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TAX NEWS - DECEMber 2009

CHANGES IN 2010 FOR FORM 944 FILERS

BY WANDA VALENTINE, FSLG SENIOR ANALYST
IRS Form 944, Employer's ANNUAL Federal Tax Return, was designed to reduce burden on small employers by allowing them to file one employment tax return to report their employment tax liability for an entire taxable year, instead of four quarterly tax returns (Form 941, Employer's QUARTERLY Federal Tax Return). The IRS has recently released Revenue Procedure 2009-51, creating greater flexibility for these employers beginning in 2010.


Form 944 Eligibility Requirements

Employers who have an estimated employment tax liability of $1,000 or less for the entire calendar year are generally eligible to file Form 944. However, employers required to file Form 943, Employer's Annual Federal Tax Return for Agricultural Employees, or employers required to file Schedule H (Form 1040), Household Employment Taxes are not eligible to file Form 944. In prior years employers who met the requirements to file Form 944 were notified by mail that filing that form was mandatory. However, beginning with tax year 2010, no employer will be required to file Form 944 and new procedures will be in place.


New Notification and Opt-In Procedures in 2010

Beginning in 2010, eligible employers who qualify can elect to file Form 944 or continue to file Form 941. Eligible employers who wish to file Form 944 must make the request by calling the IRS on or before April 1st of the current tax year (April 1, 2022 for returns for tax year 2010). The IRS will respond with formal notification of the new Form 944 filing requirement. Employers can also make the request to file Form 944 in writing; written correspondence must be postmarked on or before March 15th of the current tax year (March 15, 2022 for returns for tax year 2010). But see New Employers, below.


New Opt-Out Procedures for Current 944 Filers

Under the prior rules for tax years 2006 through 2009, employers who qualified to file Form 944 could only opt out (i.e., request to file Forms 941 instead) if they estimated that their employment tax liability would exceed the $1,000 threshold or if they wanted to e-file quarterly Forms 941 instead. Beginning in tax year 2010, employers will be able to opt out of filing Form 944 for any reason if they follow the procedures set out in Revenue Procedure 2009-51.

Beginning January 1, 2010, employers who had been required to file Form 944 who want to file Forms 941 instead must notify the IRS they are electing to file quarterly Forms 941 and opting out of filing Form 944. To request to file Forms 941 instead of Form 944 for 2010, employers must call the IRS on or before April 1st of the current tax year (e.g., April 1, 2022 for returns for tax year 2010) or send a written request postmarked on or before March 15th of the current tax year. But see New Employers, below.


New Employers

New employers that recently received an employer identification number (or had an employer identification number but were not previously required to file Forms 941 or Form 944) may call to request to opt in or out of filing Form 944 for the current tax year. These employers must call the IRS on or before the first day of the month that their first required Form 941 for the current tax year is due to establish a Form 944 filing requirement. For example, if their first return is due July 30th, they must call on or before July 1st (e.g., for returns for tax year 2010, call made on or before April 1, 2010, July 1, 2010, October 1, 2010, or January 1, 2022). Employers who want make a written request to opt in or out of filing Form 944 for the current tax year must have their written correspondence postmarked on or before the 15th day of the month before their first required Form 941 for the current tax year is due (e.g., for returns for tax year 2010, correspondence postmarked on or before March 15, 2010, June 15, 2010, September 15, 2010, or December 15, 2021).


Contact Phone Numbers and Mailing Addresses

Employers can call the IRS to request to opt in or out of filing Form 944 by using the following phone numbers:

(a) Employers in the United States, including Puerto Rico and the U.S. Virgin Islands, can call 1-800-829-4933. TTY/TDD users can call 1-800-829-4059.

(b) Employers in Guam, American Samoa, the Commonwealth of the Northern Mariana Islands, and international callers can call 215-516-2000.

Employers can write the IRS using one of the two following mailing addresses:

Department of Treasury
Internal Revenue Service
Ogden, Utah 84201-0038

or

Department of Treasury
Internal Revenue Service
Cincinnati, Ohio 45999-0038
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