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2012. 2012.taxhow taxhow Publication 80 - Main Content Table of Contents Introduction 1. 2012.taxhow Employer Identification Number (EIN) 2. 2012.taxhow Who Are Employees?Tests. 2012.taxhow Business Owned and Operated by Spouses Farm Crew Leaders 3. 2012.taxhow Employee's Social Security Number (SSN)Registering for SSNVS. 2012.taxhow 4. 2012.taxhow Wages and Other CompensationFringe Benefits 5. 2012.taxhow TipsOrdering rule. 2012.taxhow 6. 2012.taxhow Social Security and Medicare Taxes for FarmworkersThe $150 Test or the $2,500 Test 7. 2012.taxhow How To Figure Social Security and Medicare TaxesHousehold and agricultural employers. 2012.taxhow 8. 2012.taxhow Depositing TaxesPayment with Return When To Deposit How To Deposit Deposit Penalties 9. 2012.taxhow Employer's ReturnsReporting Adjustments to Form 941-SS, 944-SS, 944, or 943 Current Period Adjustments Prior Period Adjustments 10. 2012.taxhow Wage and Tax StatementsWaiver. 2012.taxhow 11. 2012.taxhow Federal Unemployment (FUTA) Tax—U. 2012.taxhow S. 2012.taxhow Virgin Islands Employers Only How To Get Tax Help Introduction This publication is for employers whose principal place of business is in the U. 2012.taxhow S. 2012.taxhow Virgin Islands, Guam, American Samoa, or the Commonwealth of the Northern Mariana Islands, or who have employees who are subject to income tax withholding for any of these jurisdictions. 2012.taxhow Employers and employees in these areas are generally subject to social security and Medicare taxes under the Federal Insurance Contributions Act (FICA). 2012.taxhow See section 6 and section 7 for more information. 2012.taxhow This publication summarizes employer responsibilities to collect, pay, and report these taxes. 2012.taxhow Whenever the term “United States” is used in this publication, it includes U. 2012.taxhow S. 2012.taxhow Virgin Islands, Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands. 2012.taxhow This publication also provides employers in the U. 2012.taxhow S. 2012.taxhow Virgin Islands with a summary of their responsibilities in connection with the tax under the Federal Unemployment Tax Act, known as FUTA tax. 2012.taxhow See section 11 for more information. 2012.taxhow Except as shown in the table in section 12, social security, Medicare, and FUTA taxes apply to every employer who pays taxable wages to employees or who has employees who report tips. 2012.taxhow This publication does not include information relating to the self-employment tax (for social security and Medicare of self-employed persons). 2012.taxhow See Publication 570, Tax Guide for Individuals With Income From U. 2012.taxhow S. 2012.taxhow Possessions, if you need this information. 2012.taxhow This publication also does not include information relating to income tax withholding. 2012.taxhow In U. 2012.taxhow S. 2012.taxhow Virgin Islands, Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands, contact your local tax department for information about income tax withholding. 2012.taxhow See Publication 15 (Circular E), for information on U. 2012.taxhow S. 2012.taxhow federal income tax withholding. 2012.taxhow Comments and suggestions. 2012.taxhow   We welcome your comments about this publication and your suggestions for future editions. 2012.taxhow   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. 2012.taxhow NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. 2012.taxhow Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. 2012.taxhow    You can also send us comments from www. 2012.taxhow irs. 2012.taxhow gov/formspubs. 2012.taxhow Click on More Information and then click on Comment on Tax Forms and Publications. 2012.taxhow   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax forms, instructions, and publications. 2012.taxhow 1. 2012.taxhow Employer Identification Number (EIN) An employer identification number (EIN) is a nine-digit number that the IRS issues. 2012.taxhow Its format is 00-0000000. 2012.taxhow It is used to identify the tax accounts of employers and certain other organizations and entities that have no employees. 2012.taxhow Use your EIN on all of the items that you send to the IRS and SSA for your business. 2012.taxhow If you do not have an EIN, you may apply for one online. 2012.taxhow Go to IRS. 2012.taxhow gov and click on the Apply for an EIN Online link under Tools. 2012.taxhow You may also apply for an EIN by calling 1-800-829-4933, (U. 2012.taxhow S. 2012.taxhow Virgin Islands only) or 267-941-1099 (toll call), or you can fax or mail Form SS-4, Application for Employer Identification Number, to the IRS. 2012.taxhow Do not use a social security number (SSN) in place of an EIN. 2012.taxhow If you do not have an EIN by the time a return is due, file a paper return and enter “Applied For” and the date that you applied for it in the space shown for the number. 2012.taxhow If you took over another employer's business, do not use that employer's EIN. 2012.taxhow You should have only one EIN. 2012.taxhow If you have more than one, write to the IRS office where you file your returns using the “without a payment” address in the Instructions for Form 941-SS, Instructions for Form 944, or Instructions for Form 943. 2012.taxhow Or call the IRS Business & Specialty Tax Line at 1-800-829-4933 (U. 2012.taxhow S. 2012.taxhow Virgin Islands only) or 267-941-1000 (toll call). 2012.taxhow Persons who are deaf, hard of hearing, or have a speech disability (TDD/TTY users) in the U. 2012.taxhow S. 2012.taxhow Virgin Islands may call 1-800-829-4059. 2012.taxhow The IRS will tell you which EIN to use. 2012.taxhow For more information, see Publication 1635, Employer Identification Number: Understanding Your EIN, or Publication 583, Starting a Business and Keeping Records. 2012.taxhow 2. 2012.taxhow Who Are Employees? Generally, employees are defined either under common law or under special statutes for certain situations. 2012.taxhow See Publication 15-A, Employer's Supplemental Tax Guide, for details on statutory employees and nonemployees. 2012.taxhow Employee status under common law. 2012.taxhow   Generally, a worker who performs services for you is your employee if you can control what will be done and how it will be done. 2012.taxhow This is so even when you give the employee freedom of action. 2012.taxhow What matters is that you have the right to control the details of how the services are performed. 2012.taxhow See Publication 15-A for more information on how to determine whether an individual providing services is an independent contractor or an employee. 2012.taxhow    Generally, people in business for themselves are not employees. 2012.taxhow For example, doctors, lawyers, veterinarians, and others in an independent trade in which they offer their services to the public are usually not employees. 2012.taxhow However, if the business is incorporated, corporate officers who work in the business are employees of the corporation. 2012.taxhow   If an employer-employee relationship exists, it does not matter what it is called. 2012.taxhow The employee may be called an agent or independent contractor. 2012.taxhow It also does not matter how payments are measured or paid, what they are called, or if the employee works full or part time. 2012.taxhow Statutory employees. 2012.taxhow   There are also some special definitions of employees for social security, Medicare, and FUTA taxes. 2012.taxhow   While the following persons may not be common law employees, they are considered employees for social security and Medicare purposes if the conditions under Tests , discussed later, are met. 2012.taxhow a. 2012.taxhow   An agent (or commission) driver who delivers food or beverages (other than milk) or picks up and delivers laundry or dry cleaning for someone else. 2012.taxhow b. 2012.taxhow   A full-time life insurance salesperson who sells primarily for one company. 2012.taxhow c. 2012.taxhow   A homeworker who works by the guidelines of the person for whom the work is done, with materials furnished by and returned to that person or to someone that person designates. 2012.taxhow d. 2012.taxhow   A traveling or city salesperson (other than an agent-driver or commission-driver) who works full time (except for sideline sales activities) for one firm or person getting orders from customers. 2012.taxhow The orders must be for merchandise for resale or supplies for use in the customer's business. 2012.taxhow The customers must be retailers, wholesalers, contractors, or operators of hotels, restaurants, or other businesses dealing with food or lodging. 2012.taxhow Tests. 2012.taxhow   Withhold social security and Medicare taxes from statutory employees' wages if all three of the following tests apply. 2012.taxhow The service contract states or implies that almost all of the services are to be performed personally by them. 2012.taxhow They have little or no investment in the equipment and property used to perform the services (other than an investment in transportation facilities). 2012.taxhow The services are performed on a continuing basis for the same payer. 2012.taxhow Persons in a or d, earlier, are also employees for FUTA tax purposes if tests 1 through 3 are met (U. 2012.taxhow S. 2012.taxhow Virgin Islands only). 2012.taxhow   Publication 15-A gives examples of the employer-employee relationship. 2012.taxhow Statutory nonemployees. 2012.taxhow   Certain direct sellers, qualified real estate agents, and certain companion sitters are, by law, considered nonemployees. 2012.taxhow They are generally treated as self-employed for employment tax purposes. 2012.taxhow See Publication 15-A for details. 2012.taxhow H-2A agricultural workers. 2012.taxhow   On Form W-2, do not check box 13 (Statutory employee) as H-2A workers are not statutory employees. 2012.taxhow Treating employees as nonemployees. 2012.taxhow   If you incorrectly treated an employee as a nonemployee and did not withhold social security and Medicare taxes, you will be liable for the taxes. 2012.taxhow See Treating employees as nonemployees in section 2 of Publication 15 (Circular E), for details on Internal Revenue Code section 3509, which may apply. 2012.taxhow IRS help. 2012.taxhow   If you want the IRS to determine if a worker is an employee, file Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding. 2012.taxhow Voluntary Classification Settlement Program (VCSP). 2012.taxhow   Employers who are currently treating their workers (or a class or group of workers) as independent contractors or other nonemployees and want to voluntarily reclassify their workers as employees for future tax periods may be eligible to participate in the VCSP if certain requirements are met. 2012.taxhow To apply, use Form 8952, Application for Voluntary Classification Settlement Program (VCSP). 2012.taxhow For more information, visit IRS. 2012.taxhow gov and enter “VCSP” in the search box. 2012.taxhow Business Owned and Operated by Spouses If you and your spouse jointly own and operate a business and share in the profits and losses, you are partners in a partnership, whether or not you have a formal partnership agreement. 2012.taxhow See Publication 541, Partnerships, for more details. 2012.taxhow The partnership is considered the employer of any employees, and is liable for any employment taxes due on wages paid to its employees. 2012.taxhow Exception—Qualified Joint Venture. 2012.taxhow   If you and your spouse materially participate as the only members of a jointly owned and operated business, and you file a joint Form 1040, U. 2012.taxhow S. 2012.taxhow Individual Income Tax Return, or joint Form 1040-SS, U. 2012.taxhow S. 2012.taxhow Self-Employment Tax Return—U. 2012.taxhow S. 2012.taxhow Virgin Islands, Guam, American Samoa, the Commonwealth of the Northern Mariana Islands, or Puerto Rico, you can make a joint election to be taxed as a qualified joint venture instead of a partnership. 2012.taxhow See the Instructions for Schedule C (Form 1040) or the Instructions for Form 1040-SS. 2012.taxhow Spouses electing qualified joint venture status are treated as sole proprietors for federal tax purposes. 2012.taxhow Either of the sole proprietor spouses may report and pay the employment taxes due on wages paid to the employees, using the EIN of that spouse’s sole proprietorship. 2012.taxhow For more information on qualified joint ventures, visit IRS. 2012.taxhow gov and enter “qualified joint venture” in the search box. 2012.taxhow Farm Crew Leaders You are an employer of farmworkers if you are a crew leader. 2012.taxhow A crew leader is a person who furnishes and pays (either on his or her own behalf or on behalf of the farm operator) workers to do farmwork for the farm operator. 2012.taxhow If there is no written agreement between you and the farm operator stating that you are his or her employee, and if you pay the workers (either for yourself or for the farm operator), then you are a crew leader. 2012.taxhow 3. 