1. Depositing and Reporting Withheld Taxes

2. Employer Identification Numbers (EIN)
Identifies employer to IRS and SSA
Depositing taxes
Filing returns
Communications
9-digit number in required format:
Form SS-4, Application for Employer Identification Number
U.S. employers use online application, by fax, by mail
Foreign employers apply by phone
Watch mergers, consolidations, and reincorporation
Be sure to use the correct EIN

3. Payroll Tax Deposit Rules
Based on the employer’s total liability for federal income, social security, and Medicare taxes during a lookback period
12-month period ending the preceding June 30
Calendar Year 2017: July 1, 2015 – June 30, 2016
Shortfall rule
Deposit obligation met if the amount of the shortfall is no greater than $100 or 2% of entire amount due
Shortfall deposit due by appropriate make up date dependent on depositor status

4. Payroll Tax Deposit Rules
Semiweekly Depositor
Total liability exceeds $50,000 during lookback period
Accumulated tax liability due for wages paid on Wednesday, Thursday, and Friday by the following Wednesday
Accumulated tax liability due for wages paid on Saturday, Sunday, Monday, and Tuesday by the following Friday
Saturday, Sunday, and holidays are not business days
Monthly Depositor
Total liability is $50,000 or less during lookback period
Accumulated tax liability due each calendar month by 15th of the following month

5. Payroll Tax Deposit Rules
One-day Depositor
Total liability exceeds $100,000 during the monthly or semiweekly deposit period
Accumulated tax liability due the close of the next business day
Monthly depositors become semiweekly depositors for the remainder of the current calendar year and the entire next calendar year
Quarterly Depositor
Total liability is less than $2,500 for the current or immediately preceding quarter
Annual Depositor
Total liability is less than $1,001 upon notification from the IRS

6. Electronic Federal Tax Payment System
Required for all depository taxes
Exception: Quarterly or Annual depositors who deposit taxes with the quarterly or annual tax returns
EFTPS Payment Options
EFTPS – Direct (ACH Debit)
EFTPS – Through a Financial Institution (ACH Credit)
Employer accountable for timely tax deposits made by payroll service providers
Form 8655 – Reporting Agent Authorization
Allows payroll provider to submit employment tax returns and deposits

7. Electronic Federal Tax Payment System
Enrollment Process
Complete Form 9779, Business Enrollment Form for EFTPS
Enrollment takes 2 – 10 weeks
Form 9787, Business Confirmation/Update Form
Received within 15 business days once Form 9779 is completed
10% penalty assessed if payroll taxes are paid using EFTPS, excluding exception depositors
Legal marijuana business
Provide proof of denied bank account applications to have penalties abated

8. Penalties for Failure to Deposit on Time
Subject to the following failure to deposit (FTD) penalties
Depositors that fail to deposit the entire amount of tax required by the due date, with the shortfall consideration, and without reasonable cause for the failure
2% of the amount not deposited if deposited within 5 days of the due date
5% of the amount not deposited if deposited within days of the due date
10% of the amount not deposited if deposited more than 15 days of the due date
15% of the amount not deposited if deposited within 10 days after receipt of the first IRS delinquency notice or on the same day a notice and demand for payment is received

9. Penalties for Failure to Deposit on Time
100% penalty of total amount of taxes uncollected or paid
Individuals who are responsible for collecting, accounting for, and paying taxes and who willfully fail to do so
This could be you!
Felony conviction goes with 100% penalty
Criminal penalty
Fined up to $10,000 and/or imprisoned for up to 5 years

10. Federal Employment Tax Returns
Form 941, Employer’s Quarterly Federal Tax Return
Form 941-PR, Employer’s Quarterly Federal Tax Return – Puerto Rico
Form 941-SS, Employer’s Quarterly Federal Tax Return – all other possessions
Form 941-Schedule B, Report of Tax Liability for Semiweekly Schedule Depositors (when liability due not when tax deposit made)
Form 941-Schedule D, Report of Discrepancies Caused by Acquisitions, Statutory Mergers, or Consolidations
Form 941-Schedule R, Allocation Schedule for Aggregate Form 941 Filers (used by 3rd-party providers who file tax returns and deposits)

