Changes To Note
The social security wage base for 2001 is $80,400. There is no wage
base limit for Medicare tax. The tax rate remains 6.2% for social
security and 1.45% for Medicare tax.
Threshold for deposit requirement increased from $1,000 to
$2,500. For tax return periods beginning January 1, 2001, if
your tax liability for the return period (line 10 for Form 941-SS or
line 11 for Form 943) is less than $2,500, you are not
required to make deposits and may pay the taxes with the return. See
section 8 for a complete discussion of the deposit rules.
Electronic deposit requirement.
You must make electronic deposits of all depository
taxes (such as employment tax, excise tax, and corporate income tax)
using the Electronic Federal Tax Payment System (EFTPS) in 2001 if:
- The total deposits of such taxes in 1999 were more than
- You were required to use EFTPS in 2000.
If you are required to use EFTPS and fail to do so, you may be
subject to a 10% penalty. If you are not required to use EFTPS, you
may participate voluntarily. To get more information or to enroll in
EFTPS, call 1-800-555-4477 or 1-800-945-8400.
See section 8 for more information.
Extended due date for electronic filers.
The due date for filing Copy A of electronically filed 2000 Forms
W-2VI, W-2GU, W-2AS, or W-2CM with the Social Security Administration
is April 2, 2001. The extended due date does not apply to magnetic
media or paper filing.
Change of address.
If you changed your business mailing address or business location,
notify the IRS by filing Form 8822, Change of Address.
Private delivery services.
You can use certain private delivery services designated by the IRS
to send tax returns or payments. If you mail by the due date using any
of these services, you are considered to have filed on time. The most
recent list of designated private delivery services was published in
August 1999. The list includes only the following:
- Airborne Express (Airborne): Overnight Air Express Service,
Next Afternoon Service, Second Day Service.
- DHL Worldwide Express (DHL): DHL Same Day Service,
DHL USA Overnight.
- Federal Express (FedEx): FedEx Priority Overnight, FedEx
Standard Overnight, FedEx 2 Day.
- United Parcel Service (UPS): UPS Next Day Air, UPS Next Day
Air Saver, UPS 2nd Day Air, UPS 2nd Day Air A.M.
The private delivery service can tell you how to get written proof
of the mailing date. Caution: Private delivery services
cannot deliver items to P.O. boxes. You must use the U.S. Postal
Service to mail any item to an IRS P.O. box address.
When hiring new employees.
Record the number and name from each new employee's social security
card. An employee who does not have a social security card should
apply for one on Form SS-5, Application for a Social
Security Card. (See section 3.)
Unresolved tax issues.
If you have attempted to deal with an IRS problem unsuccessfully,
you should contact the Taxpayer Advocate. The Taxpayer Advocate
independently represents your interests and concerns within the IRS by
protecting your rights and resolving problems that have not been fixed
through normal channels.
While Taxpayer Advocates cannot change the tax law or make a
technical tax decision, they can clear up problems that resulted from
previous contacts and ensure that your case is given a complete and
Your assigned personal advocate will listen to your point of view
and will work with you to address your concerns. You can expect the
advocate to provide:
- A fresh look at a new or ongoing problem.
- Timely acknowledgment.
- The name and phone number of the individual assigned to your
- Updates on progress.
- Timeframes for action.
- Speedy resolution.
- Courteous service.
When contacting the Taxpayer Advocate, you should provide the
- Your name, address, and employer identification
- The name and telephone number of an authorized contact
person and the hours he or she can be reached.
- The type of tax return and year(s) involved.
- A detailed description of the problem.
- Previous attempts to solve the problem and the office that
had been contacted.
- A description of the hardship you are facing (if
You may contact a Taxpayer Advocate by calling a toll-free number,
1-877-777-4778. Persons who have access to TTY/TDD
equipment may call 1-800-829-4059 and ask for Taxpayer Advocate
assistance. If you prefer, you may call, write, or fax the Taxpayer
Advocate office in your area. See Pub. 1546 The Taxpayer
Advocate Service of the IRS, for a list of addresses and fax numbers.
Keep all records of employment taxes for 4 years. These should be
available for IRS review.
