IRS Form 944 for 2015 – 2016

Every employer in the United States is familiar with Form 941, formally titled the Employer’s Quarterly Federal Tax Return, which is required to be filed with the Internal Revenue Service four times each year: at the end of April, July, October and January. The main information supplied by an employer on this form is the total amount of wages and tips given employees, and the total amount of monies withheld for Social Security, Medicare and Federal taxes.

Starting in 2007, the Internal Revenue Service introduced Form 944, in an effort to make its system more efficient as well as to ease the time spent by employers completing paperwork. This article sets forth details about the form.

Form 944 can only be used by small businesses, defined as those with an annual employment tax liability of no more than $1,000.00. It is estimated that employers which paid wages of less than $4,100 will fall within this group. Employers list the same information on this form as they would on Form 941. Unlike the quarterly filing requirements of Form 941, this form is filed only once a year. The filing deadline is at the end of January for the previous year.

Employers will receive a notice from the IRS regarding their eligibility to use this form instead of Form 941. Should the IRS notice received by the employer declare that the employer must file it, it cannot file Form 941 without first asking and receiving permission from the IRS to do so.

An employer eligible to file this form can also register with the IRS to file it online. One of the advantages of online filing is that the IRS has software in its system which will perform the needed calculations for an employer.

Though, at first glance, it may appear that Form 944 only applies to a very small number of businesses, it is estimated that the number of employers who fall within its parameters are between 900,000 and 1,000,000. Because it reduces the administrative paperwork of employers as well as the volume of paperwork received by the IRS, it is obviously a win-win situation.


How does this affect new businesses?

New employers who complete form SS-4 on paper will estimate first-year tax liability and can be accepted in the 944 filing program. New employers who complete form SS-4 online are not be reviewed for 944 status and are 941 filers. However, text on the online registration site gives a brief description of the 944 program.

How does this affect existing businesses?

  • Existing employers who reported $1,000 or less in annual liability in a given year will be switched to 944 filing status for the following year. Unless employers receive a 944 letter, they stay a 941 filer.
  • 944 employers who wish to remain 941 filers must notify the IRS in writing by April 1. Reporting agents (such as Intuit Online Payroll) cannot notify IRS on behalf of clients unless they have power of attorney (Intuit does not have power of attorney – employers need to contact the IRS themselves).
  • Employers in either filing status who file the wrong form are subject to Failure to File penalties.