IRS Updates Procedures Qualifying Small Employers Can Use To Qualify To Report Employment Taxes Annually Rather Than Quarterly

October 27, 2009

The Internal Revenue Service (IRS) today published updated procedures governing when certain employers may elect to report social security, Medicare and withheld federal income taxes (employment taxes) annually by filing IRS Form 944, rather than reporting those amounts quarterly for tax years beginning after December 31, 2009. 

Beginning in the 2010 tax year, Revenue Procedure 2009-51 will allow qualifying employers to opt out of filing Form 944 social security, Medicare and withheld federal income taxes (“employment taxes”) for any reason if they follow the procedures set forth in Revenue Procedure 2009-51 by the applicable deadline specified in the Revenue Procedure.  The procedures set forth in Revenue Procedure 2009-51 generally are available only to employers are those with an estimated annual employment tax liability of $1,000 or less for the entire calendar year, other than employers required to make a return on Form 943, Employer’s Annual Federal Tax Return For Agricultural Employees, or on Schedule H (Form 1040), Household Employment Taxes.

Revenue Procedure 2009-51 outlines the procedures that qualified employers can apply to report employment taxes annually on the Form 944.  Employers wishing to take advantage of this option must request to file the Form 944 by contacting the IRS as specified in Revenue Procedure 2009-51 and have received the written approval of their request from the IRS before using the Form 944 by the applicable deadline.  Alternatively employers who previously received notification of their qualification to file Form 944 must continue to file Form 944 unless the IRS notifies the employer that the employer no longer qualifies to file Form 944 or the employer opts out consistent with the procedures set forth in Revenue Procedure 2009-51.

Employers electing to report employment taxes annually rather than quarterly should ensure that they continue to timely deposit employment taxes as required by the Internal Revenue Code.  Generally, the same deposit rules apply to employers regardless of which form they file to report their employment tax liability; however, the de minimis deposit amount may be different. Employers who file Forms 941 and 944 still must deposit their employment tax liability in accordance with the rules in Treas. Reg. §§ 31.6302-1 and 31.6302-1T or, absent reasonable cause, the employers may be subject to the penalty for failure to deposit under section 6656.

Qualifying employers wishing to make elections under these rules must act in a timely fashion.  An employer wishing to request to opt in or out of filing Form 944 for the current tax year via telephone generally must call the IRS at the designated number on or before April 1st of the current tax year (e.g., April 1, 2010 for returns for tax year 2010); written requests generally must be postmarked on or before March 15th of the current tax year (e.g., March 15, 2010 for returns for tax year 2010).  Special deadlines apply for businesses 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.  Consult your tax advisor if you have questions about these deadlines. 

If you have questions about or need assistance evaluating, commenting on or responding to these or other employment, compensation, employee benefit, workplace health and safety, corporate ethics and compliance practices, concerns or claims, please contact the author of this article, Curran Tomko Tarski LLP Labor & Employment Practice Group Chair Cynthia Marcotte Stamer.  Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization and Chair of the American Bar Association RPTE Employee Benefits & Other Compensation Group, Ms. Stamer is experienced with assisting employers and others about compliance with federal and state employment, compensation and employee benefit, workplace safety, and other labor and employment, as well as advising and defending employers and others against tax, employment discrimination and other labor and employment, and other related audits, investigations and litigation, charges, audits, claims and investigations by the IRS, Department of Labor and other federal and state regulators. Ms. Stamer has advised and represented employers on these and other labor and employment, compensation, employee benefit and other personnel and staffing matters for more than 20 years. Ms. Stamer also speaks and writes extensively on these and other related matters. For additional information about Ms. Stamer and her experience or to access other publications by Ms. Stamer see here or contact Ms. Stamer directly.   For additional information about the experience and services of Ms. Stamer and other members of the Curran Tomko Tarksi LLP team, see here.

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Senate Finance Bill Finishes Drafting & Releases For Review the America’s Healthy Future Act Bill Language

October 22, 2009

Americans finally have a chance to read the actual statutory language of the painfully negotiated package of proposed health care reforms that the Senate Finance Committee proposes for adoption.  The Senate Finance Committee leadership finally finished drafting has posted the 1506 page long text of the proposed statutory language of the health care reform provisions of the “America’s Healthy Future Act” on its website here.

When the Senate Finance Committee vote passing the America’s Health Future Act, members of the Senate Finance Committee had not yet had the opportunity to review the actual statutory language to be proposed to implement the package of heatlh care reforms painfully hashed out in their committee.  As the actual statutory language had not been completed at the time a majority of the Democrats and one Republican Senator serving on the Senate Finance Committee voted to send the legislation to the the full Senate, the vote actually was taken based on a narative description of the intended reforms set forth in a revised draft of the “Chairman’s Mark” of the legislation.  Since that time Senate Finance Committee Chairman Max Baucus and other key Democrat Senators on the Senate Finance Committee have worked behind closed doors to prepare the actual statutory language to be presented to the full Senate.

As proposed, the America’s Healthy Future Act would require sweeping changes to the U.S. health care systems that would radically impact the roles and responsibilities of every patient, health care provider, health care payor, employer and other American.  Because of the potential implications on the way health care is financed, delivered and administered and the projections that the legislation will cost approximately $1 Trillion, all parties are urged to carefully review the complex and lengthy legislation to gain an understanding of the legislation and to act quickly to make any concerns known to elected leaders in Congress. 

If you need help evaluating or responding to this health care reform legislation or with other employee benefit, compensation, employee benefit or insurance matters, please contact the author of this update, Cynthia Marcotte Stamer.  Current Chair of the American Bar Association (ABA) RPTE Section Employee Benefits & Other Compensation Group and the former Chair of the ABA Health Law Section Managed Care & Insurance Group, Ms. Stamer has more than 20 years experience advising employers, private and public health plans and their sponsors, insurers and administrators and others about health care policy, regulatory compliance, risk management and operational issues,

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©2009 Cynthia Marcotte Stamer. All rights reserved. 


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