There is no required format for such records, but they should
include your EIN; the amounts and dates of all wage payments
(including fringe benefits) and tips reported; the names, addresses,
and occupations of employees receiving such payments, and their social
security numbers; copies of returns filed; dates of employment; and
the dates and amounts of deposits made in accordance with section 8.
Farm employers must keep a record of the name, permanent address, and
EIN of each crew leader (see Farm Crew Leaders on page 4).
The following are important dates and responsibilities. Also see
Pub. 509, Tax Calendars for 2001.
Note: If any date shown below falls on a Saturday,
Sunday, or legal holiday, the due date is the next business day. For
any due date, you will meet the file or furnish
requirement if the form is properly addressed and mailed First-Class
or sent by an IRS designated delivery service on or before the due
date. (See Private delivery services earlier.)
By January 31
- Furnish wage and tax statements to employees.
Give each employee a completed Form W-2VI, W-2GU, W-2AS, or
W-2CM. (See section 10.)
- File Form 943, Employer's Annual Tax Return for
Agricultural Employees, with the Internal Revenue Service. If you
deposited all Form 943 taxes when due, you may file Form 943 by
- File Form 940 or 940-EZ - U.S. Virgin Islands
employers. File Form 940 or 940-EZ,
Employer's Annual Federal Unemployment (FUTA) Tax Return, with the
U.S. Internal Revenue Service. Pay or deposit (if more than $100) any
balance of the tax due. If you deposited the full amount of taxes when
due, you may file by February 12.
By February 28
Send wage and tax statements to the Social Security
Administration (SSA). Send Copy A of Forms W-2VI, W-2GU, W-2AS,
or W-2CM with Form W-3SS, Transmittal of Wage and Tax
Statements, to the Social Security Administration. For electronically
filed returns, see By April 2 below.
By April 2
File electronic Forms W-2VI, W-2GU, W-2AS, or W-2CM.
File copy A of electronic (not magnetic media or paper) Forms W-2VI,
W-2GU, W-2AS, or W-2CM with the Social Security Administration.
By April 30, July 31, October 31, and January 31
File Form 941-SS, Employer's Quarterly Federal Tax
Return (American Samoa, Guam, the Commonwealth of the Northern Mariana
Islands, and the U.S. Virgin Islands), with the Internal Revenue
Service. If you deposited the full amount of taxes when due, you have
10 additional days to file.
Deposit FUTA tax for the quarter (including any amount
carried over from other quarters) if over $100. If $100 or less, carry
over to the next quarter. (See section 11.)
Circular SS is for employers whose principal place of business is
in the U.S. Virgin Islands, Guam, American Samoa, or the Commonwealth
of the Northern Mariana Islands, or who have employees who are subject
to income tax withholding for any of these jurisdictions. Employers
and employees in these areas are generally subject to social security
and Medicare taxes under the Federal Insurance Contributions Act. This
circular summarizes employer responsibilities to collect, pay, and
report these taxes.
Whenever the term United States is used in this circular, it
includes the U.S. Virgin Islands, Guam, American Samoa, and the
Commonwealth of the Northern Mariana Islands.
Circular SS also provides employers in the U.S. Virgin Islands with
a summary of their responsibilities in connection with the tax under
the Federal Unemployment Tax Act, known as FUTA tax. See section 11.
Except as shown in the tables on pages 15 through 19, these taxes
apply to every employer who pays taxable wages to employees or who has
employees who report tips.
This circular does not include instructions relating to the
self-employment tax (for social security and Medicare of self-employed
persons). See Pub. 570, Tax Guide for Individuals With
Income From U.S. Possessions, if you need this information.
This circular also does not include instructions relating to income
tax withholding. In the U.S. Virgin Islands, Guam, American Samoa, or
the Commonwealth of the Northern Mariana Islands, contact your local
tax department for information about income tax withholding. See
Circular E, Employer's Tax Guide (Pub. 15), for information
on U.S. Federal income tax withholding.
Note: Employers in the U.S. Virgin Islands may call 1-800-829-1040 for Federal tax information. If you have access to TTY/TDD equipment, call 1-800-829-4059 with your tax question or to order forms and publications.
How To Get Forms and Publications
Access the IRS's Web Site at www.irs.gov to do the
- Download forms, instructions, and publications.
- See answers to frequently asked tax questions.
