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Form 944-Employer's Annual Federal Tax Return

Form 944 New for 2006, Form 944 is designed so the smallest employers (those whose annual payroll liability for social security, Medicare and withholding federal income taxes is $1,000 or less) will file and pay these taxes only once a year instead of every quarter. New Form 944, Employer’s Annual Federal Tax Return, substitutes for Form 941, Employer’s Quarterly Federal Tax Return) for employers with little or no employment tax due. Most employers who file Form 944 will be able to make a single payment with their annual return.

Eligible employers are those with estimated annual employment tax liability of $1,000 or less. The IRS will begin mailing notification letters between February 1 and February 15, 2006 to eligible small employers for calendar year 2006. Employers who do not receive a letter and believe they are eligible to file the new Form 944 can call the IRS at 1-800-829-0115 to find out if they qualify. Taxpayers should contact the IRS by April 1, 2006.

New employers who expect to owe $1,000 or less in total annual employment tax (approximately $4,000 or less in annual wages) also are eligible to file Form 944. These employers can 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.