Instructions for Form 944-SS |
2006 Tax Year |
General Instructions: Understanding Form 944-SS
This is archived information that pertains only to the 2006 Tax Year. If you are looking for information for the current tax year, go to the Tax Prep Help Area.
Federal law requires you, as an employer, to withhold taxes from your employees' paychecks. Each time you pay wages, you must
withhold — or
take out of your employees' paychecks — certain amounts for social security tax and Medicare tax. Under the withholding system,
taxes withheld
from your employees are credited to your employees in payment of their tax liabilities.
Federal law also requires employers to pay any liability for the employer's portion of social security and Medicare taxes.
This portion of social
security and Medicare taxes is not withheld from employees.
What Is the Purpose of Form 944-SS?
Form 944-SS, Employer's ANNUAL Federal Tax Return, is designed so the smallest employers (those whose annual liability for
social security and
Medicare taxes is $1,000 or less) will have to file and pay these taxes only once a year instead of every quarter. These instructions
give you some
background information about Form 944-SS. They tell you who must file the form, how to fill it out line by line, and when
and where to file it. If you
want more in-depth information about payroll tax topics, see Pub. 80 (Circular SS), Federal Tax Guide for Employers in the
U.S. Virgin Islands, Guam,
American Samoa, and the Commonwealth of the Northern Mariana Islands. Or visit the IRS website at
www.irs.gov and type
“Employment Tax” in the Search box.
Use Form 944-SS to report all the following items.
-
Payroll taxes (both employee and employer
shares of social security and Medicare taxes)
for the year.
-
Current year's adjustments to social security and
Medicare taxes for fractions of cents, sick pay, tips,
and group-term life insurance.
-
Prior years' adjustments to payroll taxes (attach
Form 941c).
Who Must File Form 944-SS?
In general, if the IRS has notified you to file Form 944-SS, then you must file Form 944-SS to report all the following amounts.
You must file a Form 944-SS for each year even if you have no taxes to report unless the IRS notifies you that your filing
requirement has been
changed to Form 941-SS (or you filed a final return — See If your business has closed... below). See also What if you don't want
to file Form 944-SS? below.
In February 2006, the IRS will mail eligible employers a notice to file Form 944-SS for 2006 if their expected annual liability
for social security
and Medicare taxes will be $1,000 or less.
If you believe you are eligible to file Form 944-SS for 2006 but the IRS did not notify you, call the IRS at 1-800-829-0115
(U.S. Virgin Islands
only), or 215-516-2000 (toll call) to determine if you can file Form 944-SS. If you contact the IRS and the IRS determines
you are eligible to file
Form 944-SS, we will send you a notice that your filing requirement has been changed. To determine if you can file Form 944-SS
to report your 2006
employment tax liability, you must contact the IRS by April 1, 2006.
New employers are also eligible to file Form 944-SS if they will meet the eligibility requirements. New employers filing Form SS-4,
Application for Employer Identification Number, must complete line 13 of Form SS-4 indicating the highest number of employees
expected in the next 12
months and must check the “yes” box or the “no” box to indicate whether they expect to have $1,000 or less in employment tax liability for
the calendar year. Generally, if you pay $4,000 or less in wages subject to social security and Medicare taxes, you are likely
to pay $1,000 or less
in employment taxes. If a new employer indicates on line 13 of Form SS-4 it expects to have $1,000 or less in employment tax
liability for the
calendar year, the IRS will notify the new employer to file Form 944-SS to report social security and Medicare taxes. The
IRS's determination may be
made after April 1, 2006, so long as it is made before the employer's first Form 941-SS would have been due.
What if you don't want to file Form 944-SS?
You must file Form 944-SS if you have been notified to do so, unless you meet certain exceptions. If the IRS has notified
you to file Form 944-SS
and the exception noted in the paragraph below applies to you, you can contact the IRS by telephone at 1-800-829-0115 (U.S.
Virgin Islands only), or
215-516-2000 (toll call) about what form to file. To determine if you can file Form 941-SS quarterly to report your social
security and Medicare
taxes, you must contact the IRS by April 1, 2006 for the 2006 calendar year unless you are a new employer. See New employers... above.
You may be eligible to file Form 941-SS quarterly, instead of Form 944-SS annually, if you expect your 2006 liability for
social security and
Medicare taxes to be more than $1,000.
If you contact the IRS and the IRS determines you can file Forms 941-SS instead of Form 944-SS, the IRS will send you a written
notice that your
filing requirement has been changed.
