IRS Eases Tax Filing Rules for Small Employers

The Internal Revenue Service has announced temporary new rules that will reduce the burden of tax filing on small business owners who usually owe little or no taxes on their quarterly returns.

The IRS announced that starting Jan. 1, 2006, certain employers will be able to file a new Form 944 once a year, replacing Form 941, which was filed every quarter. The IRS says the change would help nearly 950,000 eligible small business owners who have an estimated annual employment tax liability of $1,000 or less.

”This is just one more burden reduction step the IRS is taking to make it easier for small business employers to comply with the tax laws. Replacing four quarterly forms with one annual form is a significant benefit for small business taxpayers,“ said the IRS’ Small Business/Self Employee Commissioner Kevin M. Brown.

Letters notifying eligible small employers will be sent between Feb. 1 and Feb. 15. If you believe you are eligible, but do not receive a letter, call the IRS at 800.829.0115 by April 1.

Also eligible for the Form 944 program are new employers who expect to owe $1,000 or less in total annual employment tax. The IRS directs employers to indicate their estimated tax amount when applying for their EIN (Employer’s Identification Number) on Form SS-4. The IRS will notify the employer to file either Form 944 or Form 941 in the same notice indicating the taxpayer’s new EIN.

The new rules are only temporary and proposed, so the IRS and the U.S. Department of the Treasury are accepting comments on the rules and how they can be made easier to understand. The Form 944 program may be expanded in the future, so comments are also being accepted on how to change eligibility requirements. A public hearing is set for April 26 in Washington, D.C.

Access more detailed information about the temporary and proposed regulations, and how to comment, at http://www.irs.gov/irs/article/0,,id=152458,00.html.

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