11. Federal Employment Tax Returns
Form 943, Employer’s Annual Federal Tax Return for Agricultural Employees
Form 944, Employer’s Annual Federal Tax Return for small employers
Form 945, Annual Return of Withheld Federal Income Tax
Non-payroll withholding
Form 945-A, Annual Record of Federal Tax Liability

12. Federal Employment Tax Returns
Quarterly tax return due the last day of the first month following the end of each calendar quarter.
Automatic extension when all deposits are made timely. Quarterly tax return due with extension on the 10th day of the next month
Quarter
Quarter Ends
Tax Return Due Date
Automatic Extension
January - March
March 31
April 30
May 10
April – June
June 30
July 31
August 10
July – September
September 30
October 31
November 10
October - December
December 31
January 31
February 10

13. Correcting Tax Returns
Form 941-X, Adjusted Employer’s Quarterly Federal Tax Return or Claim for Refund
Used to correct errors employer’s have discovered on a previously filed Form 941
Due Date for Form 941-X, with underreported tax
Discovered error in: January – March; Form 941-X is due April 30
Discovered error in: April – June; Form 941-X is due July 31
Discovered error in: July – September; Form 941-X is due October 31
Discovered error in: October – December; Form 941-X is due January 31
Form 843, Claim for Refund and Request for Abatement
Request a refund or abatement of assessed interest, additions to tax, or penalties

14. Penalties: Late Reporting / Paying Tax
Late filing of employment tax returns
5% of the amount of tax required to be shown on the return for each month with a maximum of 25%
Fraudulent: 15% per month up to maximum of 75%
Failure to pay employment taxes
0.5% of any unpaid tax shown on the return for each month with a maximum of 25%
Additional 0.5% when IRS has issued a notice and demand and not paid within days
Penalties increase to 1% beginning 10 days after the day the employer is notified by the IRS that it intends to levy on the employer’s assets or notice of immediate payment is received

15. Penalties: Late Reporting / Paying Tax
Criminal Penalties
Willful failure to file a return, pay tax: fine of up to $25,000 and/or imprisonment for up to one year
Willful delivery of fraudulent tax return: fine of up to $10,000 and/or imprisonment for up to one year
Willful attempt to evade the payment of any tax: fine of up to $100,000 and/or imprisonment for up to five years
Willful signing of fraudulent tax return: fine of up to $100,000 and/or imprisonment for up to three years
General Statute of Limitations for assessing taxes: 3 years from the date the return was filed

16. Information Return: Employees
Form W-2, Wage and Tax Statement
6-part form
Employer provides to employee before January 31 following the tax year
Employer files informational returns with SSA before January 31
Applies to any employer engaged in a business that pays compensation to an employee for work performed, even if payment is not paid in cash
Undeliverable Forms W-2: must be kept through April 15 of the 4th year
Reissued Forms W-2: write “reissued statement” on the face of the form
Multiple forms acceptable for specific circumstances
Employers can provide electronic copies with employee consent. Watch state regulations!

17. Information Return: Employees
Format considerations on Form W-2
Hyphenation: include in EIN and SSN as appropriate
Dollar Amounts: no commas or dollar signs; cents required
Electronic reporting for Form W-2
Filing 250 or more forms for a calendar year are required to file electronically
Wage and tax information to SSA – Form W-3, Transmittal of Wage and Tax Statements
Only required for paper filers
Accompanies paper Form W-2

18. Form W-2 Boxes Box 1: Federal income taxable wages for the year
Box 3: Social security taxable wages for the year
Box 5: Medicare taxable wages for the year
Boxes 2, 4, and 6: respective tax withheld
Tips: Watch out for box 7 and box 8
Box 9: W-2 Verification Code initiative participating employers
Box 10: Total dependent care benefits provided by employer (IRC §129)
Box 11: Distributions from a NQDC or net losses subject to social security and Medicare taxes during the year

19. Form W-2 Boxes Box 12: Box 14: Other Capital letters only
4 codes per form
Familiarize yourself with the most common ones.
Refer to section 3 and section 4!
Catch-up contributions are added to elective deferral for reporting
Make-up deferral for veterans
Be sure to include the 2-digit year after the code (e.g. D )
Box 14: Other
Miscellaneous information for employee
Railroad employers must report RRTA compensation and taxes in box 14