2012.taxhow Employee's Social Security Number (SSN) An employee's social security number (SSN) consists of nine digits separated as follows: 000-00-0000. 2012.taxhow You must get each employee's name and SSN and enter them on Form W-2AS, W-2CM, W-2GU, or W-2VI. 2012.taxhow If you do not report the employee's correct name and SSN, you may owe a penalty unless you have reasonable cause. 2012.taxhow See Publication 1586, Reasonable Cause Regulations and Requirements for Missing and Incorrect Name/TINs, for information on the requirement to solicit the employee's SSN. 2012.taxhow Employee's social security card. 2012.taxhow   You should ask the employee to show you his or her social security card. 2012.taxhow The employee may show the card if it is available. 2012.taxhow Do not accept a social security card that says “Not valid for employment. 2012.taxhow ” A social security number issued with this legend does not permit employment. 2012.taxhow You may, but you are not required to, photocopy the social security card if the employee provides it. 2012.taxhow If an employee does not have a social security card or needs a new one, the employee should apply for one on Form SS-5 and submit the necessary documentation. 2012.taxhow The employee must complete and sign Form SS-5; it cannot be filed by the employer. 2012.taxhow You may be asked to supply a letter to accompany Form SS-5 if the employee has exceeded his or her yearly or lifetime limit for the number of replacement cards allowed. 2012.taxhow If your employee has applied for an SSN but has not received the card before you must file your Form W-2 reports, and you are filing your reports on paper, enter “Applied For” in box d. 2012.taxhow Enter all zeroes in the SSN field if filing electronically. 2012.taxhow When the employee receives the SSN, file Copy A of Form W-2c with SSA to show the employee's SSN. 2012.taxhow Correctly record the employee's name and SSN. 2012.taxhow   Record the name and number of each employee as they appear on his or her social security card. 2012.taxhow If the name is not correct as shown on the card (for example, because of marriage or divorce), the employee should request a corrected card from the SSA. 2012.taxhow Continue to use the old name until the employee shows you the replacement social security card with the corrected name. 2012.taxhow   If the SSA issues the employee a replacement card after a name change, or a new card with a different social security number after a change in alien work status, file a Form W-2c to correct the name/SSN reported on the most recently filed Form W-2AS, W-2CM, W-2GU, or W-2VI. 2012.taxhow It is not necessary to correct other years if the previous name and SSN were used for years before the most recent Form W-2. 2012.taxhow Where to get and file social security number application forms. 2012.taxhow    U. 2012.taxhow S. 2012.taxhow Virgin Islands—U. 2012.taxhow S. 2012.taxhow Social Security Administration, 8000 Nisky Center, First Floor, Suite 2, St. 2012.taxhow Thomas, VI 00802. 2012.taxhow  Guam—U. 2012.taxhow S. 2012.taxhow Social Security Administration, 655 Harmon Loop Road, Suite 300, Dededo, GU 96929. 2012.taxhow  American Samoa—U. 2012.taxhow S. 2012.taxhow Social Security Administration, Pago Plaza, Suite 117, Pago Pago, AS 96799. 2012.taxhow  Commonwealth of the Northern Mariana Islands—U. 2012.taxhow S. 2012.taxhow Social Security Administration, MH Building, Suite 201, Saipan, MP 96950. 2012.taxhow Verification of social security numbers. 2012.taxhow   Employers and authorized reporting agents can use the Social Security Number Verification Service (SSNVS) to instantly verify up to 10 names and SSNs (per screen) at a time, or submit an electronic file of up to 250,000 names and SSNs and usually receive the results the next business day. 2012.taxhow Visit www. 2012.taxhow socialsecurity. 2012.taxhow gov/employer/ssnv. 2012.taxhow htm for more information. 2012.taxhow Registering for SSNVS. 2012.taxhow   You must register online and receive authorization from your employer to use SSNVS. 2012.taxhow To register, visit SSA's website at www. 2012.taxhow ssa. 2012.taxhow gov/employer and click on the Business Services Online link. 2012.taxhow Follow the registration instructions to obtain a user identification (ID) and password. 2012.taxhow You will need to provide the following information about yourself and your company. 2012.taxhow Name. 2012.taxhow SSN. 2012.taxhow Date of birth. 2012.taxhow Type of employer. 2012.taxhow EIN. 2012.taxhow Company name, address, and telephone number. 2012.taxhow Email address. 2012.taxhow   When you have completed the online registration process, SSA will mail a one-time activation code to your employer. 2012.taxhow You must enter the activation code online to use SSNVS. 2012.taxhow 4. 2012.taxhow Wages and Other Compensation Generally, all wages are subject to social security and Medicare tax (and FUTA tax for U. 2012.taxhow S. 2012.taxhow Virgin Islands employers). 2012.taxhow However, wages subject to social security tax and FUTA tax are limited by a wage base amount that you pay to each employee for the year. 2012.taxhow The wage base for social security tax is $117,000 for 2014. 2012.taxhow After you pay $117,000 to an employee in 2014, including tips, do not withhold social security tax on any amount that you later pay to the employee for the year. 2012.taxhow The wage base for FUTA tax is $7,000 for 2014. 2012.taxhow All wages are subject to Medicare tax. 2012.taxhow The wages may be in cash or in other forms, such as an automobile for personal use. 2012.taxhow Wages include salaries, vacation allowances, bonuses, commissions, and fringe benefits. 2012.taxhow It does not matter how payments are measured or paid. 2012.taxhow See the table in section 12 for exceptions to social security, Medicare, and FUTA taxes on wages. 2012.taxhow See section 5 and section 6 for a discussion of how the rules apply to tips and farmworkers. 2012.taxhow Social security and Medicare taxes apply to most payments of sick pay, including payments by third parties such as insurance companies. 2012.taxhow Special rules apply to the reporting of third-party sick pay. 2012.taxhow For details, see Publication 15-A. 2012.taxhow Determine the value of noncash pay (such as goods, lodging, and meals) by its fair market value. 2012.taxhow However, see Fringe Benefits , later in this section. 2012.taxhow Except for farmworkers and household employees, this kind of pay may be subject to social security, Medicare, and FUTA taxes. 2012.taxhow Back pay, including retroactive wage increases (but not amounts paid as liquidated damages), is taxed as ordinary wages in the year paid. 2012.taxhow For information on reporting back pay to the Social Security Administration, see Publication 957, Reporting Back Pay and Special Wage Payments to the Social Security Administration. 2012.taxhow Travel and business expenses. 2012.taxhow   Payments to your employee for travel and other necessary expenses of your business generally are included in taxable wages if (a) your employee is not required to or does not substantiate timely those expenses to you with receipts or other documentation, or (b) you advance an amount to your employee for business expenses and your employee is not required to or does not return timely any amount that he or she does not substantiate. 2012.taxhow Sick pay. 2012.taxhow   In general, sick pay is any amount that you pay, under a plan that you take part in, to an employee because of sickness or injury. 2012.taxhow These amounts are sometimes paid by a third party, such as an insurance company. 2012.taxhow In either case, these payments are subject to social security and Medicare taxes (and FUTA tax for U. 2012.taxhow S. 2012.taxhow Virgin Islands employers). 2012.taxhow Sick pay becomes exempt from these taxes after the end of 6 calendar months after the calendar month the employee last worked for the employer. 2012.taxhow Publication 15-A explains the employment tax rules that apply to sick pay, disability benefits, and similar payments to employees. 2012.taxhow Fringe Benefits Generally, fringe benefits are includible in the gross income of an employee and are subject to employment taxes. 2012.taxhow Examples of fringe benefits include the use of an automobile, aircraft flights that you provide, free or discounted commercial airline flights, vacations, discounts on property or services, memberships in country clubs or other social clubs, and tickets to entertainment or sporting events. 2012.taxhow In general, the amount included in the employee's income is the excess of the fair market value of the benefit over the sum of any amount paid for it by the employee and any amount excluded by law. 2012.taxhow For more information, see Publication 15-B, Employer's Tax Guide to Fringe Benefits. 2012.taxhow When fringe benefits are treated as paid. 2012.taxhow   You can choose to treat certain noncash fringe benefits (including personal use of an automobile provided by you) as paid by the pay period, quarter, or on any other basis that you choose, but they must be treated as paid at least annually. 2012.taxhow You do not have to make a formal choice of payment dates or notify the IRS. 2012.taxhow You do not have to use the same basis for all employees. 2012.taxhow You may change methods as often as you like, as long as all benefits provided in a calendar year are treated as paid no later than December 31 of the calendar year. 2012.taxhow However, see Special accounting rule for fringe benefits provided during November and December , later in this section. 2012.taxhow   You can treat the value of a single taxable noncash fringe benefit as paid on one or more dates in the same calendar year, even if the employee gets the entire benefit at one time. 2012.taxhow However, once you elect the payment dates, you must report the taxes on your return in the same tax period in which you treated them as paid. 2012.taxhow This election does not apply to a fringe benefit where real property or investment personal property is transferred. 2012.taxhow Withholding social security and Medicare taxes on fringe benefits. 2012.taxhow   You add the value of fringe benefits to regular wages for a payroll period and figure social security and Medicare taxes on the total. 2012.taxhow   If you withhold less than the required amount of social security and Medicare taxes from the employee in a calendar year but report and pay the proper amount, you may recover the taxes from the employee. 2012.taxhow Depositing taxes on fringe benefits. 2012.taxhow   Once you choose payment dates for taxable noncash fringe benefits, you must deposit taxes in the same deposit period that you treat the fringe benefits as paid. 2012.taxhow You may make a reasonable estimate of the value of the fringe benefits. 2012.taxhow In general, the value of taxable noncash fringe benefits provided in a calendar year must be determined by January 31 of the following year. 2012.taxhow   You may claim a refund of overpayments or elect to have any overpayment applied to the next employment tax return. 2012.taxhow If deposits are underpaid, see Deposit Penalties in section 8. 2012.taxhow Valuation of vehicles provided to employees. 2012.taxhow    If you provide a vehicle to your employees, you may either determine the actual value of the benefit for the entire calendar year, taking into account the business use of the vehicle, or consider the entire use for the calendar year as personal and include 100% of the value of the vehicle in the employee's income. 2012.taxhow For reporting information to employees, see the box 14 instructions in the General Instructions for Forms W-2 and W-3. 2012.taxhow Special accounting rule for fringe benefits provided during November and December. 2012.taxhow   You may choose to treat the value of taxable noncash fringe benefits provided during November and December as paid in the next year. 2012.taxhow However, this applies only to those benefits that you actually provided during November and December, not to those you merely treated as paid during those months. 2012.taxhow   If you use this rule, you must notify each affected employee between the time of the employee's last paycheck of the calendar year and at or near the time that you give the employee Form W-2AS, W-2CM, W-2GU, or W-2VI. 2012.taxhow If you use the special accounting rule, your employee must also use it for the same period that you use it. 2012.taxhow You cannot use this rule for a fringe benefit of real property or tangible or intangible real property of a kind normally held for investment that is transferred to your employee. 2012.taxhow 5. 2012.taxhow Tips Tips that your employee receives from customers are generally subject to social security and Medicare withholding. 2012.taxhow Your employee must report cash tips to you by the 10th of the month after the month that the tips are received. 2012.taxhow The report should include tips you paid over to the employee for charge customers, tips the employee received directly from customers, and tips received from other employees under any tip-sharing arrangement. 