Form 944

[geekgirldany]

I have a customer that was switched to Form 944 instead of the quarterly 941 in 2007. His payroll was very low until the 3rd Qtr. He will go over the $1,000 liability and I am sure he will be switched back in 2008 quarterly form. Plus I know he will be required monthly deposits.

Should I have him pay the payroll taxes every month like he would be if it was not for Form 944? Or just have him pay the taxes with the Form 944 at the end of the year?

Thanks
Dany

[Golden Rocket]

Pay as directed

Geeko, if you deposit with a frequency more than what is required, they will try to refund the money. The customer will receive mail to the effect that they have reclassified the application into a different quarter, under the assumption that the client made an inadvertent error.

I would maintain the same form and frequency until IRS indicates otherwise. They may screw it up anyway, but at least you will have expressed direction such that penalties would be waived.

[JohnH]

Write them a letter

You can write a letter to IRS telling them to forget the 944 and keep him on quarterly 941 filing. (But I think there's window of time when you are allowed to do that - maybe it won't help you right now)

[BOB W]

How about my client that deposits in excess of $2,000 per month for the last 3 years and gets a letter putting them on 944 form. I called and wrote to no avail. I still file the 941 quarterly with a $10,000 + liability. Just got another letter warning of improper form filing.

Hello > what is going on.

What is going to happen if no prepayments were made. I bet the IRS will bill him for under payments during the year. Maybe they will forgive the penalties as they do for first time filers.

[geekgirldany]

That is what I am worried about is that they would add penalties for not paying on time like he should have. I think the IRS leaves it up to the taxpayer to figure out if their payment frequency and afterwards they will send a penalty notice.

After searching through the folders on my computer I found a letter they sent to him in April 2007:

"Even though your 2006 Form 944 was more than $1,000 you must remain a Form 944 filer for calendar year 2007. You must deposit, if required, using the monthly deposit schedule. Beginning in calendar year 2008 you will be required to file a quarterly using Form 941. You will be sent a reminder notice in December 2007."

So I guess that answered my question. It appears that if you are required to deposit monthly then you must do that and just file the Form 944 at the end of the year. Bet this is causing more problems than it is helping.

Thank you guys for responding.

[ChEAr$]

form 944

Once a person is set up by IRS for the year as 944 filer, that's it.
No turning back.

1. If you use 941 as one suggested, they will ignore it and not post.
2. They will not refund what might be considered overpayments.

So if 944 applies and deposits should be monthly anyway, make sure
they are made, otherwise penalties apply.

After end of year client will be re evaluated and if 941 applies, IRS
will switch from 944 to 941.

Been there; done that.

[wv112]

We used the monthly deposit coupons for almost all our 944 clients last year. Then just filed the 944 in Jan. No problems from that. Most clients would not have saved the money to pay it all in Jan. Some we just made 4 deposits, figured what would have been due with the quarterly report and then used the coupons for that amount. Worked well for all the clients.

[gailtaxed]

There is a place on the newer coupons to indicate that you are making a deposit for 944 taxes. My problem has been, and continues to be, clients who don't let me know that they have received a letter from the IRS changing them to 944 status.

[Maria]

944 v.s. 941

Hi,

I have a client whose filing requirement is 944. They used to file 941 since the client did not notify the bookkeeper of the change until the IRS sending another letter saying they are not processing the 941.

Anyway, we only process a few payrolls (super simple easy one). We pay payroll tax on line through EFTPS.COM. It is super easy and the website keeps all your payment history. It is just like paying your personal bills on line.

Thanks.

[geekgirldany]

I've started trying to get my payroll customers over to EFTPS and using the state online system to make payments. Well when they are setup I actually make their payments for them. It is alot easier. Georgia State Unemployment could use some work though.

[ChEAr$]

One word of advice

I've started trying to get my payroll customers over to EFTPS and using the state online system to make payments. Well when they are setup I actually make their payments for them. It is alot easier. Georgia State Unemployment could use some work though.

Make sure you have something in writing and signed by client authorizing you to make
such online payments. IOW, Cover your assets.

[geekgirldany]

I had thought of that. Makes me responsible now for making their payment for them. Time to get another engagement letter setup.

[Black Bart]

Not always, I don't think.

Once a person is set up by IRS for the year as 944 filer, that's it.
No turning back...

.

Maybe it depends on which IRS district you're in or...something else...I dunno, but here's what happened with my small biz Dairy Freeze client who preferred old-fashioned to new-fangled:

(February 1, 2006 -- client received letter from IRS):
...This notice...advise...we have changed your filing requirement for employment tax returns from quarterly to annually...Therefore you will file Form 944...rather than Form 941...

(February 21, 2006 -- I sent letter to IRS):
In regard...your letter...advising...we must switch from Form 941 to Form 944, this is to request we be allowed to "opt-out" of the 944 program and continue to file paper 941 forms quarterly as in the past. We discussed this by phone with an IRS representative who advised us to make a formal written request which would be granted. Please advise.

(April 3, 2006 -- received letter from IRS):
Thank you for your inquiry of Feb. 21, 2006. We have updated your payroll filing requirement according to your request. You are required to file Form 941, Employer's Quarterly Federal Tax Return, and no longer have to file Form 944, Employer's Annual Federal Tax Return...any questions, please call...

So...it can be done, but -- is it worth it? Probably not, as it's just swimming upstream -- it saves IRS time and money, so they'll stay with it. Sooner or later there won't be a choice and it matters not that we lose some quarterly Form 941 preparation business (you can't convince anybody that one time's just as much trouble as four times).

Yeah, I know they (or I) can make out a coupon every month, but some of them don't know how or didn't owe enough to be required to make deposits. I could just take 'em the 941 and they'd pay it all at once without having to fool with deposits. They liked it, I liked it, and we also got to "catch-up" on the latest rumors (Lordy, I never thought the mayor would've...and him a deacon too...). Anyway, everybody was happy with our rut except the dadgum Boogeyman who keeps on buggin' us -- wish they'd just dang-it leave things alone...and that's all I (Gumpishly) have to say about that.

[gailtaxed]

The letter clients receive from the IRS does spell out the procedure for changing back to 941 if they choose. However, it also gives them a deadline (I believe it is April 1). My problem has been that they never show me that letter - the first one that I see is the one they get after we file a 941 telling us that they are not accepting the 941 and asking what they want done with the money.

I do not like this new program, but I think you are right that we have no choice.

[John of PA]

we are responsibe, yes

GG, yes your right on target there, IRS is making us more and more responsible. My understanding is, when you are assigned to form 944 with a letter, you stay with it all year, regardless. I like the idea in the earlier post to make 944 deposits with the coupon. I would not switch back to 941 quarterly filing unless instructed to do so with another IRS letter.