IRS Simplifies Tax Filing Requirements for Small Business Employers
Friday February 3, 2006
The Internal Revenue Service announced January 3 that it is simplifying the employment tax reporting requirements for some 950,000 small business owners with few employees.
Employers with estimated annual employment tax liability of $1,000 or less are now eligible to file Form 944 (Employer’s Annual Federal Tax Return) annually instead of Form 941 (Employer’s Quarterly Federal Tax Return) quarterly. Most eligible employers will be able to make a single payment with their return.
The minimum requirement for eligibility equates to approximately $4,000 or less in annual wages. This will primarily affect LLCs and S-corps that are passing most of the profit through to the owners, as well as sole proprietors with part-time employees.
For more information, see the IRS press release.
Comments
I have posted some information on IRS Form 944 Employer’s Annual Federal Tax Return on the taxes website. The IRS and Treasury Department are still implementing this new program, and not all details are immediately available. Employers who might qualify should talk to their tax advisor or payroll processor.