2012.taxhow Both directly and indirectly tipped employees must report tips to you. 2012.taxhow The report should not include tips that the employee paid out to other employees. 2012.taxhow No report is required for months when tips are less than $20. 2012.taxhow Your employees report tips on Form 4070, Employee's Report of Tips to Employer, or on a similar statement. 2012.taxhow They may also use Form 4070A, Employee's Daily Record of Tips, to keep a record of their tips. 2012.taxhow Both forms are included in Publication 1244, Employee's Daily Record of Tips and Report to Employer, available at IRS. 2012.taxhow gov. 2012.taxhow The statement must be signed by the employee and must include: The employee's name, address, and SSN, Your name and address, The month or period that the report covers, and The total tips received during the month or period. 2012.taxhow You are permitted to establish a system for electronic tip reporting by employees. 2012.taxhow See Regulations section 31. 2012.taxhow 6053-1(d). 2012.taxhow Collecting taxes on tips. 2012.taxhow   You must collect the employee social security and Medicare taxes on the employee's tips. 2012.taxhow You can also collect these taxes from the employee's wages or from other funds that he or she makes available. 2012.taxhow Stop collecting the employee social security tax when his or her total wages and tips for 2014 reach $117,000. 2012.taxhow Collect the employee Medicare tax for the whole year on all wages and tips. 2012.taxhow   You are responsible for the employer social security tax on wages and tips until the wages (including tips) reach the wage base limit. 2012.taxhow You are responsible for the employer Medicare tax for the whole year on all wages and tips. 2012.taxhow File Form 941-SS (or Form 944) to report withholding and employer taxes on tips. 2012.taxhow The withholding rules for withholding an employee's share of Medicare tax on tips also apply to withholding the Additional Medicare Tax once wages and tips exceed $200,000 in the calendar year. 2012.taxhow Ordering rule. 2012.taxhow   If, by the 10th of the month after the month you received an employee's report on tips, you do not have enough employee funds available to deduct the employee social security and Medicare tax on tips, you no longer have to collect it and are not liable for it. 2012.taxhow Reporting tips. 2012.taxhow   Report tips and any collected and uncollected social security in boxes 1, 5, 7, and 12 on Forms W-2AS, W-2CM, W-2GU, or W-2VI and on Form 941-SS, lines 5b, 5c, and 5d (Form 944, lines 4b, 4c, and 4d). 2012.taxhow Do not include any uncollected Additional Medicare Tax in box 12 of Form W-2. 2012.taxhow Report an adjustment on Form 941-SS, line 9 (Form 944, line 6), for the uncollected social security and Medicare taxes. 2012.taxhow The table in section 12 shows how tips are treated for FUTA tax purposes. 2012.taxhow   Revenue Ruling 2012-18 provides guidance for employers regarding social security and Medicare taxes imposed on tips, including information on the reporting of the employer share of social security and Medicare taxes under section 3121(q), the difference between tips and service charges, and the section 45B credit. 2012.taxhow See Revenue Ruling 2012-18, 2012-26 I. 2012.taxhow R. 2012.taxhow B. 2012.taxhow 1032, available at www. 2012.taxhow irs. 2012.taxhow gov/irb/2012-26_IRB/ar07. 2012.taxhow html. 2012.taxhow 6. 2012.taxhow Social Security and Medicare Taxes for Farmworkers The tests described below apply only to services that are defined as agricultural labor (farmwork). 2012.taxhow In general, you are an employer of farmworkers if your employees: Raise or harvest agricultural or horticultural products on your farm (including the raising and feeding of livestock); Work in connection with the operation, management, conservation, improvement, or maintenance of your farm and its tools and equipment; Provide services relating to salvaging timber, or clearing land of brush and other debris, left by a hurricane (also known as hurricane labor); Handle, process, or package any agricultural or horticultural commodity if you produced over half of the commodity (for a group of up to 20 unincorporated operators, all of the commodity); or Do work for you related to cotton ginning, turpentine, gum resin products, or the operation and maintenance of irrigation facilities. 2012.taxhow For this purpose, the term “farm” includes stock, dairy, poultry, fruit, fur-bearing animal, and truck farms, as well as plantations, ranches, nurseries, ranges, greenhouses or other similar structures used primarily for the raising of agricultural or horticultural commodities, and orchards. 2012.taxhow Farmwork does not include reselling activities that do not involve any substantial activity of raising agricultural or horticultural commodities, such as a retail store or a greenhouse used primarily for display or storage. 2012.taxhow A “share farmer” working for you is not your employee. 2012.taxhow However, the share farmer may be subject to self-employment tax. 2012.taxhow In general, share farming is an arrangement in which certain commodity products are shared between the farmer and the owner (or tenant) of the land. 2012.taxhow For details, see Regulations section 31. 2012.taxhow 3121(b)(16)-1. 2012.taxhow The $150 Test or the $2,500 Test All cash wages that you pay to any employee for farmwork are subject to social security and Medicare taxes if either of the following two tests is met. 2012.taxhow You pay cash wages to the employee of $150 or more in a year (count all cash wages paid on a time, piecework, or other basis) for farmwork. 2012.taxhow The $150 test applies separately to each farmworker that you employ. 2012.taxhow If you employ a family of workers, each member is treated separately. 2012.taxhow Do not count wages paid by other employers. 2012.taxhow The total that you pay for farmwork (cash and noncash) to all of your employees is $2,500 or more during the year. 2012.taxhow Exceptions. 2012.taxhow   The $150 and $2,500 tests do not apply to wages that you pay to a farmworker who receives less than $150 in annual cash wages and the wages are not subject to social security and Medicare taxes even if you pay $2,500 or more in that year to all of your farmworkers if the farmworker: Is employed in agriculture as a hand-harvest laborer, Is paid piece rates in an operation that is usually paid on a piece-rate basis in the region of employment, Commutes daily from his or her home to the farm, and Had been employed in agriculture less than 13 weeks in the preceding calendar year. 2012.taxhow   Amounts that you pay to these seasonal farmworkers, however, count toward the $2,500-or-more test to determine whether wages that you pay to other farmworkers are subject to social security and Medicare taxes. 2012.taxhow 7. 2012.taxhow How To Figure Social Security and Medicare Taxes The tax rate for social security is 6. 2012.taxhow 2% (amount withheld) each for the employer and employee (12. 2012.taxhow 4% total). 2012.taxhow The social security wage base limit is $117,000. 2012.taxhow The tax rate for Medicare is 1. 2012.taxhow 45% (amount withheld) each for the employee and employer (2. 2012.taxhow 9% total). 2012.taxhow There is no wage base limit for Medicare tax; all covered wages are subject to Medicare tax. 2012.taxhow Multiply each wage payment by these percentages to figure the tax to withhold from employees. 2012.taxhow Employers report both the employee and employer shares on Forms 941-SS, 944, or Form 943 (farm employment). 2012.taxhow See section 5 for information on tips. 2012.taxhow Additional Medicare Tax withholding. 2012.taxhow   In addition to withholding Medicare tax at 1. 2012.taxhow 45%, you must withhold a 0. 2012.taxhow 9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. 2012.taxhow You are required to begin withholding Additional Medicare Tax in the pay period in which you pay wages in excess of $200,000 to an employee and continue to withhold it each pay period until the end of the calendar year. 2012.taxhow Additional Medicare Tax is only imposed on the employee. 2012.taxhow There is no employer share of Additional Medicare Tax. 2012.taxhow All wages that are subject to Medicare tax are subject to Additional Medicare Tax withholding if paid in excess of the $200,000 withholding threshold. 2012.taxhow   For more information on what wages are subject to Medicare tax, see the chart Special Rules for Various Types of Employment and Payments in section 12. 2012.taxhow For more information on Additional Medicare Tax, visit IRS. 2012.taxhow gov and enter “Additional Medicare Tax” in the search box. 2012.taxhow Deducting the tax. 2012.taxhow   Deduct the employee tax from each wage payment. 2012.taxhow If you are not sure that the wages that you pay to a farmworker during the year will be taxable, you may either deduct the tax when you make the payments or wait until the $2,500 test or the $150 test explained in section 6 has been met. 2012.taxhow Employee's portion of taxes paid by employer. 2012.taxhow   If you pay your employee's social security and Medicare taxes without deducting them from the employee's pay, you must include the amount of the payments in the employee's wages for social security and Medicare taxes. 2012.taxhow This increase in the employee's wage payment for your payment of the employee's social security and Medicare taxes is also subject to employee social security and Medicare taxes. 2012.taxhow This again increases the amount of the additional taxes that you must pay. 2012.taxhow Household and agricultural employers. 2012.taxhow   This discussion does not apply to household and agricultural employers. 2012.taxhow If you pay a household or agricultural employee's social security and Medicare taxes, these payments must be included in the employee's wages. 2012.taxhow However, this wage increase due to the tax payments is not subject to social security or Medicare taxes as discussed in this section. 2012.taxhow See Publication 15-A for details. 2012.taxhow Sick pay payments. 2012.taxhow   Social security and Medicare taxes apply to most payments of sick pay, including payments made by third parties such as insurance companies. 2012.taxhow For details on third-party payers of sick pay, see Publication 15-A. 2012.taxhow 8. 2012.taxhow Depositing Taxes You must deposit social security and Medicare taxes if your tax liability (Form 941-SS, line 10; Form 944, line 7; or Form 943, line 11) is $2,500 or more for the tax return period. 2012.taxhow You must make the deposit by electronic funds transfer. 2012.taxhow For more information about electronic funds transfers, see How To Deposit , later in this section. 2012.taxhow Payment with Return $2,500 rule. 2012.taxhow   Instead of making deposits during the current quarter, you can pay your total Form 941-SS tax liability when you timely file Form 941-SS if: Your total Form 941-SS tax liability for either the current quarter or the preceding quarter is less than $2,500 and You do not incur a $100,000 next-day deposit obligation during the current quarter. 2012.taxhow   If you are not sure your total liability for the current quarter will be less than $2,500, (and your liability for the preceding quarter was not less than $2,500), make deposits using the semiweekly or monthly rules so you won't be subject to failure to deposit penalties. 2012.taxhow Employers who have been notified to file Form 944 can pay their tax liability due for the fourth quarter with Form 944, if their fourth quarter tax liability is less than $2,500. 2012.taxhow Employers must have deposited any tax liability due for the first, second, and third quarters, according to the deposit rules, in order to avoid failure-to-deposit penalties for deposits due during those quarters. 2012.taxhow Only monthly schedule depositors are allowed to make an Accuracy of Deposits Rule payment with the return. 2012.taxhow Semiweekly schedule depositors must timely deposit the amount. 2012.taxhow See Accuracy of Deposits Rule and How To Deposit, later in this section. 2012.taxhow When To Deposit Under the rules discussed below, the only difference between farm and nonfarm workers' employment tax deposit rules is the lookback period. 2012.taxhow Therefore, farm and nonfarm workers are discussed together except where noted. 2012.taxhow Depending on your total taxes reported during a lookback period (discussed later), you are either a monthly schedule depositor or a semiweekly schedule depositor. 2012.taxhow The terms “monthly schedule depositor” and “semiweekly schedule depositor” do not refer to how often you pay your employees or how often you are required to make deposits. 2012.taxhow The terms identify which set of rules that you must follow when a tax liability arises (for example, when you have a payday). 