Who cannot file Form 944-SS?
The following employers cannot file Form 944-SS.
-
Employers who are not notified. If the IRS does
not notify you to file Form 944-SS, do not file
Form 944-SS. However, as explained above,
you can call the IRS at 1-800-829-0115
(U.S. Virgin Islands only) or 215-516-2000
(toll call) by April 1, 2006, to determine
if you can file Form 944-SS.
-
Household employers. If you employ only household
employees, do not file Form 944-SS. For more infor-
mation, see Pub. 926, Household Employer's Tax
Guide, and Schedule H (Form 1040), Household
Employment Taxes.
-
Agricultural employers. If you employ only agricultural
employees, do not file Form 944-SS. For more
information, see Pub. 51 (Circular A),
Agricultural Employer's Tax Guide,
and Form 943, Employer's Annual Federal Tax Return for
Agricultural Employees.
What if you close your business?
If your business has closed...
If you go out of business or stop paying wages to your employees, you must file a final return. To tell the IRS that the form for a
particular year is your final return, check the box in Part 3 on page 2 of Form 944-SS and enter the final date you paid wages.
Also attach a
statement to your return showing the name of the person keeping the payroll records and the address where those records will
be kept.
File Form 944-SS by January 31, 2007, after the end of the 2006 calendar year. File your initial Form 944-SS for the year
in which you paid wages
that are subject to social security and Medicare taxes if the IRS has notified you that you are to file Form 944-SS for that
year. If you made
deposits in full payment of your taxes for the year by January 31, 2007, you have 10 more calendar days after that date to
file your Form 944-SS.
After you file your first Form 944-SS, you must file Form 944-SS for every year after that, even if you have no taxes to report
(unless you file a
final return — see If your business has closed... above) or until the IRS notifies you to file Form 941-SS.
If IRS notified you to file Form 944-SS for 2006, file Form 944-SS (and not Forms 941-SS) even if your tax liability for 2006
exceeds $1,000.
We consider your form filed on time if it is properly addressed and mailed First-Class or if it is sent by an IRS-designated
private delivery
service on or before the due date. See Pub. 80 (Circular SS) for more information on IRS-designated private delivery services.
If any due date for filing falls on a Saturday, Sunday, or legal holiday, you may file your return on the next
business day.
How Should You Complete Form 944-SS?
Review Your Business Information at the Top of the Form
If you are using a copy of Form 944-SS that has your business name and address preprinted at the top of the form, check to
make sure the
information is correct. If you pay a tax preparer to fill out Form 944-SS, make sure the preparer uses your business name
and EIN exactly
as they appear on the preprinted form. Carefully review your EIN to make sure that it exactly matches the EIN assigned to
your business by the
IRS. If any information is incorrect, cross it out and type or print the correct information. See also If you change your name or address...
below.
If you are not using a preprinted Form 944-SS, type or print your EIN, name, and address in the spaces provided. You must enter your
name and EIN here and on the top of the second page. Do not use your social security number (SSN) or individual taxpayer identification
number (ITIN). Generally, enter the business (legal) name that you used when you applied for your EIN on Form SS-4, Application
for Employer
Identification Number. For example, if you are a sole proprietor, enter “Ronald Smith” on the “Name” line and “Ron's Cycles” on the
“Trade name” line. Leave the “Trade name” line blank if it is the same as your “Name.”
Employer identification number (EIN).
To make sure that businesses comply with federal tax laws, the IRS monitors tax filings and payments by using a numerical
system to identify
taxpayers. A unique 9-digit employer identification number (EIN) is assigned to all corporations, partnerships, and some sole
proprietors. Businesses
needing an EIN must apply for a number and use it throughout the life of the business on all tax returns, payments, and reports.
Your business should have only one EIN. If you have more than one and are not sure which one to use, write to the
IRS office where you file your
returns (using the “ without payment” address on page 4) or call the IRS Business & Specialty Tax Line at 1-800-829-4933 (U.S. Virgin Islands
only) or 215-516-6999 (toll call). TTY/TDD users in the U.S. Virgin Islands can call 1-800-829-4059.
If you do not have an EIN, apply for one from the IRS by mail, by telephone, by fax, or by visiting the IRS website
at
www.irs.gov/smallbiz. Request Form SS-4, Application for Employer Identification Number. If you do not have an EIN by the time a return
is due, write “ Applied For” and the date you applied in the space shown for the number.
