Payroll Tax Question 941 vs 944

[Safire]

If you did not respond to the letter stating 944 requirement, but go ahead and file a 941, they won't process it. My client got a letter stating that the 941 that I prepared would not be processed, to file the 944 at the proper time, but to continue making tax deposits if necessary.

[John of PA]

Makes Sense

If you did not respond to the letter stating 944 requirement, but go ahead and file a 941, they won't process it. My client got a letter stating that the 941 that I prepared would not be processed, to file the 944 at the proper time, but to continue making tax deposits if necessary.

Makes sense, prepare the 941, but don't send it; make the deposit, and plan on doing a 944 at the end of the year.

[sea-tax]

Good point BlackBart and Sea-Tax. Perhaps I'll file the 941's. Then in Jan, I'll hold off on sending in the 944 until IRS ask for it. If they don't ask for it, I'll assume they decided to not enforce the 944 filing, at least for 2006. Thanks,
PS: SeaTax, let me guess.....while your working you can look out your window and see the ocean. Not bad!!

Actually I can't see the ocean but I do see lake washington on almost a daily basis. In seattle it is the puget sound not the ocean which the city is located on. I will say this I am very fortunate to live in the area of the country which I do. It is GOD"S country so to speak and I would not trade it in for all the money in the world.

[dsi]

One of my payroll clients also received a notice advising them to file form 944 for the 2006 tax year. Of course, we had already prepared and filed the 1Q 941.

A subsequent letter from the IRS stated that since we did file a 941 for the 1Q06, that we essential had elected to continue to file 941's for 2006, and that we should wait until 2007 to start the 944 program.

[JG EA]

Interesting

...A subsequent letter from the IRS stated that since we did file a 941 for the 1Q06, that we essential had elected to continue to file 941's for 2006, and that we should wait until 2007 to start the 944 program.

I guess it depends on who processes the forms. So, maybe I'll continue the 3Q 941 after all, and if they send a 944, skip the 4Q and send in the 944.

[oceanlovin'ea]

IRS Forum

I just attended the IRS forum in Atlanta. In the session on employment taxes, the lady from IRS said if you got the letter that you were picked for the 944, you should not send in the 941's. Make your deposits as you normally would.

A couple of my clients got the letter about filing the 941 when you were picked for the 944. The letter says they won't process the 941. So even if we send them in during the year, they aren't going to process them. They will probably sit UNDER someone's desk and gather dust. At the end of the year, file the 944.

Anyone else go to an IRS forum? We had some good sessions, I thought. Seminar rooms were nice and large. Only a couple of times the rooms got totally full. But people staying at the resort complained about how far the rooms were from the convention center.

Linda F

[Unregistered]

Linda where you at Orlando or Atlanta? Orlando just finished today.

[oceanlovin'ea]

Orlando

I was in Orlando. That is just about 40 minutes from where I live. Very convenient this year.

Linda F

[S T]

Update on 941/944

Following email received from CSEA

CSEA has received multiple contacts from Members regarding IRS Form 941/944 issues. Following is the guidance the IRS provided to the Society.
Issue: Former Form 941 filers have appeared to erroneously been switched over to Form 944 filing requirements (mft 01 to 14) pursuant to the Service's conversion initiative in early 2006. All Form 941 filers who were switched were purportedly issued Notice 01345 in February 2006 explaining that they could opt out pursuant to notification by April 1, 2006. If there was no opt out and a Form 941 was filed for the first quarter, the return went unpostable, all FTDs were transferred from mft 01 to mft 14 (944), and L4086(c) was issued to the taxpayer instructing to file Form 944, not Form 941. There have been instances of some taxpayers who do not qualify for Form 944 for 2006 being placed into this filing requirement, where taxpayers also claim that they did not receive Notice 01345.

Resolution: There are 2 ways to resolve this issue.
First, the taxpayer can call 800-829-0115 and explain the problem to a customer service representative. According to IRM 21.7.2.4.14.1.1 (7/29/06) (SERP Alert 06749), if the taxpayer states that the option was exercised via phone before April 2ndand the request was not processed, the taxpayer's word will generally be accepted. If so, the assistor will complete Form 4442 and route it to the Campus Accounts Management function with the DLN of the unposted/rejected TC 150 of the previously filed Form 941 on the Form 4442. If a decision is made to accept, the filing requirement will be changed to Form 941 (mft 01), a L3007(c) will be sent to the taxpayer so confirming, the previously rejected Form 941 will post (a copy may need to be sent it), and the FTDs will be transferred back from the Form 944 module to the appropriate Form 941 quarter. The taxpayer will proceed with FTDs as usual and continue to file Form 941 quarterly. Remember, there is a general presumption that all taxpayers who were switched (qualifying or not) were sent notice. This is not the Service's preferred method.

The second and easier resolution is to let things stand as they are - this is the Service's preferred method. The taxpayer will continue to make FTDs as required, but pursuant to the FTD requirements for Form 944 (see Form 944 instructions) and not Form 941. The current revision (12/2005)of Form 8109 and 8109-B contains the Form 944, so practitioners should order the new version if they are using older manual deposit coupons. After the Form 944 is filed showing a liability of more than $1,000 (due by 1/31/07), the taxpayer will receive a CP250 stating that the taxpayer is no longer eligible to remain in the Form 944 program and that the filing requirement is being changed to Form 941. This method is preferred because it also takes into accountthose taxpayers who have the Form 944 requirement pursuant to the 2005 tax liability), but become disqualified during the calendar year due to excess liability.

Added note: Switched filers who continued to electronically file Form 941 instead of Form 944 (SERP Alert 06304) were automatically converted back to Form 941 and advised to continue to electronically file for 2006 pursuant to L3064(c). If they qualify for Form 944 in 2007 and do not opt out but continue to electronically file Form 941, the returns will not be accepted.

If you have any questions, please contact the IRS directlyat 800/829-0115.

Sandy