2012.taxhow You will need to determine your deposit schedule for a calendar year based on the total employment taxes reported on Forms 941-SS, line 10; Form 944, line 7; or Form 943, line 9, for your lookback period (defined below). 2012.taxhow If you filed both Forms 941-SS and 941 during the lookback period, combine the tax liabilities for these returns for purposes of determining your deposit schedule. 2012.taxhow Determine your deposit schedule for Form 943 separately from Forms 941-SS and 941. 2012.taxhow Lookback period for employers of nonfarm workers. 2012.taxhow   The lookback period for Form 941-SS (or Form 941) consists of four quarters beginning July 1 of the second preceding year and ending June 30 of the prior year. 2012.taxhow These four quarters are your lookback period even if you did not report any taxes for any of the quarters. 2012.taxhow For 2014, the lookback period is July 1, 2012, through June 30, 2013. 2012.taxhow    Table 1. 2012.taxhow Lookback Period for Calendar Year 2014 Lookback Period July 1, 2012 Oct. 2012.taxhow 1, 2012 Jan. 2012.taxhow 1, 2013 Apr. 2012.taxhow 1, 2013 through through through through Sep. 2012.taxhow 30, 2012 Dec. 2012.taxhow 31, 2012 Mar. 2012.taxhow 31, 2013 June 30, 2013    The lookback period for Form 944 is the second calendar year preceding the current calendar year. 2012.taxhow For example, the lookback period for calendar year 2014 is calendar year 2012. 2012.taxhow In addition, for employers who filed Form 944 for 2012 or for 2013 and will file Form 941-SS (or Form 941) for 2014, the lookback period for 2014 is the second calendar year preceding the current calendar year, that is, 2012. 2012.taxhow Lookback period for employers of farmworkers. 2012.taxhow   The lookback period for Form 943 is the second calendar year preceding the current calendar year. 2012.taxhow The lookback period for calendar year 2014 is calendar year 2012. 2012.taxhow Adjustments to lookback period taxes. 2012.taxhow   To determine your taxes for the lookback period, use only the tax that you reported on the original returns (Forms 941-SS, 943, or 944). 2012.taxhow Do not include any adjustments shown on Form 941-X, 943-X, or 944-X. 2012.taxhow Example. 2012.taxhow   An employer originally reported total taxes of $45,000 for the lookback period. 2012.taxhow The employer discovered during January 2014 that the tax reported during the lookback period was understated by $10,000 and corrected this error by filing Form 941-X. 2012.taxhow The employer is a monthly schedule depositor for 2014 because the lookback period tax liabilities are based on the amounts originally reported, and they were $50,000 or less. 2012.taxhow Deposit Period The term “deposit period” refers to the period during which tax liabilities are accumulated for each required deposit due date. 2012.taxhow For monthly schedule depositors, the deposit period is a calendar month. 2012.taxhow The deposit periods for semiweekly schedule depositors are Wednesday through Friday and Saturday through Tuesday. 2012.taxhow Monthly Deposit Schedule If your total tax reported for the lookback period is $50,000 or less, you are a monthly schedule depositor for the current year. 2012.taxhow You must deposit taxes on wage payments made during a calendar month by the 15th day of the following month. 2012.taxhow New employers. 2012.taxhow   Your tax liability for any quarter in the lookback period before the date you started or acquired your business is considered to be zero. 2012.taxhow Therefore, you are a monthly schedule depositor for the first calendar year of your business (but see the $100,000 Next-Day Deposit Rule , later in this section). 2012.taxhow Semiweekly Deposit Schedule If your total tax reported for the lookback period is more than $50,000, you are a semiweekly schedule depositor for the current year. 2012.taxhow If you are a semiweekly schedule depositor, you must deposit on Wednesday and/or Friday, depending on what day of the week that you make wage payments, as follows. 2012.taxhow Deposit taxes on wage payments made on Wednesday, Thursday, and/or Friday by the following Wednesday. 2012.taxhow Deposit taxes on wage payments made on Saturday, Sunday, Monday, and/or Tuesday by the following Friday. 2012.taxhow Semiweekly depositors are generally not required to deposit twice a week if their payments were in the same semiweekly period unless the $100,000 Next-Day Deposit Rule , discussed later in this section, applies. 2012.taxhow For example, if you made a payment on both Wednesday and Friday and incurred taxes of $10,000 for each pay date, deposit the $20,000 on the following Wednesday. 2012.taxhow If you made no additional payments on Saturday through Tuesday, no deposit is due on Friday. 2012.taxhow Semiweekly deposit period spanning two quarters. 2012.taxhow   If you have more than one pay date during a semiweekly period and the pay dates fall in different calendar quarters, you will need to make separate deposits for the separate liabilities. 2012.taxhow Example. 2012.taxhow   If you have a pay date on Monday, March 31, 2014 (first quarter), and another pay date on Tuesday, April 1, 2014 (second quarter), two separate deposits will be required even though the pay dates fall within the same semiweekly period. 2012.taxhow Both deposits will be due on Friday, April 4, 2014 (3 business days from the end of the semiweekly deposit period). 2012.taxhow Examples of Monthly and Semiweekly Schedules Employers of nonfarm workers. 2012.taxhow   Rose Co. 2012.taxhow reported Form 941-SS taxes as follows: 2013 Lookback Period 3rd Quarter 2011 $12,000 4th Quarter 2011 12,000 1st Quarter 2012 12,000 2nd Quarter 2012 12,000   $48,000 2014 Lookback Period 3rd Quarter 2012 $12,000 4th Quarter 2012 12,000 1st Quarter 2013 12,000 2nd Quarter 2013 15,000   $51,000 Rose Co. 2012.taxhow is a monthly schedule depositor for 2013 because its taxes for the four quarters in its lookback period ($48,000 for the 3rd quarter of 2011 through the 2nd quarter of 2012) were not more than $50,000. 2012.taxhow However, for 2014, Rose Co. 2012.taxhow is a semiweekly schedule depositor because the total taxes for the four quarters in its lookback period ($51,000 for the 3rd quarter of 2012 through the 2nd quarter of 2013) exceeded $50,000. 2012.taxhow Employers of farmworkers. 2012.taxhow   Red Co. 2012.taxhow reported taxes on its 2012 Form 943, line 9, of $48,000. 2012.taxhow On its 2013 Form 943, line 11, it reported taxes of $60,000. 2012.taxhow   Red Co. 2012.taxhow is a monthly schedule depositor for 2014 because its taxes for its lookback period ($48,000 for calendar year 2012) were not more than $50,000. 2012.taxhow However, for 2015, Red Co. 2012.taxhow is a semiweekly schedule depositor because the total taxes for its lookback period ($60,000 for calendar year 2013) exceeded $50,000. 2012.taxhow New agricultural employers. 2012.taxhow   New agricultural employers filing Form 943 are monthly schedule depositors for the first and second calendar years of their business because their taxes for the lookback period (2 years) are considered to be zero. 2012.taxhow However, see the $100,000 Next-Day Deposit Rule , later in this section. 2012.taxhow Deposits on Business Days Only If a deposit due date falls on a day that is not a business day, the deposit is considered timely if it is made by the close of the next business day. 2012.taxhow A business day is any day other than a Saturday, Sunday, or legal holiday. 2012.taxhow For example, if a deposit is required to be made on Friday, but Friday is a legal holiday, the deposit is considered timely if it is made by the following Monday (if Monday is a business day). 2012.taxhow Semiweekly schedule depositors have at least 3 business days to make a deposit. 2012.taxhow If any of the 3 weekdays after the end of a semiweekly period is a legal holiday, you will have an additional day for each day that is a legal holiday to make the required deposit. 2012.taxhow For example, if a semiweekly schedule depositor accumulated taxes for payments made on Friday and the following Monday is a legal holiday, the deposit normally due on Wednesday may be made on Thursday (this allows 3 business days to make the deposit). 2012.taxhow Legal holiday. 2012.taxhow   The term “legal holiday” means any legal holiday in the District of Columbia. 2012.taxhow Legal holidays for 2014 are listed below. 2012.taxhow January 1—New Year's Day January 20—Birthday of Martin Luther King, Jr. 2012.taxhow February 17—Washington's Birthday April 16—District of Columbia Emancipation Day May 26—Memorial Day July 4—Independence Day September 1—Labor Day October 13—Columbus Day November 11—Veterans Day November 27—Thanksgiving Day December 25—Christmas Day Application of Monthly and Semiweekly Schedules The following examples illustrate the procedure for determining the deposit date under the two different deposit schedules. 2012.taxhow Monthly schedule example. 2012.taxhow   Spruce Co. 2012.taxhow is a monthly schedule depositor with seasonal employees. 2012.taxhow It paid wages each Friday during August but did not pay any wages during September. 2012.taxhow Under the monthly deposit schedule, Spruce Co. 2012.taxhow must deposit the combined tax liabilities for the four August paydays by September 15. 2012.taxhow Spruce Co. 2012.taxhow does not have a deposit requirement for September (due by October 15) because no wages were paid and, therefore, it did not have a tax liability for September. 2012.taxhow Semiweekly schedule example. 2012.taxhow   Green, Inc. 2012.taxhow is a semiweekly schedule depositor and pays wages once each month on the last Friday of the month. 2012.taxhow Although Green, Inc. 2012.taxhow , has a semiweekly deposit schedule, it will deposit just once a month because it pays wages only once a month. 2012.taxhow The deposit, however, will be made under the semiweekly deposit schedule as follows: Green, Inc. 2012.taxhow ’s tax liability for the April 25, 2014 (Friday), payday must be deposited by April 30, 2014 (Wednesday). 2012.taxhow Under the semiweekly deposit schedule, liabilities for wages paid on Wednesday through Friday must be deposited by the following Wednesday. 2012.taxhow $100,000 Next-Day Deposit Rule If you accumulate taxes of $100,000 or more on any day during a deposit period, you must deposit by the close of the next business day, whether you are a monthly or a semiweekly schedule depositor. 2012.taxhow For purposes of the $100,000 rule, do not continue accumulating taxes after the end of a deposit period. 2012.taxhow For example, if a semiweekly schedule depositor has accumulated taxes of $95,000 on Tuesday and $10,000 on Wednesday, the $100,000 next-day deposit rule does not apply because the $10,000 is accumulated in the next deposit period. 2012.taxhow Thus, $95,000 must be deposited by Friday and $10,000 must be deposited by the following Wednesday. 2012.taxhow However, once you accumulate at least $100,000 in a deposit period, stop accumulating at the end of that day and begin to accumulate anew on the next day. 2012.taxhow For example, Fir Co. 2012.taxhow is a semiweekly schedule depositor. 2012.taxhow On Monday, Fir Co. 2012.taxhow accumulates taxes of $110,000 and must deposit on Tuesday, the next business day. 2012.taxhow On Tuesday, Fir Co. 2012.taxhow accumulates additional taxes of $30,000. 2012.taxhow Because the $30,000 is not added to the previous $110,000 and is less than $100,000, Fir Co. 2012.taxhow does not have to deposit the $30,000 until Friday (following the semiweekly deposit schedule). 2012.taxhow If you are a monthly schedule depositor and you accumulate a $100,000 tax liability on any day during a month, you become a semiweekly schedule depositor on the next day and remain so for the remainder of the calendar year and for the following calendar year. 2012.taxhow Example. 2012.taxhow   Elm, Inc. 2012.taxhow started its business on May 1, 2014. 2012.taxhow On May 8, it paid wages for the first time and accumulated a tax liability of $40,000. 2012.taxhow On Friday, May 9, Elm, Inc. 2012.taxhow paid wages and accumulated a liability of $60,000, making its accumulated Form 941-SS tax liability total $100,000. 2012.taxhow Elm, Inc. 2012.taxhow must deposit $100,000 by Monday, May 12, the next business day. 2012.taxhow Because this was the first year of its business, the tax liability for its lookback period is considered to be zero, and it would be a monthly schedule depositor based on the lookback rules. 2012.taxhow However, because Elm, Inc. 2012.taxhow accumulated $100,000 on May 9, it became a semiweekly schedule depositor on May 10. 2012.taxhow It will be a semiweekly schedule depositor for the remainder of 2014 and for 2015. 2012.taxhow Accuracy of Deposits Rule You are required to deposit 100% of your tax liability on or before the deposit due date. 2012.taxhow However, penalties will not be applied for depositing less than 100% if both of the following conditions are met. 2012.taxhow Any deposit shortfall does not exceed the greater of $100 or 2% of the amount of taxes otherwise required to be deposited, and The deposit shortfall is paid or deposited by the shortfall makeup date as described below. 