Publication 15-A: Employer's Supplemental Tax Guide; Introductory Material

This is archived information that pertains only to the 2004 Tax Year. If you
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Table of Contents

What's New

Redesigned Form 941. Form 941 was completely redesigned for tax periods beginning after 2004. Many of the reporting lines on the redesigned Form 941 have changed from those shown on the January 2004 revision. Form 941 line references in this publication relate to the January 2005 revision of Form 941. Use only the redesigned version of Form 941 (revision date of January 2005 or later) to report employment taxes for tax periods beginning after December 2004. Use the January 2004 revision of this publication for Form 941 line references relating to tax periods ending before 2005, including the fourth quarter 2004 Form 941 that is due January 31, 2005.

New form for reporting discrepancies between Forms 941 and Forms W-2. We recently developed Schedule D (Form 941), Report of Discrepancies Caused by Acquisitions, Statutory Mergers, or Consolidations. You may use Schedule D (Form 941) to explain certain wage, tax, and payment discrepancies between Forms 941 and Forms W-2 that were caused by acquisitions, statutory mergers, or consolidations.

Changes to nonqualified deferred compensation plans. New Code section 409A, added by the American Jobs Creation Act of 2004, provides that all amounts deferred under a nonqualified deferred compensation (NQDC) plan for all taxable years are currently includible in gross income unless certain requirements are satisfied. If section 409A requires an amount to be included in gross income, the statute imposes a substantial additional tax. Section 409A generally applies to amounts deferred in tax years beginning after December 31, 2004, but deferrals made before that year may be subject to the statute under certain circumstances. The Act also provides significant withholding and reporting requirements for the NQDC. See Nonqualified Deferred Compensation Plans in section 5.

Increase to withholding on supplemental wage payments exceeding $1,000,000. Section 904 of the American jobs Creation Act of 2004 increased the flat withholding rate on supplemental wage payments that exceed $1,000,000 during the year to 35%. See section 7 in Publication 15 (Circular E), Employer's Tax Guide, for details.

Reminders

Furnishing Form W-2 to employees electronically. You may set up a system to furnish Forms W-2 electronically to employees who choose to receive them in that format. Each employee participating must consent (or receive confirmation of any consent made using a paper document) electronically, and you must notify the employees of all hardware and software requirements to receive the forms. You may not send a Form W-2 electronically to any employee who does not consent or who has revoked consent previously provided. To furnish Forms W-2 electronically, you must meet the following disclosure requirements and provide a clear and conspicuous statement of each of them to your employees.

The employee must be informed that he or she may receive a paper Form W-2 if consent is not given to receive it electronically.
The employee must be informed of the scope and duration of the consent.
The employee must be informed of any procedure for obtaining a paper copy of any Form W-2 (and whether or not the request for a paper statement is treated as a withdrawal of his or her consent) after giving consent.
The employee must be notified about how to withdraw a consent and the effective date and manner by which the employer will confirm the withdrawn consent. The employee must also be notified that the withdrawn consent does not apply to the previously issued Forms W-2.
The employee must be informed about any conditions under which electronic Forms W-2 will no longer be furnished (for example, termination of employment).
The employee must be informed of any procedures for updating his or her contract information that enables the employer to provide electronic Forms W-2.
The employer must notify the employee of any changes to the employer's contact information.

You must furnish electronic Forms W-2 by the due date of the paper forms. For more information, see Regulations section 31.6051-1(j).

Electronic filing and payment. Now, more than ever before, businesses can enjoy the benefits of filing and paying their federal taxes electronically. Whether you rely on a tax professional or handle your own taxes, IRS offers you convenient programs to make it easier. Spend less time and worry on taxes and more time running your business. Use e-file and Electronic Federal Tax Payment System (EFTPS) to your benefit.

For e-file, visit www.irs.gov for additional information.
For EFTPS, visit www.eftps.gov or call EFPTS Customer Service at 1-800-555-4477.

Use the electronic options available from IRS and make filing and paying taxes easier.