20. Correcting Informational Returns
Form W-2c, Corrected Wage and Tax Statement
6-part form
Electronic filing requirement for 250 or more corrected returns
Undeliverable Forms W-2c: must be kept through April 15 of the 4th year
Form W-3c, Transmittal of Corrected Wage and Tax Statement
One form for each type of Form W-2 corrected
APA offers fill-in forms for Form W-2c and Form W-3c for members

21. Reconciliation Process
Prevent out-of-balance conditions by periodically reconciling the wage and tax information.
Reconciliation frequency
Pay period
Payroll register totals of taxes withheld against tax liabilities record
Tax deposit
Tax liabilities against tax deposits made
Quarterly
Payroll registers against quarterly tax returns
Year-end
YTD payroll registers against Form W-2s and annual tax returns

22. Information Return: Nonemployees
Form 1099 Series
Follows reporting guidelines similar to Form W-2
Most common
Form 1099-MISC, Miscellaneous Income
Form 1099-R, Distributions from Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.
Form 1099-LTC, Long-term Care and Accelerated Death Benefits
Form 1099-SA, Distributions From an HSA, Archer MSA, or Medicare Advantage MSA
Form 1096, Annual Summary and Transmittal of U.S. Information Returns

23. Failure to File Information Returns
General Rules
$50 per return if the failure to file or provide correct information is corrected within 30 days after the due date, with a maximum penalty of $536,000 a year
$100 per return if the failure to file or provide correct information is corrected more than 30 days after the due date but by August 1 of the same year the return is due, with a maximum penalty of $1,609,000 a year
$260 per return if the failure to file or provide correct information is not corrected by August 1 of the same year the return is due, with a maximum penalty of $3,218,500 a year
Willful disregard: The greater of $530 per return or 10% of the correct amount of tax shown on the return. No maximum penalty.

24. Failure to Provide Information Returns
General Rules
$50 per return if the failure to file or provide correct information is corrected within 30 days after the due date, with a maximum penalty of $536,000 a year
$100 per return if the failure to file or provide correct information is corrected more than 30 days after the due date but by August 1 of the same year the return is due, with a maximum penalty of $1,609,000 a year
$260 per return if the failure to file or provide correct information is not corrected by August 1 of the same year the return is due, with a maximum penalty of $3,218,500 a year
Willful disregard: The greater of $530 per return or 10% of the correct amount of tax shown on the return. No maximum penalty.

25. Electronic Reporting Requirements
Employers that file 250 or more Forms W-2 must file electronically
Includes employers in U.S. possessions
Employers that file 250 or more Forms W-2c must file electronically
Hardship exception
Form 8508, Request for Waiver From Filing Information Returns Electronically
Filing extension
Form 8809, Application for Extension of Time to File Information Returns
Businesses filing 250 or more of any single type of Form 1099 must file electronically
Must obtain approval first
Form 4419, Application for Filing Information Returns Electronically

26. Electronic Reporting Requirements
Large food or beverage establishments
Form 8027, Employer’s Annual Information Return of Tip Income and Allocated Tips
ACA reporting forms
Form 1094-B, Transmittal of Health Coverage Information Returns
Form 1094-C, Health Coverage
Form 1095-B, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns
Form 1095-C, Employer-Provided Health Insurance Offer and Coverage

27. Special Wage Payment Reporting
IRS Publication 957, Reporting Back Pay and Special Wage Payments to the Social Security Administration, offers guidance on reporting
Beneficiary’s annual earnings limits
Retirees: Age 62 to full retirement age is $16,920
Retirees: in the year of full retirement age is $44,880
Only until the month the retiree reaches full retirement age
Special wage reporting in addition to Form W-2 reporting
Aligns back pay with the year earned not the year awarded and paid
Form SSA-131, Employer Report of Special Wage Payments

28. DO YOU KNOW???
What are the general deposit requirements for monthly, semiweekly, and one-day depositors?
What is the lookback period for determining an employer’s Form 941 payroll tax depositor status?
What is the Schedule B (Form 941) used for?
What form is used to report nonpayroll withheld taxes?
What is the purpose of Form 944?
What is the penalty for late filing of employment tax returns?
What is the penalty for providing information returns late?