negative and has been added to Line 8 (Line 10 is larger the Line 8), Compute Lines 12 or 13 which ever is applicable, by using the absolute value (Do not use the minus value) of Line 9 added to Line 11 and subtracted from Line 8.

    Caution:

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

    Figure 3.11.13-39

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    Delete Line 9 When Equal to Total Taxes on Line 8

    Figure 3.11.13-40

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    Line 9 Entry is Larger Than Total Taxes on Line 8

3.11.13.14.12  (01-01-2008)
Line 10, Total taxes after adjustment for advance EIC (Domestic Only)

  1. Line 10, Total taxes after adjustment for advance EIC, should be the total of line 8, Total taxes after adjustments, less line 9, Advance earned income credit.

  2. Though line 10 is not a T-line, it may be necessary to compute this line:

    IF THEN
    Line 10 is blank, Compute only if needed to verify or compute line(s) 11, 12 or 13.
    Line 10 contains an entry, Accept the taxpayer's entry. Use the taxpayer's entry, if needed, to verify or compute line 11, 12 or 13.

3.11.13.14.13  (01-01-2008)
Line 11, Total Deposits for This Quarter, (Rev 2005 and subsequent)
Line 12, Balance Due (Rev 2005 and subsequent)
Line 13, Overpayment, (Rev 2005 and subsequent)

  1. Process lines 11 through 13 as follows:

    IF AND THEN
    Note: All line references refer to Form 941, Rev 2005.
    Line 11 is blank, zero, dash or "none" Line 10 is different from the entry on line 12 or 13, Compute line 11 using lines 10 and 12 (or 13). See Figure 3.11.13-41a.
    Lines 12 and 13 are blank, zero, dash, or none, Enter the amount from line 10 on line 12. See Figure 3.11.13-41b.
    Line 11 is less than line 10, Line 12 is blank, Compute line 12.
    You can determine that line 12 has an incorrect entry (other than zero, none, dash, etc.) Line 11 is equal to or less than line 10, Decrease the credit claimed on line 11 by the line 12 amount.
    Line 10 and 11 are the same, There is a different amount on line 12 or 13, Adjust line(s) 11, 12 and/or 13 if an obviously misplaced entry is involved and the change will not cause a math error. See Figure 3.11.13-42.
    Lines 10, 11, 12 are the same amount,   Delete line 11.

    Figure 3.11.13-41

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    Computing Line 11, 12 and/or 13

    Figure 3.11.13-42

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    Line 11 Equals Line 10 and Line 12 Has an Entry

  2. Delete line 11 also when any of the following conditions apply:

    1. When the amount of the remittance is able to be determined and is equal to line 10, or if no EIC is shown, the line 8 amount .

    2. Lines 11 and 12 are the same amount and the computation is incorrect. See Figure 3.11.13-43.

    Figure 3.11.13-43

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    Perfecting Line 11, Mis-placed Entry

  3. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    Figure 3.11.13-44

    This image has been removed because it contains Official Use Only.
    Please click here for the text description of the image.

    This image has been removed because it contains Official Use Only.

    IF AND THEN
    Note: All line references refer to Form 941, Rev 2005.
    There are no positive entries on line(s) 11, or 12, or 13,   Step 1 - Enter line 10 on line 12.
    Step 2 - If line 10 is blank, enter line 8. Also, if line 11 has an entry, figure the difference, and enter on line 12.
    There are entries on both lines 12 and 13,   Asterisk (SCRIPS) or "X" (ISRP FOREIGN) the incorrect entry. See Figure 3.11.13-45.
    The entry on line 12 belongs on line 13, The taxpayer indicates that he/she expects a refund by putting parenthesis around the amount on line 12, or by checking the "Refund" box or "Applied to Next Return" box below line 13, Asterisk (SCRIPS) or "X" (ISRP FOREIGN) line 12 to enter that amount on line 13. See Figure 3.11.13-46.

    Figure 3.11.13-45
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    Deleting Misplaced Entry on Line 12

    Figure 3.11.13-46
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    Editing Line 12 To Line 13

  4. "Balance Due" line 12 -

    IF THEN
    The amount on line 12 contains Failure-to-File (FF) or Failure-to-Pay (FP) penalty or interest, Step 1 - Asterisk (SCRIPS) or "X" (ISRP FOREIGN) the line 12 amount,
    Step 2 - Delete the FF or FP penalty and interest from the total.
    Step 3 - Edit the Balance Due to the left of the original entry. If a Federal Tax Deposit penalty (FD) was pre-computed, add the amount in the edited Balance Due.
    Step 4 - Edit the P/I code "1" in the right margin opposite Line 11 "Total Deposit" ,≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Show the FTD penalty amount in the right margin opposite the tax period box . ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    Step 5 - Edit a Received Date if one is not present.