Always be sure the EIN on the form you file exactly matches the EIN that IRS assigned to your business. Do not use your social
security number on
forms that ask for an EIN. Filing a Form 944-SS with an incorrect EIN or using another business's EIN may result in penalties
and delays in processing
your return.
If you change your name or address...
Notify the IRS immediately if you change your business name or address.
-
Name change. Write to the IRS office where you would
file your return “without payment” on page 4 to notify the
IRS of any name change. (Get Pub. 1635, Understanding
Your EIN, to see if you need to also apply for a new EIN.)
-
Address change. Complete and mail Form 8822,
Change of Address, for any address change.
Completing and Filing Form 944-SS
Make entries on Form 944-SS as follows to enable accurate processing.
-
Use 12-point Courier font (if possible) for all entries if
you are using a typewriter or computer to fill out your
form.
-
Omit dollar signs and decimal points. Commas are
optional. (Report dollars to the left of the preprinted
decimal point and cents to the right of it.)
-
Leave blank any data field with a value of zero (except
line 7).
-
Enter negative amounts in parentheses (if possible).
Otherwise, use a minus sign.
-
Enter your name and EIN on all pages and attachments.
(Filers using the IRS-preaddressed Form 944-SS are not
required to enter their name and EIN on page 2.)
Reconciling Forms 944-SS and Form W-3SS
The IRS matches amounts reported on your Form 944-SS with Form W-2AS, W-2GU, W-2CM, or W-2VI amounts totaled on your Form
W-3SS, Transmittal of
Wage and Tax Statements. If the amounts do not agree, the IRS or SSA may contact you. The reconciled amounts are for all the
following items.
-
Social security wages.
-
Social security tips.
-
Medicare wages and tips.
Must You Deposit Your Taxes?
If your liability for social security and Medicare taxes is less than $2,500 for the year, you can pay the taxes with your
return if you file on
time. You do not have to deposit the taxes. However, you may choose to make deposits of these taxes even if your liability
is less than $2,500. If
your liability for these taxes is $2,500 or more, see the Federal Tax Deposit Requirements for Form 944-SS Filers chart on
page 4.
Note.
The $2,500 threshold at which federal tax deposits must be made is different from the amount of annual tax liability ($1,000
or less) that makes an
employer eligible to participate in the Employer's Annual Federal Tax Program and file Form 944-SS, Employer's ANNUAL Federal
Tax Return. Designated
Form 944-SS filers whose businesses grow during the year may be required to make federal tax deposits (see chart below), but
they will still file Form
944-SS for the year. If your total tax liability for calendar year 2006 is more than $1,000, the IRS will notify you when
to begin filing quarterly
Forms 941-SS.
What About Penalties and Interest?
Avoiding penalties and interest
You can avoid paying penalties and interest if you do all the following.
-
Pay your taxes when they are due.
-
File your fully completed Form 944-SS on time.
-
Report your tax liability accurately on Part 2 of the
Form 944-SS.
-
Submit valid checks for tax payments.
-
Give accurate Forms W-2 to employees.
-
File Copies A of Form W-2 with the Social Security
Administration (SSA) on time and accurately.
Penalties and interest are charged on taxes paid late and returns filed late at a rate set by law. See section 8 of
Pub. 80 (Circular SS) for details.
Use Form 843, Claim for Refund and Request for Abatement, to request abatement of assessed penalties or interest. Do not request
abatement of assessed penalties or interest on Form 944-SS or Form 941c, Supporting Statement To Correct Information.
A trust fund recovery penalty may apply if social security and Medicare taxes that must be withheld are not withheld or paid. The
penalty is the full amount of the unpaid trust fund tax. This penalty may apply when these unpaid taxes cannot be collected
from the employer. The
trust fund recovery penalty may be imposed on all people the IRS determines to be responsible for collecting, accounting for,
and paying these taxes,
and who acted willfully in not doing so. For details, see section 8 of Pub. 80 (Circular SS).
Your filing or payment address may have changed from that used to file your employment tax return in prior years. If you are
using an IRS-provided
envelope, use only the labels and envelope provided with this tax package. Do not send Form 944-SS or any payments to the
Social
Security Administration (SSA). Private delivery services cannot deliver to P.O. boxes.
Previous | Index | Next
2006 Instructions Main | 2006 Tax Help Archives | Tax Help Archives Main | Home
|
|
|