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IRS Issues Final Regulations for the Employer's Annual Federal Tax Return Program

The Internal Revenue Service (IRS) recently issued final regulations on the Form 944 Program, which allows qualified employers to file employment tax returns annually rather than quarterly. In general, the regulations track the temporary regulations issued in 2006 and revised in 2008. Some of the language, however, was updated to reflect current law and practice. In addition, the final regulations will help guide employers on the look-back periods and deposit requirements for Form 944.

The IRS introduced the Form 944 Program in 2006 after discovering that many small employers were filing their Forms 941, Employer's Quarterly Federal Tax Returns, with little or no employment taxes due.

Qualified employers must have an estimated annual employment tax liability (comprised of Social Security, Medicare and withheld federal income taxes) of $1,000 or less for the entire calendar year. Upon proper request, the IRS will notify employers in writing that they qualify for the program. The agency also notifies employers when they no longer qualify for the program and must file Forms 941 instead.

For more information on Form 944, visit the IRS website.