    Figure 3.11.13-47
    This image has been removed because it contains Official Use Only.
    Please click here for the text description of the image.

    This image has been removed because it contains Official Use Only.

  5. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    Figure 3.11.13-48
    This image has been removed because it contains Official Use Only.
    Please click here for the text description of the image.

    This image has been removed because it contains Official Use Only.

3.11.13.14.14  (01-01-2008)
Line 14, State Deposit Code (Rev 2005 and subsequent)

  1. For processing procedures for the State Deposit Code box, See IRM 3.11.13.12.7 and See Exhibit 3.11.13-24

3.11.13.14.15  (01-01-2008)
Line 15, Monthly Summary of Federal Tax Liability, (Rev 2005 and subsequent) or Schedule B (ROFTL) - Schedule Indicator Code (SIC)

  1. Monthly schedule depositors complete line 15, Monthly Summary of Federal Tax Liability, to show their monthly tax liability. Semi-weekly schedule depositors complete Schedule B, Supplemental Record of Federal Tax Liability, to show their weekly and monthly tax liability. The Record of Federal Tax Liability (ROFTL) is comprised of either or both of the above.

  2. The Schedule Indicator Code (SIC) is used to notify the computer that the ROFTL is blank, incomplete, outside the tolerance or that a penalty should not be assessed. Edit the applicable SIC on the return in the right margin, at the end of "Part 1: Answer these questions for this quarter" line on Form 941, 941-PR and 941-SS (Rev 2005 and subsequent.

  3. When determining if a SIC code should be edited, and line 10 is blank, then:

    1. If line 9 is also blank, use the amount from line 8.

    2. If there is an amount on line 9, compute the amount for line 10.

  4. SICs 1, 2, or 3 are valid for Form 941 as follows:

    SCHEDULE INDICATOR CODE (SIC) CHART
    If more than one code is applicable, enter the codes in this order: 1, 3, 2.

    Reminder:

    The "Conditions" are for tax periods beginning 01-01-2001 and subsequent. (The line number references relate to the Form 941, Rev 2005 or subsequent.)

    SIC CODE CONDITIONS
    1 1. Line 10 ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ and the ROFTL is blank, or incomplete (i.e. Form 941, line 15 "Total" or Schedule B, "Total Liability for the Quarter" box )
    2. Line 10≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    3. If the return shows all zeros or is non-taxable.
    4. If a negative or minus (-) figure appears in the ROFTL (Form 941, line 15 "Total" box) or, on the Schedule B the negative or minus figure has been subtracted from any monthly total.NOTE: If the taxpayer completed both the ROFTL (line 15 "Total" box ) and the Schedule B, only edit SIC 1 if BOTH are not to be entered by ISRP.

    5. Return prepared under IRC 6020(b).
    6. If line 10 ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , and there≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ between line 10 and the total liability for the quarter, (i.e. Form 941, line 15 total box or Schedule B, "Total Liability for the Quarter" box). If either Form 941, line 15 Total or Schedule B, "Total Liability for the Quarter" is within the dollar tolerance, do not edit SIC 1.

    Note: If Form 941, line 15 "Total" or Schedule B, "Total Liability for the Quarter" is less than ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ do not edit SIC 1.
    2 SIC 2 will no longer be edited, if the taxpayer requests abatement for Failing to Pay Timely when the return is submitted. Send 1382C letter, which will inform the taxpayer of the proper procedure to follow to request abatement, if, and when a penalty is assessed.
    In the cases of disaster, the examiners will be provided with coding procedures.
    3 "Church FICA Issue" or "Church Social Security Issue" notated. For procedures on processing returns indicating "Church FICA Issue" or "Church Social Security Issue" See IRM 3.11.13.15.6

3.11.13.14.16  (01-01-2008)
Perfecting Line 15, (Rev 2005 and subsequent) and Schedule B (ROFTL)

  1. Edit the SIC Code on the return. If more than one code should be entered, enter the code in the priority order: 1, 3.

  2. Edit the money fields if no SIC is being edited.

    1. All transcription lines must be edited in dollars and cents.

    2. If there are no entries in the ROFTL liability fields, review the return and attachments. If you are unable to edit the ROFTL liability field(s) with an entry and/or Schedule B is not attached, edit SIC 1.

