The temporary regulations generally allow certain employers to file a Form 944, “Employer’s ANNUAL Federal Tax Return,” rather than Form 941, “Employer’s QUARTERLY Federal Tax Return.” In addition, the temporary regulations provide an additional method for employers who file Form 941 to determine whether the amount of accumulated employment taxes is considered de minimis.
Under 2006 proposed and temporary regulations, the IRS sent a notification letter to qualified employers with an estimated employment tax liability of $1,000 or less requiring them to participate in the Employers’ Annual Federal Tax Program (Form 944). Employers were eligible to opt out only if they estimated that their employment tax liability would exceed the $1,000 threshold or if they wanted to e-file Forms 941 quarterly instead, the IRS said.
New employers who estimated that their employment tax liability would be $1,000 or less also were eligible to file Form 944. They were identified by their responses on Form SS-4, Application for Employer Identification Number, and notified that they were required to file Form 944 in the letter advising them of their employer identification number.
Employers not identified by the IRS in either manner were able to contact the IRS if they thought they were qualified.
The temporary regulations amend the Regulations on Employment Taxes and Collection of Income Tax at Source (26 CFR part 31) under section 6011 relating to the Federal employment tax return filing requirements and section 6302 relating to the employment tax deposit requirements. According to the IRS publication in the Federal Register, the regulations concern reporting and paying income taxes withheld from wages and reporting and paying taxes under the Federal Insurance Contributions Act (FICA).
The temporary regulations are effective December 29, 2008. Text of the regulations is here .
In addition to temporary regulations allowing certain employers to file one return annually to report their employment tax liabilities instead of four quarterly returns, the Treasury issued proposed regulations to amend permanently the Regulations on Employment Taxes and Collection of Income Tax at Source (26 CFR part 31).
The Treasury said the text of the temporary regulations serves as the text for the proposed regulations. The regulations would apply to taxable years ending on or after the date of publication in the Federal Register of the Treasury decision adopting these rules as final regulations.
The Treasury is requesting that written or electronic comments or requests for a public hearing be received by March 30, 2009.
Information on how to submit comments or request a hearing is here .