Projects Currently Under Development
Projects Completed
Projects Currently Under Development
Adjusted Employment Tax Form(s)(94X) Project
The Adjusted Employment Tax Returns Project reduces burden for employers and the IRS by implementing a new set of user-friendly forms and a more accurate process for making adjustments. New, easier-to-complete stand alone forms replace complex Form 941c, Supporting Statement to Correct Information.
The new forms will correspond with Form 941, Employer’s Quarterly Federal Tax Return; Form 943, Employer’s Annual Federal Tax Return for Agricultural Employees; Form 944, Employer’s Annual Federal Tax Return; Form 945, Annual Return of Withheld Federal Income Tax and Form CT-1, Employer's Annual Railroad Retirement Tax Return. The new forms and process will apply to errors discovered on or after January 1, 2009. For more information see:
Projects Completed
Partnership and Fiduciary Extension Project
Temporary and proposed regulations reduce the extension of time to file tax returns for certain businesses that generate Schedules K-1 and other similar statements from six months to five. The purpose of the change is to reduce the burden on taxpayers who must report information from Schedules K-1 and similar documents on their individual tax returns. Requiring these statements to be issued one month earlier, generally by September 15, will provide recipients time to prepare and file returns within the extended time frames.
This change will be effective for extension requests with respect to tax returns due on or after January 1, 2009, and applies to business entities who file the following returns and forms that have a tax year ending on or after September 30, 2008:
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Form 1065, U.S. Return of Partnership Income
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Form 1041, U.S. Income Tax Return for Estates & Trusts
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Form 8804, Annual Return for Partnership Withholding Tax (Section 1446)
The regulation does not change the process for requesting an extension of time to file nor does it affect extensions of time to file other types of business returns, such as those used by S-Corporations.
The Office of Taxpayer Burden Reduction initiated this change after reviewing filing data and in response to comments received from stakeholders.
Additional information:
S Corporation Elections
Revenue Procedure 2007-62 provides a simplified method for taxpayers to request relief for a late S corporation election. A more efficient IRS process now permits taxpayers to file Form 1120S (PDF), U.S. Income Tax Return for an S Corporation, and Form 2553 (PDF), S Corporation Election, simultaneously.
Taxpayers should submit Form 2553 before filing their first Form 1120S; however, the simultaneous filing and acceptance provides those who missed that important first step with a way to request relief, assuming they have reasonable cause for late filing of the election. Form 2553 can be submitted electronically as an attachment to an e-filed Form 1120S.
The change, announced in IR-2007-166, dated 10/9/07, is effective for taxable years ending on or after Dec. 31, 2007.
Form 8857 (Request for Innocent Spouse Relief) Redesign
An IRS process improvement team, led by the Office of Taxpayer Burden, redesigned Form 8857, Request for Innocent Spouse Relief. (PDf) The new, easier to complete form announced in IR-2007-125, dated July 5, 2007 will speed IRS processing, ease burden for taxpayers and reduce government costs.
Form 2678, Employer/Payer Appointment of Agent
The redesigned and retitled Form 2678 (Employer/Payer Appointment of Agent), May 2007 revision, is now available for download on the Forms and Publications page. All prior versions are obsolete. The new, user-friendly form contains several enhancements that clarify the appointment form and simplify the IRC section 3504 process, which allows an agent to file tax returns, and deposit and pay employment or other withholding taxes on an employer or payer’s behalf.
Form 940 (Employer’s Annual Federal Unemployment Tax Return) Redesign
The objective of this project is to reduce taxpayer burden and increase voluntary compliance by redesigning the Form 940 and reengineering its processes. Form 940 is filed by 5.6 million taxpayers annually. The Form 940 and Form 940EZ have been combined into one simplified plain language form and has been designed for scanning. The newly redesigned Form 940 can be found on the Forms and Publications page.
Extensions to File
Individuals are now able to use a redesigned IRS Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return, to get an automatic six-month extension of time to file. This new Form 4868 allows taxpayers a single 6-month extension. It replaces the prior two-step process under which an initial automatic extension was allowed for four months, then, if additional time was needed, Form 2688 was filed to request an additional two months. Form 2688 is now obsolete. View the Form 4868 (PDF).
Extension procedures have been streamlined for business taxpayers as well. Under the prior procedures, only corporations could request an automatic six-month tax-filing extension. The new regulations makes this option available to most unincorporated business taxpayers, including partnerships and trusts. Accordingly, starting Jan. 1, 2006, all eligible business taxpayers will now use the redesigned Form 7004, Application for Automatic 6-Month Extension of Time to File Certain Business Income Tax, Information, and Other Returns, to request an automatic six-month extension of time to file. In the past, eligible unincorporated business taxpayers had to request an initial three-month extension, then, if more time was needed, request an additional three months. Forms 8800, 8736 and 2758 are now obsolete. View the Form 7004 (PDF).