  3. If an entry is a negative, or a minus (-) amount, process as indicated:

    1. If only the ROFTL is completed and includes an entry that is a negative, or a minus amount, edit SIC 1.

    2. If only the Schedule B is completed and includes an entry that is a negative, or a minus amount edit a SIC 1.

  4. If the taxpayer completes the "Tax Liability Total" box on line 15 but the "Month 1" , "Month 2" , and "Month 3" boxes are all blank, the ROFTL is incomplete. If Schedule B is also not complete, edit SIC 1.

  5. If there are multiple deposit amounts on the same line, then asterisk (SCRIPS) or "X" (ISRP FOREIGN) the entry. Add the amounts and enter the resulting amount to the left of the asterisk or X.

  6. The taxpayer indicates they are a semi-weekly depositor, (i.e. checks the semi-weekly box above line 16 and line 10 ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ (use line 8 if line 10 is blank), but a completed Schedule B (or facsimile) is not attached to determine the correct amounts; correspond with the taxpayer to determine their intent. If no reply, edit SIC 1.

  7. If the taxpayer does not complete the ROFTL and shows only monthly totals on Schedule B, edit the monthly totals from Schedule B to the applicable monthly line(s) of the ROFTL, i.e. line 15.

  8. If the taxpayer completes more than one Schedule B, then combine the Daily Tax Liabilities from each Schedule B to one Schedule B and line through the Schedules B that are not to be entered.

  9. If Schedule B shows daily entries, and the taxpayer enters the total for the third month in the "Total Liability for the Quarter" box rather than the third monthly box, then edit the amount to the third monthly box. Line through the taxpayer's entry in the "Total Liability for the Quarter" box. Also, enter an asterisk (SCRIPS) or "X" (ISRP FOREIGN) to the closest left position to the taxpayer's money amount entry. Verify the total for the quarter.

  10. If the taxpayer inadvertently places an entry on Schedule B in an incorrect last day of the month, (e.g. The 29th of February, except in a leap year, or the 31st day of April, June, September or November), asterisk (SCRIPS) or "X" (ISRP FOREIGN) the entry and enter the amount to the last valid day for that month. If an entry already exists in that field, add the amounts together.

3.11.13.14.17  (01-01-2008)
Line 16, "Final Return" check box, and "Final date you paid wages" , Line 17, Seasonal Employer check box

  1. If the taxpayer has checked the "If your business has closed and you do not have to file returns in the future" box, edit a CCC "F" .

  2. If the taxpayer indicates in another location on the return, or in an attachment, that the return being filed is their final return with a notation such as (but not limited to) Final, Out of Business, No Longer Have Employees, Deceased, Liquidation, Dissolved, etc. then the "Final Return" box on line 16 should be checked and a date when final wages were paid should have been provided.

    Note:

    Do not edit CCC "F" , if the date of Final Wages is after the last day of the return's tax period.

  3. If the taxpayer did not check the box, the Code and Edit examiner should check the box and edit a CCC "F" in the designated location.

  4. If the taxpayer did not provide a date when final wages were paid, and the return shows tax data, then correspond for the Date of Final Wages. Otherwise, if the return shows no tax data, DO NOT correspond for the Date of Final Wages.

  5. If the Seasonal Employer box is checked, edit CCC "T" in the designated location on the return.

  6. If the taxpayer indicates they are a seasonal employer in another location on the return or on an attachment, edit CCC "T" in the designated location and check the box on Line 17, if not already checked.

3.11.13.14.18  (01-01-2008)
♦Paid Preparer SSN or PTIN♦

  1. The Preparer's SSN or PTIN is located at the bottom-right corner on page 2 of the return.

  2. The Preparer's SSN must be a nine-digit numeric number. The SSN cannot be all zeroes or all nines.

  3. A Preparer Tax Identification Number (PTIN) is a valid entry in the Preparer's Social Security Number area at the bottom of Form 941 (Rev 2005). The PTIN is a nine-digit number beginning with the alpha "P" (e.g., PXXXXXXXX).

