December, 2003

NPRC Invites Participation in IRS Industry Issue Resolution Project:
New IRS Form 941 Schedule Would Facilitate Reconciliation of Mergers, Acquisitions and Other Organizational Changes

The IRS and SSA reconcile employer filings of annual Forms W-2 to the quarterly employment tax returns filed during the year. Normally, the total wages and taxes reported on an employer's quarterly Forms 941 are equal to the total wages and taxes reported on their annual Forms W-2. However, this reconciliation is complicated when an employer makes an entity change, such as an acquisition, merger or spin-off. When an employer is involved in a mid-year organization change, W-2s are often filed under one federal employer identification number (FEIN), while employment tax deposits and returns (Forms 941) are filed under a different FEIN.

Employers involved in such transactions sometimes receive assessments for taxes already paid under another FEIN. Don't blame the IRS, though – they do amazingly well, considering employers are not required to provide specific information that would enable the IRS to reconcile the accounts in question. Employers currently letters of explanation to their IRS Form 941 for the period in question. Freeform letters are often ambiguous and difficult for the IRS to interpret.

The National Payroll Reporting Consortium (NPRC) is sponsoring an IRS Industry Issue Resolution project to clarify and improve procedures for reporting employment taxes in the context of mergers, acquisitions, consolidations, reorganizations and other restructurings. The proposal in a nutshell, is to create a new optional 941 schedule to report such transactions, which could be electronically filed separately or with Form 941

he proposed new schedule would identify the organizations, the nature of the transaction and effective date, and reconciliation details, such as the percentage of employment tax liabilities to “transfer” to the successor company. NPRC is inviting input and participation from all interested organizations. Contact NPRC at (NPRC@NPRC-inc.org).

September, 2003

Tax Amnesty Program

Virginia's Department of Taxation announced a tax amnesty program, giving individuals and businesses that have fallen behind on their state taxes a chance to catch up - penalty free.

July, 2003

New IRS Reporting Agents (RAF) Page

A new IRS RAF website provides comprehensive information about Reporting Agents, including key Revenue Procedures, publications, authorization forms, related links and details on how the RAF works.

June, 2003

Georgia Department of Revenue -
New Payment Schedule and EFT Mandate

The new EFT threshold and payment schedule (which closely parallels the federal schedule) is effective April 1, 2004, for employers with withholding tax liabilities over $50,000 (was $120K) during the look-back period (July-June). The agency is also considering an e-file program using XML.

• For paydays occurring on Wednesday, Thursday, or Friday, the taxes must be remitted on or before the following Wednesday or, in the case of a holiday, the next banking day thereafter;
• For paydays occurring on Saturday, Sunday, Monday, or Tuesday, the taxes must be remitted on or before the following Friday…
• Employers whose tax withheld exceeds $100,000… must be remitted by the next banking day.