- Search publications on-line by topic or keyword.
- Send us comments or request help via e-mail.
- Sign up to receive hot tax issues and news by e-mail from
the IRS Digital Dispatch.
You can also reach us using file transfer protocol at
U.S. Virgin Islands employers can order forms and publications 24
hours a day, 7 days a week, by calling 1-800-TAX-FORM
(1-800-829-3676). Others can get IRS forms and publications by writing
to the Western Area Distribution Center, Rancho Cordova, CA
1. Who Are Employees?
Generally, employees are defined either under common law or under
special statutes for certain situations.
Employee status under common law.
Generally, a worker who performs services for you is your employee
if you can control what will be done and how it will be done. This is
so even when you give the employee freedom of action. What matters is
that you have the right to control the details of how the services are
performed. See Pub. 15-A, Employer's Supplemental Tax
Guide, for more information on how to determine whether an individual
providing services is an independent contractor or an employee.
There are also some special definitions of employees for social
security, Medicare, and FUTA taxes.
While the following persons may not be common law employees, they
are considered employees for social security and Medicare purposes if
the conditions under Tests later are met.
An agent (or commission) driver who delivers food or beverages
(other than milk) or picks up and delivers laundry or dry cleaning for
A full-time life insurance salesperson who sells primarily for one
A homeworker who works by the guidelines of the person for whom the
work is done, with materials furnished by and returned to that person
or to someone that person designates.
A traveling or city salesperson (other than an agent-driver or
commission-driver) who works full time (except for sideline sales
activities) for one firm or person getting orders from customers. The
orders must be for items for resale or use as supplies in the
customer's business. The customers must be retailers, wholesalers,
contractors, or operators of hotels, restaurants, or other businesses
dealing with food or lodging.
Withhold social security and Medicare taxes from statutory
employees' wages if all three of the following tests apply.
- The service contract states or implies that almost all of
the services are to be performed personally by them.
- They have little or no investment in the equipment and
property used to perform the services (other than an investment in
- The services are performed on a continuing basis for the
Persons in a and d above are employees
for FUTA tax purposes if tests 1 through 3 are
met (U.S. Virgin Islands only).
Pub. 15-A gives examples of the employer-employee relationship.
Certain direct sellers and certain real estate agents are by law
considered nonemployees. They are treated as self-employed for
employment tax purposes. See Pub. 15-A for details.
Treating employees as nonemployees.
If you incorrectly treated an employee as a nonemployee and did not
withhold social security and Medicare taxes, you will be liable for
the taxes. See Internal Revenue Code section 3509 for details.
If you want the IRS to determine whether a worker is an employee,
file Form SS-8, Determination of Worker Status for
Purposes of Federal Employment Taxes and Income Tax Withholding.
Farm Crew Leaders
You are an employer of farmworkers if you are a crew leader. A crew
leader is a person who furnishes and pays (either on his or her own
behalf or on behalf of the farm operator) workers to do farmwork for
the farm operator. If there is no written agreement between you and
the farm operator stating that you are his or her employee, and if you
pay the workers (either for yourself or for the farm operator), then
you are a crew leader.
2. Employer Identification Number (EIN)
An employer identification number (EIN) is a nine-digit
number the IRS issues. Its format is 00-0000000. It is used to
identify the tax accounts of employers and certain other organizations
and entities that have no employees. Use your EIN on all the
items you send to the IRS and SSA for your business.
If you have not asked for an EIN, request one on Form SS-4,
Application for Employer Identification Number. Form SS-4
contains information on how to apply for an EIN by mail or by
If you do not have an EIN by the time a return is due, enter
Applied For and the date you applied in the space shown for the
number. If you took over another employer's business, do not use that
employer's EIN. Make your check for any amount due on a return payable
to the United States Treasury and show on it your name (as
shown on Form SS-4), address, kind of tax, period covered, and date
you applied for an EIN.
You should have only one EIN. If you have more than one, notify the
Internal Revenue Service Center where you file your return. List the
EINs you have, the name and address to which each number was assigned,
and the address of your principal place of business. The IRS will tell
you which EIN to use.
For more information, see Pub. 1635, Understanding Your
EIN, or Pub. 583, Starting a Business and Keeping Records.
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