  4. Asterisk (SCRIPS) or "X" (ISRP FOREIGN) the Preparer's SSN or PTIN if it is invalid.

3.11.13.14.19  (01-01-2008)
♦Paid Preparer EIN♦

  1. The Preparer's EIN is located on page 2 of the Form 941 (Rev 2005) in the bottom-right corner opposite the address line.

  2. The Preparer's EIN must be a nine-digit numeric number. The EIN cannot be all zeroes or all nines.

  3. "X" (SCRIPS Form 941 asterisk) the Preparer's EIN if it is invalid. No other editing is required.

3.11.13.14.20  (01-01-2008)
♦Paid Preparer Telephone Number♦

  1. The Paid Preparer's Phone Number is located on page 2 of Form 941 at the bottom in the center.

  2. No action is required on amended returns.

  3. If a complete Paid Preparer Telephone Number is located on the Paid Preparer's Phone Number line, no editing of this line is necessary.

  4. If the Paid Preparer's Phone Number is incomplete, illegible, or less than 10-digits, review the return and all attachments.

    Note:

    If more than 10 digits are present, continue processing the return. Only the first 10 digits will be transcribed (captured).

    IF THEN
    A complete Paid Preparer's Telephone Number is on the Preparer Phone Number line, Continue processing the return. No editing of this line is necessary.
    A complete Paid Preparer's Phone Number is located, Edit to the"Phone No." line.
    A complete Paid Preparer's Telephone Number is not located or the number is illegible, Asterisk (SCRIPS) or "X" (ISRP FOREIGN) the incomplete or illegible phone number. See Figure 3.11.13-49.
    The return is for a tax period prior to 2001 Circle the telephone number.

    Figure 3.11.13-49

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    Form 941 Page 2 Paid Preparer Information - Incomplete and Complete Phone Number.

3.11.13.14.21  (01-01-2008)
Form 941 TeleFile Conversion

  1. Form 941 TeleFile received in Document Perfection should be processed according to current Form 941 revision processing procedures:

    1. Renumber transcription lines.

    2. Always edit the tax period in YYMM format to the left of the OMB No. XXX_XXX form text.

    3. Correspond for signature if not present any where on the return, edit Actions Code 225.


    See Form 941 TeleFile Conversion Exhibits. Exhibit 3.11.13-5 Form 941 TeleFile 2003 revision. Exhibit 3.11.13-6 Form 941 TeleFile 2005 revision

3.11.13.15  (01-01-2008)
Form 941, Employer's Quarterly Federal Tax Return, Form 941-PR, Planilla Para La Declaracin Federal Trimestral Del Patrono and Form 941-SS, Employer's Quarterly Federal Tax Return (Rev. 2004) Return - Conversion Format and Line Editing

  1. The 2004 revision (and prior) of Form 941 received in Document Perfection should be processed according to current Form 941 revision processing procedures.

  2. The table below is a line item conversion table that compares Form 941 revision 2004 with the 2005 and subsequent revision line items. See Exhibit 3.11.13-4 Road Map - Form 941 Revision 2004 Conversion,

    Line Item Description Form 941, Revision 2004 Form 941, Revision 2005 and subsequent
    State deposit boxes Left of entity Line 14
    Final return check box and date of final wages paid Question A Line 16
    Seasonal Employer check box Question B Line 17
    Wages, Tips and Compensation Line 2 Line 2
    Income Tax Withholding Line 3 Line 3
    Income Tax Withholding Adjustments Line 4 Line 7d
    Taxable Social Security wages Line 6a Line 5a Column 1
    Taxable Social Security tips Line 6c Line 5b Column 1
    Taxable Medicare wages and tips Line 7a Line 5c Column 1
    Total Social Security and Medicare taxes Line 8 Line 5d
    Wages are not subject to social security and/or Medicare tax Line 8 check box Line 4
    Adjustment of Social Security and Medicare taxes Line 9 Line 7e
    Total Taxes Line 11 Line 8
    Advance Earned Income Credit (AEIC) Line 12 Line 9
    Total deposits for quarter Line 14 Line 11
    Balance due Line 15 Line 12
    Overpayment Line 16 Line 13
    Monthly Summary of Federal Tax Liability First Month Liability Line 17(a) Line 15-1
    Monthly Summary of Federal Tax Liability Second Month Liability Line 17(b) Line 15-2
    Monthly Summary of Federal Tax Liability Third Month Liability Line 17(c) Line 15-3
    Third Party designee Above Signature Part 4
    Signature Bottom of form Part 5
    Paid Preparer information Not available Part 6