2012.taxhow Makeup date for deposit shortfall: Monthly schedule depositor. 2012.taxhow Deposit or pay the shortfall by the due date of your Form 941-SS, 944, or 943 for the period in which the shortfall occurred. 2012.taxhow You may pay the shortfall with your return even if the amount is $2,500 or more. 2012.taxhow Semiweekly schedule depositor. 2012.taxhow Deposit by the earlier of: The first Wednesday or Friday (whichever comes first) that comes on or after the 15th of the month following the month in which the shortfall occurred, or The return due date for the period in which the shortfall occurred. 2012.taxhow For example, if a semiweekly schedule depositor filing Form 941-SS has a deposit shortfall during July 2014, the shortfall makeup date is August 15, 2014 (Friday). 2012.taxhow However, if the shortfall occurred on the required April 2 (Wednesday), deposit date for a March 28 (Friday) pay date, the return due date for the March 28 pay date (April 30) would come before the May 16 (Friday) shortfall makeup date. 2012.taxhow In this case, the shortfall must be deposited by April 30, 2014. 2012.taxhow Employers of Both Farm and Nonfarm Workers If you employ both farm and nonfarm workers, you must treat employment taxes for the farmworkers (Form 943 taxes) separately from employment taxes for the nonfarm workers (Form 941-SS or 944 taxes). 2012.taxhow Form 943 taxes and Form 941-SS (or Form 944) taxes are not combined for purposes of applying any of the deposit rules. 2012.taxhow If a deposit is due, deposit the Form 941-SS (or Form 944) taxes and Form 943 taxes separately, as discussed next. 2012.taxhow How To Deposit You must deposit employment taxes by electronic funds transfer. 2012.taxhow See Payment with Return , earlier in this section, for exceptions explaining when taxes may be paid with the tax return instead of being deposited. 2012.taxhow Electronic deposit requirement. 2012.taxhow   You must use electronic funds transfer to make all federal tax deposits (such as deposits of employment tax, excise tax, and corporate income tax). 2012.taxhow Generally, electronic fund transfers are made using the Electronic Federal Tax Payment System (EFTPS). 2012.taxhow If you do not want to use EFTPS, you can arrange for your tax professional, financial institution, payroll service, or other trusted third party to make electronic deposits on your behalf. 2012.taxhow   EFTPS is a free service provided by the Department of the Treasury. 2012.taxhow To get more information or to enroll in EFTPS, call 1-800-555-4477 (U. 2012.taxhow S. 2012.taxhow Virgin Islands only) or 303-967-5916 (toll call). 2012.taxhow You can also visit the EFTPS website at www. 2012.taxhow eftps. 2012.taxhow gov. 2012.taxhow Additional information about EFTPS is also available in Publication 966. 2012.taxhow When you receive your EIN. 2012.taxhow   If you are a new employer that indicated a federal tax obligation when requesting an EIN, you will be pre-enrolled in EFTPS. 2012.taxhow You will receive information about Express Enrollment in your Employer Identification Number (EIN) Package and an additional mailing containing your EFTPS personal identification number (PIN) and instructions for activating your PIN. 2012.taxhow Follow the steps in your “How to Activate Your Enrollment” brochure to activate your enrollment and begin making your payroll tax deposits. 2012.taxhow If you outsource any of your payroll and related tax duties to a third party payer, such as a payroll service provider or reporting agent, be sure to tell them about your EFTPS enrollment. 2012.taxhow Deposit record. 2012.taxhow   For your records, an Electronic Funds Transfer (EFT) Trace Number will be provided with each successful payment. 2012.taxhow The number can be used as a receipt or to trace the payment. 2012.taxhow Depositing on time. 2012.taxhow   For deposits made by EFTPS to be on time, you must initiate the deposit by 8 p. 2012.taxhow m. 2012.taxhow Eastern time the day before the date the deposit is due. 2012.taxhow If you use a third party to make deposits on your behalf, they may have different cutoff times. 2012.taxhow Same-day payment option. 2012.taxhow   If you fail to initiate a deposit transaction on EFTPS by 8 p. 2012.taxhow m. 2012.taxhow Eastern time the day before the date a deposit is due, you can still make your deposit on time by using the Federal Tax Application (FTA). 2012.taxhow To use the same-day payment method, you will need to make arrangements with your financial institution ahead of time. 2012.taxhow Please check with your financial institution regarding availability, deadlines, and costs. 2012.taxhow Your financial institution may charge you a fee for payments made this way. 2012.taxhow To learn more about the information you will need to provide your financial institution to make a same-day wire payment, please visit www. 2012.taxhow eftps. 2012.taxhow gov to download the Same-Day Payment Worksheet. 2012.taxhow How to claim credit for overpayments. 2012.taxhow   If you deposited more than the right amount of taxes for a tax period, you can choose on Form 941-SS, 941, 944, or 943 for that tax period to have the overpayment refunded or applied as a credit to your next return. 2012.taxhow Do not ask EFTPS to request a refund from the IRS for you. 2012.taxhow Deposit Penalties Penalties may apply if you do not make required deposits on time or if you make deposits of less than the required amount. 2012.taxhow The penalties do not apply if any failure to make a proper and timely deposit was due to reasonable cause and not to willful neglect. 2012.taxhow The IRS may also waive penalties if you inadvertently fail to deposit in the first quarter that a deposit is due, or the first quarter during which your frequency of deposits changed, if you timely filed your employment tax return. 2012.taxhow For amounts not properly or timely deposited, the penalty rates are as follows. 2012.taxhow 2% - Deposits made 1 to 5 days late. 2012.taxhow 5% - Deposits made 6 to 15 days late. 2012.taxhow 10% - Deposits made 16 or more days late. 2012.taxhow Also applies to amounts paid within 10 days of the date of the first notice that the IRS sent asking for the tax due. 2012.taxhow 10% - Amounts (that should have been deposited) paid directly to the IRS or paid with your tax return (but see Payment with Return , earlier in this section, for exceptions). 2012.taxhow 15% - Amounts still unpaid more than 10 days after the date of the first notice that the IRS sent asking for the tax due or the day on which you received notice and demand for immediate payment, whichever is earlier. 2012.taxhow Late deposit penalty amounts are determined using calendar days, starting from the due date of the liability. 2012.taxhow Special rule for former Form 944 filers. 2012.taxhow    If you filed Form 944 for the prior year and must file Forms 941-SS for the current year because your employment tax liability for the prior year exceeded the Form 944 eligibility requirement ($1,000 or less), the failure-to-deposit penalty will not apply to a late deposit of employment taxes for the first month of the current year if the taxes are deposited in full by March 15 of the current year. 2012.taxhow Order in which deposits are applied. 2012.taxhow   Deposits generally are applied to the most recent tax liability within the return period (quarter or year). 2012.taxhow However, if you receive a failure-to-deposit penalty notice, you may designate how your payment is to be applied in order to minimize the amount of the penalty, if you do so within 90 days of the date of the notice. 2012.taxhow Follow the instructions on the penalty notice that you received. 2012.taxhow For more information on designating deposits, see Revenue Procedure 2001-58. 2012.taxhow You can find Revenue Procedure 2001-58 on page 579 of Internal Revenue Bulletin 2001-50 at www. 2012.taxhow irs. 2012.taxhow gov/pub/irs-irbs/irb01-50. 2012.taxhow pdf. 2012.taxhow Example. 2012.taxhow Cedar, Inc. 2012.taxhow is required to make a deposit of $1,000 on July 15 and $1,500 on August 15. 2012.taxhow It does not make the deposit on July 15. 2012.taxhow On August 15, Cedar, Inc. 2012.taxhow deposits $2,000. 2012.taxhow Under the deposits rule, which applies deposits to the most recent tax liability, $1,500 of the deposit is applied to the August 15 deposit and the remaining $500 is applied to the July deposit. 2012.taxhow Accordingly, $500 of the July 15 liability remains undeposited. 2012.taxhow The penalty on this underdeposit will apply as explained earlier. 2012.taxhow Trust fund recovery penalty. 2012.taxhow   If federal income, social security, or Medicare taxes that must be withheld are not withheld or are not deposited or paid to the United States Treasury, the trust fund recovery penalty may apply. 2012.taxhow The penalty is the full amount of the unpaid trust fund tax. 2012.taxhow This penalty may apply to you if these unpaid taxes cannot be immediately collected from the employer or business. 2012.taxhow   The trust fund recovery penalty may be imposed on all persons who are determined by the IRS to be responsible for collecting, accounting for, and paying over these taxes, and who acted willfully in not doing so. 2012.taxhow   A responsible person can be an officer or employee of a corporation, a partner or employee of a partnership, an accountant, a volunteer director/trustee, or an employee of a sole proprietorship, or any other person or entity that is responsible for collecting, accounting for, and paying over trust fund taxes. 2012.taxhow A responsible person also may include one who signs checks for the business or otherwise has authority to cause the spending of business funds. 2012.taxhow    Willfully means voluntarily, consciously, and intentionally. 2012.taxhow A responsible person acts willfully if the person knows the required actions of collecting, accounting for or paying over trust fund taxes are not taking place, or recklessly disregards obvious and known risks to the government's right to receive trust fund taxes. 2012.taxhow “Averaged” failure-to-deposit penalty. 2012.taxhow   The IRS may assess an “averaged” failure-to-deposit (FTD) penalty of 2% to 10% if you are a monthly schedule depositor and did not properly complete Form 941-SS, line 14, when your tax liability shown on Form 941-SS, line 10, was $2,500 or more. 2012.taxhow IRS may also assess this penalty of 2% to 10% if you are a semiweekly schedule depositor and your tax liability shown on Form 941-SS, line 10, was $2,500 or more and you did any of the following. 2012.taxhow Completed Form 941-SS, line 14, instead of Schedule B (Form 941). 2012.taxhow Failed to attach a properly completed Schedule B (Form 941). 2012.taxhow Completed Schedule B (Form 941) incorrectly, for example, by entering tax deposits instead of tax liabilities in the numbered spaces. 2012.taxhow   The IRS figures the penalty by allocating your total tax liability shown on Form 941-SS, line 10, equally throughout the tax period. 2012.taxhow Your deposits and payments may not be counted as timely because IRS does not know the actual dates of your tax liabilities. 2012.taxhow   You can avoid the penalty by reviewing your return before filing it. 2012.taxhow Follow these steps before filing your Form 941-SS. 2012.taxhow If you are a monthly schedule depositor, report your tax liabilities (not your deposits) in the monthly entry spaces on Form 941-SS, line 14. 2012.taxhow If you are a semiweekly schedule depositor, report your tax liabilities (not your deposits) on Schedule B (Form 941) in the lines that represent the dates you paid your employees. 2012.taxhow Verify that your total liability shown on Form 941-SS, line 14, or the bottom of Schedule B (Form 941) equals your tax liability shown on Form 941-SS,  line 10. 2012.taxhow Do not show negative amounts on Form 941-SS, line 14, or Schedule B (Form 941). 2012.taxhow For prior period errors, do not adjust your tax liabilities reported on your current Form 941-SS, line 14, or on Schedule B (Form 941). 2012.taxhow Instead, file an adjusted return (Form 941-X (if you are adjusting a previously filed Form 941-SS) or Form 944-X (if you are adjusting a previously filed Form 944-SS or 944)) if you are also adjusting your tax liability. 2012.taxhow If you are only adjusting your deposits in response to a failure-to-deposit penalty notice, see the Instructions for Schedule B (Form 941) (if you previously filed Form 941-SS) or the Instructions for Form 944-X (if you previously filed Form 944-SS or 944). 2012.taxhow If you filed Form 944 for 2013 and line 7 was $2,500 or more, you were required to complete Form 944, lines 13a–13m, or attach Form 945-A, Annual Record of Federal Tax Liability. 2012.taxhow If you failed to complete lines 13a–13m, or failed to attach Form 945-A, whichever was required, IRS may assess an “averaged” failure-to-deposit (FTD) penalty. 