The Estate and Gift tax extension requests have been simplified as well. Form 4768, Application for Extension of Time To File a Return and/or Pay U.S. Estate Taxes, was reduced to one page. No correspondence will be issued if the request for an extension to file is granted. View the Form 4768 (PDF).
Form 8892, Payment of Gift/GST Tax and/or Application for Extension of Time To File Form 709, allows an automatic 6-month extension. This request is reserved for taxpayers who do not want the income tax return extended. The new tear-off section 8892-V is a voucher for paying a gift/GST-tax liability. Correspondence will be issued only if the extension request is denied. View the Form 8892 (PDF).
Annualization of Form 941/Employers’ Annual Federal Tax Program-Form 944
Beginning January 2006, certain eligible small employers will file their employment tax returns annually instead of quarterly. The new Form 944, Employer’s Annual Federal Tax Return, replaces the Form 941, Employer’s Quarterly Federal Tax Return, for those employers who have an annual employment tax liability of $1,000 or less. Only those employers who are notified to file Form 944 can file Form 944. Employers who were not notified but feel they are eligible, should call the IRS at (800) 829-4933. Notices will be sent to newly eligible employers between February 1-15th each year. Form 944 is due January 31st following the calendar year. See the Form 944 (PDF)and Form 944 Instructions (PDF) for more information.
Increased the Threshold for Form 1040EZ and Form 1040A Filers
The taxable income threshold for Forms 1040EZ and 1040A filers was increased from $50,000 to $100,000 effective for tax year 2004. This enabled more than 1 million taxpayers to file Forms 1040EZ or 1040A instead of a long form 1040. This change reduced taxpayer burden by more than 5 million hours.
Increased the Business Expense Threshold to $5,000 from $2,500 on Form 1040, Schedule C-EZ
The threshold for small business taxpayers who file Schedules C or C-EZ for reporting business expenses was raised from $2,500 to $5,000. This enabled approximately 500,000 eligible taxpayers to file a Schedule C-EZ instead of the regular Schedule C.
Redesigned Schedule K-1 (Form 1065, Form 1120-S and Form 1041)
Schedule K-1, which is used to report earnings from partnerships and S-corporations to 25,000,000 investors, was revised for tax year 2004. Benefits of the new form include an improved layout and streamlined instructions. During IRS processing, it can also be scanned, resulting in less transcription errors and less taxpayer notices. During focus testing with investors, one person joked that IRS should call the new form the “K-1 for Dummies.” The new forms can be accessed from Forms and Publications for tax years ending 12/31/2004 and after.
The Schedule K-1 for Form 1041, used to report distributions from estates and trusts to beneficiaries, has been conformed to the new format for tax years ending 12/31/05 and after. The new form will be posted to Forms and Publications prior to the 2005 filing season.
Redesigned Form 941
Form 941 was revised for 2005. The 941 is filed quarterly by approximately 6 million employers and used to report employment tax liabilities. The new form features an improved layout, with plain language instructions. Practitioner feedback, as well as focus testing of employers, helped IRS finalize the new design. The new 941 can be accessed from Forms and Publications for quarters beginning in 2005.
Redesigned Form 941 Schedule D
In response to an Industry Issue Resolution (IIR) suggestion from the National Association of Tax Reporting & Payroll Management, a new Form 941, Schedule D was designed and new Revenue Procedures were issued. The new form and procedures simplify and clarify payroll tax reporting for employers who are parties to certain acquisitions, statutory mergers, or consolidations effective on or after January 1, 2005. The information requested and provided on this schedule is expected to enable the IRS to resolve most discrepancies without contacting taxpayers. The filing of this new schedule began in tax year 2005.
Increase the FUTA Minimum Deposit Threshold
Treasury approved an IRS TBR proposal to raise the Federal Unemployment Tax Act (FUTA) quarterly deposit threshold from $100 to $500. This proposal reduces burden for 2.6 million taxpayers per year and eliminates the requirement for taxpayers with eight or less employees from having to make three tax deposits a year. This change was effective January 1, 2005, and saved taxpayers who fall under the new threshold from having to make 7.8 million deposits a year.
Alternative Minimum Tax (AMT) Assistant
The Internal Revenue Service is providing a new online tool to help individual taxpayers determine whether they are potentially subject to the alternative minimum tax (AMT).
The AMT Assistant helps taxpayers determine whether or not they may be subject to the AMT by automating the AMT Worksheet of the 1040 Instructions, called the “Worksheet to See if You Should Fill in Form 6251 – Line 45.”
This new tool is now available on IRS.gov. For more information or to try this tool, please visit the AMT webpage.
References/Related Topics
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