  3. Edit CCC "P" to all Form 941 Revision 2004.

    Exception:

    Do not edit CCC P to Form 941 Revision 2004:
    • Form 941(CG)
    • Form 941 final returns
    • Prior year Tax Periods

3.11.13.16  (01-01-2008)
Form 941C, Supporting Statement To Correct Information - General

  1. Some Income Tax Withholding and Social Security/Medicare Tax Adjustments (for non-barred periods) to Employment Tax Returns may need supporting documentation attached, such as Form 941C or Supporting Statement to Correct Information. Form 941C is normally used by the taxpayer to correct information reported on a previously filed return. If a supporting statement or a Form 941C is not attached when required, edit CCC "C" on the return, unless otherwise directed.

  2. Tax adjustments which must have a supporting statement are:

    1. Any Social Security/Medicare tax decrease ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    2. Any income tax withholding decrease ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ in the same calendar year as the processing year.

    3. Any income tax withholding decrease in a prior processing year must infer or state that it is due to an administrative error.

  3. If Form 941C is attached to the return, ensure that the EIN numbers agree. If Form 941C does not have an EIN number, copy the EIN number from the return onto Form 941C.

  4. A Form 941C or supporting statement must contain the requirements found in the following chart to be complete.

    Requirements Procedures
    An explanation of the error Accept any increase adjustment unless the period is barred by statute.
    If it is a decrease adjustment and is based solely on information that requires technical knowledge of the tax law, e.g. Sec. 501(c)(3) of the Internal Revenue Code, prepare Form 3465.
    The amount chargeable to
    each period    		 N/A
    The employer-employee settlement agreement Over Collection of Income Tax Withholding and Social Security/Medicare Tax
    Current Year - the employer must furnish a statement explaining the employee has been repaid or the withholding tax on the employee's Form W-2 has been increased.

    Note:

    If the employer elects to increase the employee's withholding tax, ensure that the Income Tax Withholding and Social Security/Medicare tax adjustment shows a total employer/employee tax over collected amount and is equal to the employee's portion of the over collected Income Tax Withholding and Social Security/Medicare tax and is shown as an increase on Form 941 line 7e (Rev 2005 and subsequent).


    Prior Year - the employer must get a written statement from the employee that he/she has not and will not claim a refund on his/her Form 1040 for the over collection.
    Signature A signature and certification is required when a ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ in tax is shown. Correspond if the signature and certification is missing. If the taxpayer does not reply to a request for a signature and certification, and the adjustment is a ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ disallow the adjustment on the return. Allow any adjustment ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ continue to process.

    Note:

    The Certification may be a check box in Part I and/or a statement in Part V.

  5. If a supporting statement is submitted instead of a Form 941C, prepare a Form 941C from the information given. Form 941C is necessary to insure the proper handling of the adjustment information. If the supporting statement does not contain sufficient information to complete a Form 941C or fails to meet all the requirements in (4) above, edit CCC "C" , to the return. See Figure 3.11.13-50.

    Figure 3.11.13-50

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    Form 941C Completed From Taxpayer Correspondence Attached to Form 941

3.11.13.16.1  (01-01-2008)
Form 941C Entries–Part(s) I through V

  1. Examine the Form 941C to ensure that all necessary information is present. If any of the needed data is missing, perfect the document from attachments. The following information is needed on all statements or Forms 941C. See Exhibit 3.11.13-15

    1. The Entity portion:
      a - Name
      b - Employer identification Number (EIN)
      c - Type of return being adjusted
      d - Tax period in which the Form 941C is attached
      e - Date the error was discovered (If blank use the last day of the quarter of the return being filed for)

    2. Part I - Signature and Certification:
      a - Certification
      b - Signature
      c - Date

    3. Part II - Income Tax Withholding (Including Backup Withholding) Adjustment:
      a - Column (a) - the period the return corrects. If there is room for misinterpretation, rewrite the tax period in MMDDYY format. For example, 033106,
      b - Column (b) - Withheld Income Tax amount previously reported,
      c - Column (c) - correct Withheld Income Tax for Period,
      d - Column (d) - Withheld income Tax adjustment amount,
      e - Line 5 -Total of column (d). If more than one page, a total must be shown for each page.