2012.taxhow 9. 2012.taxhow Employer's Returns General instructions. 2012.taxhow   File Forms 941-SS (or Form 944) for nonfarm workers and Form 943 for farmworkers. 2012.taxhow (U. 2012.taxhow S. 2012.taxhow Virgin Islands employers may be required to file Form 940 for the combined wages of nonfarm workers and farmworkers. 2012.taxhow ) Employers with employees subject to U. 2012.taxhow S. 2012.taxhow income tax withholding. 2012.taxhow   If you have both employees who are subject to U. 2012.taxhow S. 2012.taxhow income tax withholding and employees who are not subject to U. 2012.taxhow S. 2012.taxhow income tax withholding, you must file only Form 941 (or Form 944) and include all your employees’ wages on that form. 2012.taxhow Nonfarm employers. 2012.taxhow   File Form 941-SS for the calendar quarter in which you first pay wages for nonfarm workers and for each quarter thereafter unless you are a seasonal employer or file a final return. 2012.taxhow Due dates for each quarter of the calendar year are as follows. 2012.taxhow Quarter Due Jan. 2012.taxhow , Feb. 2012.taxhow , Mar. 2012.taxhow Apr. 2012.taxhow 30 Apr. 2012.taxhow , May, June July 31 July, Aug. 2012.taxhow , Sept. 2012.taxhow Oct. 2012.taxhow 31 Oct. 2012.taxhow , Nov. 2012.taxhow , Dec. 2012.taxhow Jan. 2012.taxhow 31   However, if you deposited all taxes when due for the quarter, you have 10 additional days from the due dates to file the return. 2012.taxhow If the due date for filing your return falls on a Saturday, Sunday, or legal holiday, you may file on the next business day. 2012.taxhow   If you closed your business or stopped paying wages and do not have to file returns in the future, check the box on line 15 of your final Form 941-SS and show the date final wages were paid. 2012.taxhow Form 944. 2012.taxhow   If IRS notified you to file Form 944, file your 2013 Form 944 by January 31, 2014, or by February 10, 2014 (if you deposited all taxes when due). 2012.taxhow Household employers reporting social security and Medicare taxes. 2012.taxhow   If you are a sole proprietor and file Forms 941-SS (or Form 944) for business employees, you may include taxes for household employees on your Forms 941-SS (or Form 944). 2012.taxhow Otherwise, report social security and Medicare taxes for household employees on Schedule H (Form 1040), Household Employment Taxes. 2012.taxhow See Publication 926, Household Employer's Tax Guide, for more information. 2012.taxhow Employers of farmworkers. 2012.taxhow   Every employer of farmworkers must file a Form 943 for each calendar year beginning with the first year the employer pays $2,500 or more for farmwork or employs a farmworker who meets the $150 test described in section 6. 2012.taxhow   File a Form 943 each year for all taxable wages paid for farmwork. 2012.taxhow You may report household workers in a private home on a farm operated for profit on Form 943. 2012.taxhow Do not report wages for farmworkers on Form 941-SS or 944. 2012.taxhow   Send Form 943 to the IRS by January 31 of the following year. 2012.taxhow Send it with payment of any taxes due that you are not required to deposit. 2012.taxhow If you deposited all taxes when due, you have 10 additional days to file. 2012.taxhow Penalties. 2012.taxhow   For each whole or part month that a return is not filed when required (disregarding any extensions of the filing deadline), there is a failure-to-file penalty of 5% of the unpaid tax due with that return. 2012.taxhow The maximum penalty is generally 25% of the tax due. 2012.taxhow Also, for each whole or part month that the tax is paid late (disregarding any extensions of the payment deadline), there is a failure-to-pay penalty of 0. 2012.taxhow 5% per month of the amount of tax. 2012.taxhow For individual filers only, the failure-to-pay penalty is reduced from 0. 2012.taxhow 5% per month to 0. 2012.taxhow 25% per month if an installment agreement is in effect. 2012.taxhow You must have filed your return on or before the due date of the return to qualify for the reduced penalty. 2012.taxhow The maximum amount of the failure-to-pay penalty is also 25% of the tax due. 2012.taxhow If both penalties apply in any month, the failure-to-file penalty is reduced by the amount of the failure-to-pay penalty. 2012.taxhow The penalties will not be charged if you have a reasonable cause for failing to file or pay. 2012.taxhow If you receive a penalty notice, you can provide an explanation of why you believe reasonable cause exists. 2012.taxhow Reporting Adjustments to Form 941-SS, 944-SS, 944, or 943 Current Period Adjustments Make current period adjustments for fractions of cents, sick pay, tips, and group-term life insurance on your Form 941-SS, 944, or 943. 2012.taxhow See the Instructions for Form 941-SS, Instructions for Form 944, or Instructions for Form 943 for information on how to report these adjustments. 2012.taxhow Prior Period Adjustments Forms for prior period adjustments. 2012.taxhow   Use Form 941-X or Form 944-X to make a correction after you discover an error on a previously filed Form 941 or Form 944. 2012.taxhow There are also Forms 943-X, 945-X, and CT-1X to report corrections on the corresponding returns. 2012.taxhow Form 941-X and Form 944-X also replace Form 843, Claim for Refund and Request for Abatement, for employers to request a refund or abatement of overreported employment taxes. 2012.taxhow Continue to use Form 843 when requesting a refund or abatement of assessed interest or penalties. 2012.taxhow See Revenue Ruling 2009-39, 2009-52 I. 2012.taxhow R. 2012.taxhow B. 2012.taxhow 951, for examples of how the interest-free adjustment and claim for refund rules apply in 10 different situations. 2012.taxhow You can find Revenue Ruling 2009-39, at www. 2012.taxhow irs. 2012.taxhow gov/irb/2009-52_IRB/ar14. 2012.taxhow html. 2012.taxhow Background. 2012.taxhow   Treasury Decision 9405 changed the process for making interest-free adjustments to employment taxes reported on Forms 941-SS, 943, 944-SS, and 944, and for filing a claim for refund of employment taxes. 2012.taxhow Treasury Decision 9405, 2008-32 I. 2012.taxhow R. 2012.taxhow B. 2012.taxhow 293, is available at www. 2012.taxhow irs. 2012.taxhow gov/irb/2008-32_IRB/ar13. 2012.taxhow html. 2012.taxhow You will use the adjustment process if you underreported employment taxes and are making a payment, or if you overreported employment taxes and will be applying the credit to the Form 941-SS, 943, or 944 period during which you file Forms 941-X, 943-X, or 944-X, respectively. 2012.taxhow You will use the claim process if you overreported employment taxes and are requesting a refund or abatement of the overreported amount. 2012.taxhow We use the terms “correct” and “corrections” to include interest-free adjustments under sections 6205 and 6413, and claims for refund and abatement under sections 6402, 6414, and 6404 of the Internal Revenue Code. 2012.taxhow Correcting employment taxes. 2012.taxhow   When you discover an error on a previously filed Form 941-SS, 943, 944-SS, or 944, you must: Correct that error using Form 941-X, Form 943-X, or Form 944-X, File a separate Form 941-X, Form 943-X, or Form 944-X for
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2012. 2012.taxhow taxhow Publication 1544 - Main Content Table of Contents Why Report These Payments? Who Must File Form 8300?What Payments Must Be Reported? What Is Cash? Taxpayer Identification Number (TIN) What Is a Related Transaction? What About Suspicious Transactions? When, Where, and What To File Examples Penalties How To Get Tax HelpLow Income Taxpayer Clinics (LITCs). 2012.taxhow Why Report These Payments? Drug dealers and smugglers often use large cash payments to “launder” money from illegal activities. 2012.taxhow Laundering means converting “dirty” or illegally-gained money to “clean” money. 2012.taxhow The government can often trace this laundered money through the payments you report. 2012.taxhow Laws passed by Congress require you to report these payments. 2012.taxhow Your compliance with these laws provides valuable information that can stop those who evade taxes and those who profit from the drug trade and other criminal activities. 2012.taxhow The USA PATRIOT Act of 2001 increased the scope of these laws to help trace funds used for terrorism. 2012.taxhow Who Must File Form 8300? Generally, any person in a trade or business who receives more than $10,000 in cash in a single transaction or in related transactions must file Form 8300. 2012.taxhow For example, you may have to file Form 8300 if you are a dealer in jewelry, furniture, boats, aircraft, or automobiles; a pawnbroker; an attorney; a real estate broker; an insurance company; or a travel agency. 2012.taxhow Special rules for clerks of federal or state courts are discussed later under Bail received by court clerks. 2012.taxhow However, you do not have to file Form 8300 if the transaction is not related to your trade or business. 2012.taxhow For example, if you own a jewelry store and sell your personal automobile for more than $10,000 in cash, you would not submit a Form 8300 for that transaction. 2012.taxhow Transaction defined. 2012.taxhow    A “transaction” occurs when: Goods, services, or property are sold; Property is rented; Cash is exchanged for other cash; A contribution is made to a trust or escrow account; A loan is made or repaid; or Cash is converted to a negotiable instrument, such as a check or a bond. 2012.taxhow Person defined. 2012.taxhow   A “person” includes an individual, a company, a corporation, a partnership, an association, a trust, or an estate. 2012.taxhow   Exempt organizations, including employee plans, are also “persons. 2012.taxhow ” However, exempt organizations do not have to file Form 8300 for a more-than-$10,000 charitable cash contribution they receive since it is not received in the course of a trade or business. 2012.taxhow Foreign transactions. 2012.taxhow   You do not have to file Form 8300 if the entire transaction (including the receipt of cash) takes place outside of: The 50 states, The District of Columbia, Puerto Rico, or A possession or territory of the United States. 2012.taxhow However, you must file Form 8300 if any part of the transaction (including the receipt of cash) occurs in Puerto Rico or a possession or territory of the United States and you are subject to the Internal Revenue Code. 2012.taxhow Bail received by court clerks. 2012.taxhow   Any clerk of a federal or state court who receives more than $10,000 in cash as bail for an individual charged with any of the following criminal offenses must file Form 8300: Any federal offense involving a controlled substance, Racketeering, Money laundering, and Any state offense substantially similar to (1), (2), or (3) above. 2012.taxhow For more information about the rules that apply to court clerks, see Section 1. 2012.taxhow 6050I-2 of the Income Tax Regulations. 2012.taxhow What Payments Must Be Reported? You must file Form 8300 to report cash paid to you if it is: Over $10,000, Received as: One lump sum of over $10,000, Installment payments that cause the total cash received within 1 year of the initial payment to total more than $10,000, or Other previously unreportable payments that cause the total cash received within a 12-month period to total more than $10,000, Received in the course of your trade or business, Received from the same buyer (or agent), and Received in a single transaction or in related transactions (defined later). 2012.taxhow What Is Cash? Cash is: The coins and currency of the United States (and any other country), and A cashier's check, bank draft, traveler's check, or money order you receive, if it has a face amount of $10,000 or less and you receive it in: A designated reporting transaction (defined later), or Any transaction in which you know the payer is trying to avoid the reporting of the transaction on Form 8300. 2012.taxhow Cash may include a cashier's check even if it is called a “treasurer's check” or “bank check. 2012.taxhow ” Cash does not include a check drawn on an individual's personal account. 2012.taxhow A cashier's check, bank draft, traveler's check, or money order with a face amount of more than $10,000 is not treated as cash. 2012.taxhow These items are not defined as cash and you do not have to file Form 8300 when you receive them because, if they were bought with currency, the bank or other financial institution that issued them must file a report on FinCEN Form 104. 2012.taxhow Example 1. 2012.taxhow You are a coin dealer. 2012.taxhow Bob Green buys gold coins from you for $13,200. 2012.taxhow He pays for them with $6,200 in U. 2012.taxhow S. 2012.taxhow currency and a cashier's check having a face amount of $7,000. 2012.taxhow The cashier's check is treated as cash. 2012.taxhow You have received more than $10,000 cash and must file Form 8300 for this transaction. 2012.taxhow Example 2. 2012.taxhow You are a retail jeweler. 