IRS Releases Final Version of Form 941

IRS Releases Final Version of Form 941

On June 19, the IRS posted a new version of Form 941 (Employer’s Quarterly Federal Tax Return).  It will be used beginning with the second quarter return (April 1 to June 30) that must be filed by July 31 (August 10 for employers that made timely deposits in full payment of their taxes for the first quarter).

Background. Form 941 required substantial revisions to account for refundable employment tax credits, advance payment of employer credits, and deferred payment of the employer’s share of Social Security tax in response to the coronavirus (COVID-19) public health emergency.

    • Qualified leave wages. Refundable tax credits are available for paid sick leave and paid family leave (“qualified leave wages”) required under the Families First Coronavirus Response Act (the “FFCRA”). Qualified leave wages aren’t subject to the employer share of Social Security tax.


    • Employee retention credit. Additionally, the form also includes the Employee Retention Credit (ERC) provided under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The ERC is equal to 50% of qualified wages paid to employees after March 12, 2020, and before Jan. 1, 2021. If employers paid any qualified wages between March 13, 2020, and March 31, 2020, inclusive, they will include 50% of those wages, together with 50% of any qualified wages paid during the second quarter of 2020, on their second quarter Form 941, 941-SS, or 941-PR to claim the credit. IRS instructions for the first quarter 2020 Form 941 noted that employers should not include the credit on their first quarter Form 941, 941-SS, or 941-PR (included on draft version of Form 941 on Part 3, line 24).


    • Advance payment of credits. Eligible employers may claim the above credits on their federal employment tax returns (e.g., Form 941), but they can benefit more quickly by filing Form 7200 (Advance Payment of Employer Credits Due to COVID-19) to request an advance payment of the tax credits for qualified sick and qualified family leave wages and the employee retention credit. Employers may file Form 7200 if there are insufficient federal employment taxes to cover the amount of the credits.


    • Deferred payment of employer tax. Section 2302 of the Cares Act allows employers to defer the deposit and payment of the employer’s share of Social Security taxes. The deferral applies to deposits and payments of the employer’s share of Social Security tax that would otherwise be required to be made during the period beginning on March 27, 2020, and ending Dec. 31, 2020. The deferred deposits of the employer’s share of Social Security tax must be deposited by the following dates (referred to as the “applicable dates'”) to be treated as timely (and avoid a failure to deposit penalty): (1) on Dec. 31, 2021, 50% of the deferred amount; and (2) on Dec. 31, 2022, the remaining amount. Employers that received a Paycheck Protection Program loan may not defer the deposit and payment of the employer’s share of Social Security tax that is otherwise due after the employer receives a decision from the lender that the loan was forgiven.


    New Form 941. There are no changes in the final version of the form from the draft version that was released in April. The deadline for filing the second quarter 2020 Form 941 (Employer’s Quarterly Federal Tax Return) is July 31, unless the tax was deposited for the quarter in full and on time, in which case employers have until August 10 to file the return.

    Draft instructions for Form 941. The instructions for Form 941 have not yet been finalized. The first draft was released in May with a second draft released earlier this June.

    Schedule B and Schedule R. The IRS released a draft version of Schedule R (Allocation Schedule for Aggregate Form 941 Filers). A final version of this form has not yet been released. Draft instructions were released in May for Form 941 Schedule B (Report of Tax Liability for Semiweekly Schedule Depositors) and Schedule R. The IRS has announced that Schedule B will not be revised.

    This article was adapted from, and initially published by Thomson Reuters/Tax & Accounting on June 23, 2020.
    Document Title:IRS Releases Final Version of Form 941 (06/23/2020)
    Checkpoint Source:Payroll Updates

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