    4. Part III - Social Security Tax Adjustment:
      a - Column (a) - the period the return corrects. If there is room for misinterpretation, rewrite the tax period in MMDDYY format. For example, 033106,
      b - Column (b) - wages previously reported,
      c - Column (c) - correct taxable wages for the period,
      d - Column (d) - tips previously reported,
      e - Column (e) - correct taxable tips for the period,
      f - Column (f) - Social Security Tax adjustment,
      g - Line 5 - Totals for Columns (b) through (f). If more than one page, each page must show totals for Columns (b) through (f),
      h - Line 6 - Net Social Security tax adjustment totals for Part III, column (f) (first page only),
      i - Line 7 - Net wage adjustment difference between totals of Part III, 5(b) and 5(c). Enter amount in parentheses, if needed
      j - Line 8 - Net tip adjustment difference between totals of Part III, 5(d) and 5(e). Enter amount in parentheses, if needed.

    5. Part IV - Medicare Tax Adjustment:
      a - Column (a) - the period the return corrects. If there is room for misinterpretation, rewrite the tax period in MMDDYYYY format. For example, 03312005,
      b - Column (b) - wages and tips previously reported,
      c - Column (c) - correct taxable wages,
      d - Column (d) - Medicare tax adjustment,
      e - Line 5 - Totals for Columns (b) through (d). If more than one page, each page must show totals for Columns (b) through (d),
      f - Line 6 - Net Medicare tax adjustment totals for Part IV, columns (d),
      g - Line 7 - Net Wage and Tip adjustment difference between totals for all pages.

    6. Part V - Explanation of Adjustments

3.11.13.16.2  (01-01-2008)
Form 941C Verification of Return Adjustment Line Procedures

  1. Verify Form 941, 941-PR and 941-SS (Rev. 2005 and subsequent) as follows:

    1. Line 7d and 7f (Domestic Only) against Form 941C, Part II.

    2. Line 7e and 7g against Form 941C, Parts III & IV.

  2. Verify Form 943 and 943-PR as follows:

    1. Line 8 against Form 941C, Parts II (Domestic Only), III and IV.

  3. Verify Form 944, 944-PR, 944(SP) and 944-SS as follows:

    1. Line 6b and 6d (Domestic Only) against Form 941C, Part II.

    2. Line 6c and 6e against Form 941C, Parts III & IV.

  4. Verify Form 945 as follows:

    1. Line 3 against Form 941C, Parts II.

  5. Verify Form 941C by comparing Form 941 and 941C as follows See Figure 3.11.13-51:

    1. Compare entry on Form 941C Part II, Line 5 Column (D) with entry on Form 941, Line 7d (Revision 2005 and Subsequent).

    2. Compute and compare entries on Form 941C Part III , Line 6 and Part IV, Line 6 with entry on Form 941 Line 7e (Revision 2005 and subsequent).

    Note:

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ "≡ ≡ "

    Figure 3.11.13-51
    This image is too large to be displayed in the current screen. Please click the link to view the image.

    Verification of Form 941C with Form 941

3.11.13.16.2.1  (01-01-2008)
Part I Form 941C, Signature and Certification

  1. Verify Signature and Certification as follows:

    1. Certification - The taxpayer is instructed to check a box(s) to indicate the type of correction they wishes to make. The taxpayer may provide additional information in Part V.

    2. Signature - The signature must be shown in the "Signature and Certification" field in Part I. If the amount of the adjustment is a ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ a box must be checked or an explanation given indicating there was no over collection.

      Note:

      If correspondence is needed to secure a missing signature for a Form 941C, at the same time, secure any additional information, (for example, to resolve the reporting of a negative adjustment taken, or when the Form 941C will not verify). See IRM 3.11.13.5 for "Correspondence Action" procedures.

    3. Date - The date also in Part I cannot be prior to the period being corrected.

3.11.13.16.2.2  (01-01-2008)
Part II Form 941C, Income Tax Withholding (including Backup Withholding) Adjustment

  1. Form 941 Only - An adjustment for a preceding quarter(s) of the same tax year - A decrease adjustment to withholding tax to correct errors made in the preceding quarter of the same tax year (e.g. An adjustment being shown on a second, third, or fourth quarter return for an error made on the first quarter Form 941 of the current processing year) as the Form 941 being filed does not require an administrative error qualification.

  2. An adjustment to a prior year(s) - A decrease adjustment of withholding tax to correct errors made in a prior year(s) must infer or state (on the Form 941C, 941C facsimile, or attached correspondence) that the error being correc