2012.taxhow Mary North buys an item of jewelry from you for $12,000. 2012.taxhow She pays for it with a personal check payable to you in the amount of $9,600 and traveler's checks totaling $2,400. 2012.taxhow Because the personal check is not treated as cash, you have not received more than $10,000 cash in the transaction. 2012.taxhow You do not have to file Form 8300. 2012.taxhow Example 3. 2012.taxhow You are a boat dealer. 2012.taxhow Emily Jones buys a boat from you for $16,500. 2012.taxhow She pays for it with a cashier's check payable to you in the amount of $16,500. 2012.taxhow The cashier's check is not treated as cash because its face amount is more than $10,000. 2012.taxhow You do not have to file Form 8300 for this transaction. 2012.taxhow Designated Reporting Transaction A designated reporting transaction is the retail sale of any of the following: A consumer durable, such as an automobile or boat. 2012.taxhow A consumer durable is property, other than land or buildings, that: Is suitable for personal use, Can reasonably be expected to last at least 1 year under ordinary use, Has a sales price of more than $10,000, and Can be seen or touched (tangible property). 2012.taxhow For example, a $20,000 car is a consumer durable, but a $20,000 dump truck or factory machine is not. 2012.taxhow The car is a consumer durable even if you sell it to a buyer who will use it in a business. 2012.taxhow A collectible (for example, a work of art, rug, antique, metal, gem, stamp, or coin). 2012.taxhow Travel or entertainment, if the total sales price of all items sold for the same trip or entertainment event in one transaction (or related transactions) is more than $10,000. 2012.taxhow To figure the total sales price of all items sold for a trip or entertainment event, you include the sales price of items such as airfare, hotel rooms, and admission tickets. 2012.taxhow Example. 2012.taxhow You are a travel agent. 2012.taxhow Ed Johnson asks you to charter a passenger airplane to take a group to a sports event in another city. 2012.taxhow He also asks you to book hotel rooms and admission tickets for the group. 2012.taxhow In payment, he gives you two money orders, each for $6,000. 2012.taxhow You have received more than $10,000 cash in this designated reporting transaction. 2012.taxhow You must file Form 8300. 2012.taxhow Retail sale. 2012.taxhow   The term “retail sale” means any sale made in the course of a trade or business that consists mainly of making sales to ultimate consumers. 2012.taxhow   Thus, if your business consists mainly of making sales to ultimate consumers, all sales you make in the course of that business are retail sales. 2012.taxhow This includes any sales of items that will be resold. 2012.taxhow Broker or intermediary. 2012.taxhow   A designated reporting transaction includes the retail sale of items (1), (2), or (3) of the preceding list, even if the funds are received by a broker or other intermediary, rather than directly by the seller. 2012.taxhow Exceptions to Definition of Cash A cashier's check, bank draft, traveler's check, or money order you received in a designated reporting transaction is not treated as cash if one of the following exceptions applies. 2012.taxhow Exception for certain bank loans. 2012.taxhow   A cashier's check, bank draft, traveler's check, or money order is not treated as cash if it is the proceeds from a bank loan. 2012.taxhow As proof that it is from a bank loan, you may rely on a copy of the loan document, a written statement or lien instruction from the bank, or similar proof. 2012.taxhow Example. 2012.taxhow You are a car dealer. 2012.taxhow Mandy White buys a new car from you for $11,500. 2012.taxhow She pays you with $2,000 of U. 2012.taxhow S. 2012.taxhow currency and a cashier's check for $9,500 payable to you and her. 2012.taxhow You can tell that the cashier's check is the proceeds of a bank loan because it includes instructions to you to have a lien put on the car as security for the loan. 2012.taxhow For this reason, the cashier's check is not treated as cash. 2012.taxhow You do not have to file Form 8300 for the transaction. 2012.taxhow Exception for certain installment sales. 2012.taxhow   A cashier's check, bank draft, traveler's check, or money order is not treated as cash if it is received in payment on a promissory note or an installment sales contract (including a lease that is considered a sale for federal tax purposes). 2012.taxhow However, this exception applies only if: You use similar notes or contracts in other sales to ultimate consumers in the ordinary course of your trade or business, and The total payments for the sale that you receive on or before the 60th day after the sale are 50% or less of the purchase price. 2012.taxhow Exception for certain down payment plans. 2012.taxhow   A cashier's check, bank draft, traveler's check, or money order is not treated as cash if you received it in payment for a consumer durable or collectible, and all three of the following statements are true. 2012.taxhow You receive it under a payment plan requiring: One or more down payments, and Payment of the rest of the purchase price by the date of sale. 2012.taxhow You receive it more than 60 days before the date of sale. 2012.taxhow You use payment plans with the same or substantially similar terms when selling to ultimate consumers in the ordinary course of your trade or business. 2012.taxhow Exception for travel and entertainment. 2012.taxhow   A cashier's check, bank draft, traveler's check, or money order received for travel or entertainment is not treated as cash if all three of the following statements are true. 2012.taxhow You receive it under a payment plan requiring: One or more down payments, and Payment of the rest of the purchase price by the earliest date that any travel or entertainment item (such as airfare) is furnished for the trip or entertainment event. 2012.taxhow You receive it more than 60 days before the date on which the final payment is due. 2012.taxhow You use payment plans with the same or substantially similar terms when selling to ultimate consumers in the ordinary course of your trade or business. 2012.taxhow Taxpayer Identification Number (TIN) You must furnish the correct TIN of the person or persons from whom you receive the cash. 2012.taxhow If the transaction is conducted on the behalf of another person or persons, you must furnish the TIN of that person or persons. 2012.taxhow If you do not know a person's TIN, you have to ask for it. 2012.taxhow You may be subject to penalties for an incorrect or missing TIN. 2012.taxhow There are three types of TINs. 2012.taxhow The TIN for an individual, including a sole proprietor, is the individual's social security number (SSN). 2012.taxhow The TIN for a nonresident alien individual who needs a TIN but is not eligible to get an SSN is an IRS individual taxpayer identification number (ITIN). 2012.taxhow An ITIN has nine digits, similar to an SSN. 2012.taxhow The TIN for other persons, including corporations, partnerships, and estates, is the employer identification number (EIN). 2012.taxhow Exception. 2012.taxhow   You are not required to provide the TIN of a person who is a nonresident alien individual or a foreign organization if that person or foreign organization: Does not have income effectively connected with the conduct of a U. 2012.taxhow S. 2012.taxhow trade or business; Does not have an office or place of business, or a fiscal or paying agent in the United States; Does not file a federal tax return; Does not furnish a withholding certificate described in §1. 2012.taxhow 1441-1(e)(2) or (3) or 1. 2012.taxhow 1441-5(c)(2)(iv) or (3)(iii) to the extent required under 1. 2012.taxhow 1441-1(e)(4)(vii); Does not have to furnish a TIN on any return, statement, or other document as required by the income tax regulations under section 897 or 1445; or In the case of a nonresident alien individual, the individual has not chosen to file a joint federal income tax return with a spouse who is a U. 2012.taxhow S. 2012.taxhow citizen or resident. 2012.taxhow What Is a Related Transaction? Any transactions between a buyer (or an agent of the buyer) and a seller that occur within a 24-hour period are related transactions. 2012.taxhow If you receive over $10,000 in cash during two or more transactions with one buyer in a 24-hour period, you must treat the transactions as one transaction and report the payments on Form 8300. 2012.taxhow For example, if you sell two products for $6,000 each to the same customer in 1 day and the customer pays you in cash, these are related transactions. 2012.taxhow Because they total $12,000 (more than $10,000), you must file Form 8300. 2012.taxhow More than 24 hours between transactions. 2012.taxhow   Transactions are related even if they are more than 24 hours apart if you know, or have reason to know, that each is one of a series of connected transactions. 2012.taxhow   For example, you are a travel agent. 2012.taxhow A client pays you $8,000 in cash for a trip. 2012.taxhow Two days later, the same client pays you $3,000 more in cash to include another person on the trip. 2012.taxhow These are related transactions, and you must file Form 8300 to report them. 2012.taxhow What About Suspicious Transactions? If you receive $10,000 or less in cash, you may voluntarily file Form 8300 if the transaction appears to be suspicious. 2012.taxhow A transaction is suspicious if it appears that a person is trying to cause you not to file Form 8300 or is trying to cause you to file a false or incomplete Form 8300, or if there is a sign of possible illegal activity. 2012.taxhow If you are suspicious, you are encouraged to call the local IRS Criminal Investigation Division as soon as possible. 2012.taxhow Or, you can call the FinCEN Financial Institution Hotline toll free at 1-866-556-3974. 2012.taxhow When, Where, and What To File The amount you receive and when you receive it determine when you must file. 2012.taxhow Generally, you must file Form 8300 within 15 days after receiving a payment. 2012.taxhow If the Form 8300 due date (the 15th or last day you can timely file the form) falls on a Saturday, Sunday, or legal holiday, it is delayed until the next day that is not a Saturday, Sunday, or legal holiday. 2012.taxhow More than one payment. 2012.taxhow   In some transactions, the buyer may arrange to pay you in cash installment payments. 2012.taxhow If the first payment is more than $10,000, you must file Form 8300 within 15 days. 2012.taxhow If the first payment is not more than $10,000, you must add the first payment and any later payments made within 1 year of the first payment. 2012.taxhow When the total cash payments are more than $10,000, you must file Form 8300 within 15 days. 2012.taxhow   After you file Form 8300, you must start a new count of cash payments received from that buyer. 2012.taxhow If you receive more than $10,000 in additional cash payments from that buyer within a 12-month period, you must file another Form 8300. 2012.taxhow You must file the form within 15 days of the payment that causes the additional payments to total more than $10,000. 2012.taxhow   If you are already required to file Form 8300 and you receive additional payments within the 15 days before you must file, you can report all the payments on one form. 2012.taxhow Example. 2012.taxhow On January 10, you receive a cash payment of $11,000. 2012.taxhow You receive additional cash payments on the same transaction of $4,000 on February 15, $5,000 on March 20, and $6,000 on May 12. 2012.taxhow By January 25, you must file a Form 8300 for the $11,000 payment. 2012.taxhow By May 27, you must file an additional Form 8300 for the additional payments that total $15,000. 2012.taxhow Amending a Report?   If you are amending a report, check box 1a at the top of Form 8300. 2012.taxhow Complete the form in its entirety (Parts I-IV) and include the amended information. 2012.taxhow Do not attach a copy of the original report. 2012.taxhow Where to file. 2012.taxhow   Mail the form to the address given in the Form 8300 instructions. 2012.taxhow Required statement to buyer. 2012.taxhow   You must give a written or electronic statement to each person named on any Form 8300 you must file. 2012.taxhow You can give the statement electronically only if the recipient agrees to receive it in that format. 2012.taxhow The statement must show the name and address of your business, the name and phone number of a contact person, and the total amount of reportable cash you received from the person during the year. 2012.taxhow It must state that you are also reporting this information to the IRS. 2012.taxhow   You must send this statement to the buyer by January 31 of the year after the year in which you received the cash that caused you to file the form. 2012.taxhow    You must keep a copy of every Form 8300 you file for 5 years. 2012.taxhow Examples Example 1. 