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85 Cards in this Set
- Front
- Back
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How does an employer obtain an Employer Identification Number (EIN)? |
By completing Form SS-4 and mailing or faxing it. In addition, employers who are not federal, state or local government agencies, real estate investment conduits or an employer with a foreign address can apply online. Only foreign employers may apply over the phone.
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How long will it take to get an EIN if applying via fax?
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Within 4 business days.
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How long will it take to get an EIN if applying via mail?
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About 4 weeks.
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When should an employer apply for an EIN?
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Ideally, prior to starting to pay employees, but no later than 7 days after the employer first pay wages.
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What is a look back period for taxes associated with Form 941?
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Monthly/semi-weekly depositing determinations is based on a look back period. If tax liability is $50,000 or less then the employer is a monthly depositor. If tax liability is over $50,000 then the employer is a semi-weekly depositor. The look back period starts July 1 of the second previous year and ends June 30 of the previous year (Example: 2015 look back period is 7/1/13-6/30/14).
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Is a 941x taken into account when considering the look back period?
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Only in the month it was filed (Example: a 941x filed in April of 2015 for Q1 2014 would not be part of the 2015 look back period. Instead, it would be part of the 2017 look back period).
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What special rules apply to employers who file Form 944?
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The look back period will be the second preceding calendar year (Example: 2014 look back is 1/1/12-12/31/12). This applies if the employer has filed a Form 944 in either of the two preceding calendar years.
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What is Form 945?
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Annual Return of Withheld Federal Income Tax. It reports withholding on non payroll payments.
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What special rule applies to railroad and farm employers when it comes to the look back period?
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They are a look back period of the second preceding calendar year (Example: 2014 look back is 1/1/12-12/31/12). If the employer files both 941 & 943 forms, they must abide by both rules regarding look back period and depositing for 941 & 943.
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When are taxes due for a monthly depositor?
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The 15th of the month following the deduction.
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When are taxes due for semi-weekly depositors?
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Wages paid Wednesday - Friday are due the following Wednesday. Wages paid Saturday - Tuesday are due the following Friday.
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What is the one-day depositing rule?
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If accumulated tax liability exceeds $100,000, then it is due the following day.
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What happens when a semi-weekly depositor has a period that bridges two quarters?
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The employer has two separate deposit obligations and must make two separate deposits.
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What is the quarterly "de minimis" deposit rule?
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Employers with accumulated tax liability of less than $2500 for any quarter, they may pay the liability with their 941. This also applies if the liability is less than $2500 in the preceding quarter.
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What is the exception for Form 944 depositors?
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Employers with annual employment tax liability of $1,000 or less may pay with a timely filed Form 944.
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How is "legal" holiday defined when it comes to tax depositing rules?
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It is limited to legal holidays in DC, state holidays do not count.
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What is the "short-fall" rule?
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Employers are not penalized for depositing a small amount less than the entire amount of their obligation. The short fall must be no more than either $100 or 2% of the entire amount due (whichever figure is larger).
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How are deposits made?
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Generally, via EFTPS. New employers are required to use EFTPS starting in 2011. There may still be some businesses using an FTD Coupon, however it is uncommon.
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How does an employer enroll in EFTPS?
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By submitting Form 9779 (Business Enrollment form for EFTPS) or online at eftps.gov.
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What happens when an employer enrolls in EFTPS?
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Within 15 business days, they will receive Form 9787 (Business Confirmation/Update Form) and an EFTPS instructional booklet. The PIN will be mailed separately.
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What are the grounds for penalty abatement?
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Abatement is only granted in cases where there is a bank failure to initiate the deposit. New employers do not have leeway when it comes to depositing tax liability.
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What are the penalties for failure to deposit on time?
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2% of undeposited amount if paid within 5 days. 5% of the undeposited amount if paid within 6-15 days. 10% of undeposited amount if paid more than 15 days after due. The 10% penalty applies to amounts paid to the IRS within 10 days after receiving their first IRS delinquency notice. 15% of undeposited amount if the employer receives a delinquency notice and does not pay within ten days, or if they receive a demand for immediate payment and do not pay on the same day.
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Can an employer blame service provider for failure to deposit?
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No. It does not matter if the employer delegated employment tax responsibility to the agent, contracts do not relieve employer of obligations.
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Can financial difficulty be made as an excuse to fail to deposit taxes?
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Possibly, but federal courts have ruled both ways on this kind of issue.
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How long does an employer have to request abatement for penalties due to underpayment of taxes?
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90 days from the date of the penalty notice.
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What is the averaged failure to deposit penalty?
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This kind of penalty is assessed on a monthly depositor who completed sections of their 941 incorrectly or they failed to attach Schedule B. It is calculated by taking the employer's total tax liability shown on the 941 and distributing it equally throughout the tax period.
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Who must file Form 941?