Electronic submission of Forms W-4, W-4P, W-4S, W-4V, and W-5. You may set up a system to electronically receive any or all of the following forms (and their Spanish versions, if available) from an employee or payee.

Form W-4, Employee's Withholding Allowance Certificate.
Form W-4P, Withholding Certificate for Pension or Annuity Payments.
Form W-4S, Request for Federal Income Tax Withholding From Sick Pay.
Form W-4V, Voluntary Withholding Request.
Form W-5, Earned Income Credit Advance Payment Certificate.

If you establish an electronic system to receive any of these forms, you do not need to process that form in a paper version. For each form that you establish an electronic submission system for, you must meet each of the following five requirements.

The electronic system must ensure that the information received by the payer is the information sent by the payee. The system must document all occasions of user access that result in a submission. In addition, the design and operation of the electronic system, including access procedures, must make it reasonably certain that the person accessing the system and submitting the form is the person identified on the form.
The electronic system must provide exactly the same information as the paper form.
The electronic submission must be signed with an electronic signature by the payee whose name is on the form. The electronic signature must be the final entry in the submission.
Upon request, you must furnish a hard copy of any completed electronic form to the IRS and a statement that, to the best of the payer's knowledge, the electronic form was submitted by the named payee. The hard copy of the electronic form must provide exactly the same information as, but need not be a facsimile of, the paper form. For Forms W-4 and W-5, the signature must be under penalty of perjury, and must contain the same language that appears on the paper version of the form. The electronic system must inform the employee that he or she must make a declaration contained in the perjury statement and that the declaration is made by signing the Form W-4 or W-5.
You must also meet all recordkeeping requirements that apply to the paper forms.

For more information, see:

Form W-4—Regulations section 31.3402(f)(5)-1,
Form W-5—Announcement 99-3. You can find Announcement 99-3 on page 15 of Internal Revenue Bulletin 1999-3 at
www.irs.gov/pub/irs-irbs/irb99-03.pdf, and
Forms W-4P, W-4S, and W-4V—Announcement 99-6. You can find Announcement 99-6 on page 24 of Internal Revenue Bulletin 1999-4 at
www.irs.gov/pub/irs-irbs/irb99-04.pdf.

Photographs of Missing Children. The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Photographs of missing children selected by the Center may appear in this booklet on pages that would otherwise be blank. You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child.

Introduction

This publication supplements Publication 15 (Circular E), Employer's Tax Guide. It contains specialized and detailed employment tax information supplementing the basic information provided in Publication 15 (Circular E). This publication also contains:

Alternative methods and tables for figuring income tax withholding,
Combined income tax, employee social security tax, and employee Medicare tax withholding tables, and
Tables for withholding on distributions of Indian gaming profits to tribal members.

Publication 15-B, Employer's Tax Guide to Fringe Benefits, contains information about the employment tax treatment of various types of noncash compensation.

Telephone help. You can call the IRS with your employment tax questions at 1-800-829-4933.

Help for people with disabilities. Telephone help is available using TTY/TDD equipment. You can call 1-800-829-4059 with your tax question or to order forms and publications. You may also use this number for problem resolution assistance.

Ordering publications and forms. See page 59 for information on how to obtain forms and publications.

Useful Items - You may want to see:

Publication

15 Employer's Tax Guide (Circular E)
15-B Employer's Tax Guide to Fringe Benefits
51 Agricultural Employer's Tax Guide (Circular A)
509 Tax Calendars for 2005
225 Farmer's Tax Guide
515 Withholding of Tax on Nonresident Aliens and Foreign Entities
535 Business Expenses
553 Highlights of 2004 Tax Changes
583 Starting a Business and Keeping Records
1635 Understanding Your EIN

Comments and Suggestions. We welcome your comments about this publication and your suggestions for future editions. You can email us at *[email protected]. Please put “Publications Comment” on the subject line.

You can write to us at the following address:

Internal Revenue Service
TE-GE Forms and Publications Branch
SE:W:CAR:MP:T:T
1111 Constitution Ave. NW, IR-6406
Washington, DC 20224

We respond to many letters by telephone. Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence.