What is the new Form 944?
Recently, the Internal Revenue Service has placed a focus on simplifying the administrative burden placed upon small business owners. In an effort to reduce the paperwork required by small business, the IRS plans to introduce the new Form 944 this year. It is available for use by those businesses with an annual employment tax liability of $1,000 or less. For those qualifying businesses, this form will replace the Form 941 (Employer’s Quarterly Federal Tax Return), and will be filed once a year.A small business would have a payroll tax liability of $1,000 or less if the business paid total wages of approximately $4,000 or less. The IRS estimates that nearly 950,000 small businesses will be able to file Form 944 instead of filing quarterly returns.
Form 944 Employer’s Annual Federal Tax Return will be used to report wages paid, tips reported, federal income tax withheld, employer’s share of social security and medicare taxes withheld and any advanced earned income credit payments. The first returns are scheduled due January 31, 2007.
As a result, the IRS in expecting the volume of paperwork to drop by almost 1 million returns thus, simplifying the taxpayer burden of paperwork for small business owners.
The official form will be released sometime in 2006. For more information on this new form or other forms required by the IRS, go to: http://www.irs.gov/businesses/small/article/0,,id=152104,00.html. The IRS also provides a basic overview of Form 944 in Publication 4515 (PDF, 2 pages).
The Treasury Department has also 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.
Diana Van Blaricom is a certified Professional in Human Resources (PHR).