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Generally it is filed by any employer who withholds taxes from employee wages. The only exemptions apply to seasonal employers who are not employing anyone for the quarter, businesses only withholding on non-payroll items, employers that only report withholding on domestic workers, employers who report only in a US territory, an agricultural employer with only agricultural employees and employers who file Form 944.
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What is Schedule D of the 941?
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Report of Discrepancies Caused by Acquisition, Statutory Mergers or Consolidations. It is filed when an employer acquired another company and has discrepancies between the W3 and Form 941s.
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What is the automatic extension for filing Form 941?
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If there are timely deposits for all tax liability, the employer receives an automatic 10 day extension on the due date. No further extensions are typically granted.
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When is Form 941 due?
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The last day of the month following the close of the calendar quarter.
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What is Schedule B of the 941?
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Report of Tax Liability for Semi-weekly Schedule Depositors. It records the tax liability only, not the taxes paid. The totals must match Line 10 of the 941.
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When would Schedule B be filed with Form 941x?
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If the employer had a tax increase or if the employer were to be assessed a failure to deposit penalty.
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What is Schedule R of the 941?
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Allocation Schedule for Aggregate 941 filers. The agent reports: (a) Client EIN, (b) wages, tips and other compensation, (c) federal tax withheld, (d) total Social Security and Medicare taxes, (e) §3121(g) Notice & Demand Tax Due, (f) Total taxes after adjusment and (g) total deposits.
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What is Form 941 SS?
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Employers Quarterly Federal Tax Return - it is used by employers who operate in: American Samoa, Guam, Northern Mariana Islands and the Virgin Islands.
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What is Form 943?
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Employer's Annual Federal Tax Return for Agricultural Employers. It's basically the same as a 941, but for agricultural employers and it's filed annually instead of quarterly.
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What is Form 943 A?
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Agricultural Employer's Record of Federal Tax Liability. It's filed with the 943 when tax liability exceeds $100,000 or if the employer is a semi-weekly depositor.
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What is Form 941 PR?
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Employers Quarterly Federal Tax Return - it is used by employers operating in Puerto Rico.
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What special requirements must be met to qualify and employee for filing Form 944 instead of Form 941?
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For small employers, the form is used by those with employment tax liability of $1,000 or less. Employers who expect to have less than $1,000 in liability can request to file Form 944 instead of Form 941 by April 1 (for callers, those requesting in writing must do so by March 15).
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When is Form 944 due?
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By the last day of the first month after the year reported on the form (January 31). Employers with timely tax deposits are entitled to a ten day extension, similar to the extension granted to 941 filers.
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How are adjustments and corrections to Form 941 accomplished?
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By filing Form 941x.
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When is Form 941x due?
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It depends on when the error is discovered. The 941x is due the last day of the month following the end of the calendar quarter in which the error was discovered (Example: For an error uncovered in March, the 941x would be due April 30).
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What is the period of limitations for 941x?
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Generally, tax corrections to the 941 must be within 3 years of filing the original 941 (or two years from the date the tax was reported on the 941, whichever is later).
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What are the penalties for late filing of employment tax returns?
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It is an "addition to tax" penalty: 5% of the amount of tax required to be shown on the return (reduced by timely deposits and credits) for each month or each fraction of a month the return is late (25% maximum). If the late filing is fraudulent, penalties increase to 15% per month with a maximum of 75% of unpaid tax.
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What are the penalties for failure to pay employment taxes (as pertaining to Form 941x)?
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It is an "addition to tax" penalty: 5% of the amount of tax required to be shown on the return (reduced by timely deposits and credits) for each month or each fraction of a month the return is late (25% maximum). An additional 0.5% is assessed if the IRS has issued a notice & demand and it is not paid within 21 calendar days. It will increase to 1.0% each month 10 days after the employer receives an intent to levy or the day after immediate payment is demanded with intent to levy.
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What criminal penalties may apply when employment taxes are not paid and returns are not filed?
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Willful failure: $25,000 ($100,000 for corporations) and/or imprisonment for up to 1 year. Delivery of a known fraudulent return: $10,000 ($50,000 for corporations) and/or imprisonment for up to 1 year. Attempt to evade: $100,000 ($500,000 for corporations) and/or imprisonment for up to 5 years. For signing a documents knowing it to be untrue: $100,000 ($500,000 for corporations) and/or imprisonment for up to 3 years.
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What penalties exist for return preparers?
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First tier penalties are from $250-$1,000 (or 50% of income derived from form preparation). Second tier penalties are from $1,000-$5,000 (or 50% of income derived from form preparation).
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Who files Forms W2 after a merger or consolidation?
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The surviving corporation typically provides the W2, discrepancies being noted on the respective 941s filed by the absorbed company and surviving company (Schedule D).
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When is Copy A of Form W2 due to the SSA?
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On the last day of February following the year in which the form applies to.
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When are employee copies of the W2 due?
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They must be post-marked by January 31 of the year following the year the forms apply to.
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Can a terminated employee demand an early copy of their W2?
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Yes. If the request is made in writing, it must be furnished within 30 days (some states have a shorter length of time).
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Can Form W2 be provided electronically?
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Yes. The employee must provide active consent, however active consent is not required to store all W2s online.
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What accelerated due dates apply to employers going out of business?
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The final 941 is due by the end of the month following the close of the calendar quarter in which business ceased. W2s are due by the same date to the employees. Copy A is due to the SSA by the last day of the following month (not applicable to employers who file Form 944).
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What is Form 8809?
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Application for Extension of Time to File Information Returns. It is due by the original form due date to apply for an extension.
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What is Code "A" for Box 12 of the W2?
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Uncollected Social Security ot RRTA tax on tips.
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What is Code "B" for Box 12 of the W2?
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Uncollected Medicare tax on tips.
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What is Code "C" for Box 12 of the W2?
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Taxable Cost of group term life coverage over $50,000.
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What is Code "D" for Box 12 of the W2?
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Elective deferrals under a §401(k) cash or deferral arrangement.
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What is Code "E" for Box 12 of the W2?
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Elective deferrals under a §403(b) cash or deferral arrangement.
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What is Code "F" for Box 12 of the W2?
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Elective deferrals under a §408(k)(a) salary reduction SEP.
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What is Code "G" for Box 12 of the W2?
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Elective deferrals and employer contributions (including non-elective deferrals) to any government or non government §457(b) deferred compensation plan.
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What is Code "H" for Box 12 of the W2?
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Elective deferrals under a §501(c)(18)(D) tax-exempt organization plan.
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What is Code "K" for Box 12 of the W2?
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20% excise tax on excess golden parachute payments
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What is Code "L" for Box 12 of the W2?
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Substantiated employee business expense reimbursements.
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What is Code "M" for Box 12 of the W2?
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Uncollected Social Security ot RRTA tax on the taxable cost of group term life insurance over $50,000 (for former employees)
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What is Code "N" for Box 12 of the W2?
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Uncollected Medicare tax on the taxable cost of group term life insurance over $50,000 (for former employees)
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What is Code "P" for Box 12 of the W2?
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Excludable moving expenses paid directly to the employee.
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What is Code "Q" for Box 12 of the W2?
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Nontaxable combat pay.
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What is Code "R" for Box 12 of the W2?
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Employer contributions to an Archer MSA.
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What is Code "S" for Box 12 of the W2?
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Employee salary reduction contributions under a §408(p) SIMPLE.
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What is Code "T" for Box 12 of the W2?
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Adoption assistance benefits.
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What is Code "V" for Box 12 of the W2?
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Employer contributions to an HSA.
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What is Code "Y" for Box 12 of the W2?
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Deferrals under a §409A non qualified deferred compensation plan.
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What is Code "AA" for Box 12 of the W2?
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Designated Roth contributions under a §401(k) plan.
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What is Code "BB" for Box 12 of the W2?
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Designated Roth contributions under a §403(b) salary reduction agreement.
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What is Code "DD" for Box 12 of the W2?
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Cost of employer sponsored health coverage.
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What is Code "EE" for Box 12 of the W2?
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Designated Roth contributions under a §457(b) plan.
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What are the penalties for failure to file informational returns such as W2, W3, 1096 or 1099)?
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$30 per return if corrected within 30 days (max. $250,000). $60 per return if corrected in more than 30 days, but before August 1 (max. $500,000). $100 per return if not corrected by August 1 (max. $1,500,000).
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What is Form W3?
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Transmittal of Wage & Tax Statements. It is filed with the SSA along with Forms W2. It contains the totals of all amounts reported on the W2s.
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What format should the SSN be presented on the W2?
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xxx-xx-xxxx
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When should Form W2c be filed?
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Form W2c is completed when incorrect information was reported on Form W2. It is necessary for financial changes or for SSN changes, but not necessary if the only change is to an address or Box 12DD.
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What kinds of reconciliations should be performed before the year-end forms are filed?
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Reconcile 941 amounts to amounts to be reported on W2 & W3. Amounts should include federal taxable wages, federal tax withheld, Social Security & Medicare wages, Social Security & Medicare tax withheld, plus the additional wages subject to the additional Medicare tax and the tax withheld.
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Can Forms 1099-MISC be filed by magnetic media?
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No. They can be filed on paper (less than 250) or electronically only.
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What is Form 1099-R used for?
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Distribution of Pension, Annuities, Retirement or Profit-Sharing Plans. Any distributions are reported on this form. Special codes are used to indicate the type of distribution or rollover.
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What is the de minimis rule surrounding corrected informational returns and W2Cs?
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Employers are not penalized for timely filed returns up to August 1, up to the greater of 10 returns or 0.5% of the total number of returns filed in the year. Insignificant errors are not penalized.
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What types of errors are never considered insignificant?
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Errors in: SSN or TIN, the employee or payee last name or any monetary amounts. |