2012.taxhow Pat Brown is the sales manager for Small Town Cars. 2012.taxhow On January 6, 2009, Jane Smith buys a new car from Pat and pays $18,000 in cash. 2012.taxhow Pat asks for identification from Jane to get the necessary information to complete Form 8300. 2012.taxhow A filled-in form is shown in this publication. 2012.taxhow Pat must mail the form to the address shown in the form's instructions by January 21, 2009. 2012.taxhow He must also send a statement to Jane by January 31, 2010. 2012.taxhow Example 2. 2012.taxhow Using the same facts given in Example 1, suppose Jane had arranged to make cash payments of $6,000 each on January 6, February 6, and March 6. 2012.taxhow Pat would have to file a Form 8300 by February 26 (17 days after receiving total cash payments within 1 year over $10,000 because February 21, 2009, is a Saturday). 2012.taxhow Pat would not have to report the remaining $6,000 cash payment because it is not more than $10,000. 2012.taxhow However, he could report it if he felt it was a suspicious transaction. 2012.taxhow Penalties There are civil penalties for failure to: File a correct Form 8300 by the date it is due, and Provide the required statement to those named in the Form 8300. 2012.taxhow If you intentionally disregard the requirement to file a correct Form 8300 by the date it is due, the penalty is the greater of: $25,000, or The amount of cash you received and were required to report (up to $100,000). 2012.taxhow There are criminal penalties for: Willful failure to file Form 8300, Willfully filing a false or fraudulent Form 8300, Stopping or trying to stop Form 8300 from being filed, and Setting up, helping to set up, or trying to set up a transaction in a way that would make it seem unnecessary to file Form 8300. 2012.taxhow If you willfully fail to file Form 8300, you can be fined up to $250,000 for individuals ($500,000 for corporations) or sentenced to up to 5 years in prison, or both. 2012.taxhow These dollar amounts are based on Section 3571 of Title 18 of the U. 2012.taxhow S. 2012.taxhow Code. 2012.taxhow The penalties for failure to file may also apply to any person (including a payer) who attempts to interfere with or prevent the seller (or business) from filing a correct Form 8300. 2012.taxhow This includes any attempt to structure the transaction in a way that would make it seem unnecessary to file Form 8300. 2012.taxhow Structuring means breaking up a large cash transaction into small cash transactions. 2012.taxhow How To Get Tax Help You can get help with unresolved tax issues, order free publications and forms, ask tax questions, and get information from the IRS in several ways. 2012.taxhow By selecting the method that is best for you, you will have quick and easy access to tax help. 2012.taxhow Free help with your return. 2012.taxhow   Free help in preparing your return is available nationwide from IRS-certified volunteers. 2012.taxhow The Volunteer Income Tax Assistance (VITA) program is designed to help low-moderate income taxpayers and the Tax Counseling for the Elderly (TCE) program is designed to assist taxpayers age 60 and older with their tax returns. 2012.taxhow Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. 2012.taxhow To find the nearest VITA or TCE site, visit IRS. 2012.taxhow gov or call 1-800-906-9887 or 1-800-829-1040. 2012.taxhow   As part of the TCE program, AARP offers the Tax-Aide counseling program. 2012.taxhow To find the nearest AARP Tax-Aide site, call 1-888-227-7669 or visit AARP's website at www. 2012.taxhow aarp. 2012.taxhow org/money/taxaide. 2012.taxhow   For more information on these programs, go to IRS. 2012.taxhow gov and enter keyword “VITA” in the upper right-hand corner. 2012.taxhow Internet. 2012.taxhow You can access the IRS website at IRS. 2012.taxhow gov 24 hours a day, 7 days a week to: Check the status of your 2011 refund. 2012.taxhow Go to IRS. 2012.taxhow gov and click on Where's My Refund. 2012.taxhow Wait at least 72 hours after the IRS acknowledges receipt of your e-filed return, or 3 to 4 weeks after mailing a paper return. 2012.taxhow If you filed Form 8379 with your return, wait 14 weeks (11 weeks if you filed electronically). 2012.taxhow Have your 2011 tax return available so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund. 2012.taxhow E-file your return. 2012.taxhow Find out about commercial tax preparation and e-file services available free to eligible taxpayers. 2012.taxhow Download forms, including talking tax forms, instructions, and publications. 2012.taxhow Order IRS products online. 2012.taxhow Research your tax questions online. 2012.taxhow Search publications online by topic or keyword. 2012.taxhow Use the online Internal Revenue Code, regulations, or other official guidance. 2012.taxhow View Internal Revenue Bulletins (IRBs) published in the last few years. 2012.taxhow Figure your withholding allowances using the withholding calculator online at  www. 2012.taxhow irs. 2012.taxhow gov/individuals. 2012.taxhow Determine if Form 6251 must be filed by using our Alternative Minimum Tax (AMT) Assistant available online at  www. 2012.taxhow irs. 2012.taxhow gov/individuals. 2012.taxhow Sign up to receive local and national tax news by email. 2012.taxhow Get information on starting and operating a small business. 2012.taxhow Phone. 2012.taxhow Many services are available by phone. 2012.taxhow   Ordering forms, instructions, and publications. 2012.taxhow Call 1-800-TAX-FORM (1-800-829-3676) to order current-year forms, instructions, and publications, and prior-year forms and instructions. 2012.taxhow You should receive your order within 10 days. 2012.taxhow Asking tax questions. 2012.taxhow Call the IRS with your tax questions at 1-800-829-1040. 2012.taxhow Solving problems. 2012.taxhow You can get face-to-face help solving tax problems every business day in IRS Taxpayer Assistance Centers. 2012.taxhow An employee can explain IRS letters, request adjustments to your account, or help you set up a payment plan. 2012.taxhow Call your local Taxpayer Assistance Center for an appointment. 2012.taxhow To find the number, go to www. 2012.taxhow irs. 2012.taxhow gov/localcontacts or look in the phone book under United States Government, Internal Revenue Service. 2012.taxhow TTY/TDD equipment. 2012.taxhow If you have access to TTY/TDD equipment, call 1-800-829-4059 to ask tax questions or to order forms and publications. 2012.taxhow TeleTax topics. 2012.taxhow Call 1-800-829-4477 to listen to pre-recorded messages covering various tax topics. 2012.taxhow Refund information. 2012.taxhow You can check the status of your refund on the new IRS phone app. 2012.taxhow Download the free IRS2Go app by visiting the iTunes app store or the Android Marketplace. 2012.taxhow IRS2Go is a new way to provide you with information and tools. 2012.taxhow To check the status of your refund by phone, call 1-800-829-4477 (automated refund information 24 hours a day, 7 days a week). 2012.taxhow Wait at least 72 hours after the IRS acknowledges receipt of your e-filed return, or 3 to 4 weeks after mailing a paper return. 2012.taxhow If you filed Form 8379 with your return, wait 14 weeks (11 weeks if you filed electronically). 2012.taxhow Have your 2011 tax return available so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund. 2012.taxhow If you check the status of your refund and are not given the date it will be issued, please wait until the next week before checking back. 2012.taxhow Other refund information. 2012.taxhow To check the status of a prior-year refund or amended return refund, call 1-800-829-1040. 2012.taxhow Evaluating the quality of our telephone services. 2012.taxhow To ensure IRS representatives give accurate, courteous, and professional answers, we use several methods to evaluate the quality of our telephone services. 2012.taxhow One method is for a second IRS representative to listen in on or record random telephone calls. 2012.taxhow Another is to ask some callers to complete a short survey at the end of the call. 2012.taxhow Walk-in. 2012.taxhow Many products and services are available on a walk-in basis. 2012.taxhow   Products. 2012.taxhow You can walk in to many post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. 2012.taxhow Some IRS offices, libraries, grocery stores, copy centers, city and county government offices, credit unions, and office supply stores have a collection of products available to print from a CD or photocopy from reproducible proofs. 2012.taxhow Also, some IRS offices and libraries have the Internal Revenue Code, regulations, Internal Revenue Bulletins, and Cumulative Bulletins available for research purposes. 2012.taxhow Services. 2012.taxhow You can walk in to your local Taxpayer Assistance Center every business day for personal, face-to-face tax help. 2012.taxhow An employee can explain IRS letters, request adjustments to your tax account, or help you set up a payment plan. 2012.taxhow If you need to resolve a tax problem, have questions about how the tax law applies to your individual tax return, or you are more comfortable talking with someone in person, visit your local Taxpayer Assistance Center where you can spread out your records and talk with an IRS representative face-to-face. 2012.taxhow No appointment is necessary—just walk in. 2012.taxhow If you prefer, you can call your local Center and leave a message requesting an appointment to resolve a tax account issue. 2012.taxhow A representative will call you back within 2 business days to schedule an in-person appointment at your convenience. 2012.taxhow If you have an ongoing, complex tax account problem or a special need, such as a disability, an appointment can be requested. 2012.taxhow All other issues will be handled without an appointment. 2012.taxhow To find the number of your local office, go to www. 2012.taxhow irs. 2012.taxhow gov/localcontacts or look in the phone book under United States Government, Internal Revenue Service. 2012.taxhow Mail. 2012.taxhow You can send your order for forms, instructions, and publications to the address below. 2012.taxhow You should receive a response within 10 days after your request is received. 2012.taxhow  Internal Revenue Service 1201 N. 2012.taxhow Mitsubishi Motorway Bloomington, IL 61705-6613 Taxpayer Advocate Service. 2012.taxhow   The Taxpayer Advocate Service (TAS) is your voice at the IRS. 2012.taxhow Our job is to ensure that every taxpayer is treated fairly, and that you know and understand your rights. 2012.taxhow We offer free help to guide you through the often-confusing process of resolving tax problems that you haven’t been able to solve on your own. 2012.taxhow Remember, the worst thing you can do is nothing at all. 2012.taxhow   TAS can help if you can’t resolve your problem with the IRS and: Your problem is causing financial difficulties for you, your family, or your business. 2012.taxhow You face (or your business is facing) an immediate threat of adverse action. 2012.taxhow You have tried repeatedly to contact the IRS but no one has responded, or the IRS has not responded to you by the date promised. 2012.taxhow   If you qualify for our help, we’ll do everything we can to get your problem resolved. 2012.taxhow You will be assigned to one advocate who will be with you at every turn. 2012.taxhow We have offices in every state, the District of Columbia, and Puerto Rico. 2012.taxhow Although TAS is independent within the IRS, our advocates know how to work with the IRS to get your problems resolved. 2012.taxhow And our services are always free. 2012.taxhow   As a taxpayer, you have rights that the IRS must abide by in its dealings with you. 2012.taxhow Our tax toolkit at www. 2012.taxhow TaxpayerAdvocate. 2012.taxhow irs. 2012.taxhow gov can help you understand these rights. 2012.taxhow   If you think TAS might be able to help you, call your local advocate, whose number is in your phone book and on our website at www. 2012.taxhow irs. 2012.taxhow gov/advocate. 2012.taxhow You can also call our toll-free number at 1-877-777-4778. 2012.taxhow   TAS also handles large-scale or systemic problems that affect many taxpayers. 2012.taxhow If you know of one of these broad issues, please report it to us through our Systemic Advocacy Management System at www. 2012.taxhow irs. 2012.taxhow gov/advocate. 2012.taxhow Low Income Taxpayer Clinics (LITCs). 2012.taxhow   Low Income Taxpayer Clinics (LITCs) are independent from the IRS. 2012.taxhow Some clinics serve individuals whose income is below a certain level and who need to resolve a tax problem. 2012.taxhow These clinics provide professional representation before the IRS or in court on audits, appeals, tax collection disputes, and other issues for free or for a small fee. 2012.taxhow Some clinics can provide information about taxpayer rights and responsibilities in many different languages for individuals who speak English as a second language. 2012.taxhow For more information and to find a clinic near you, see the LITC page on www. 2012.taxhow irs. 2012.taxhow gov/advocate or IRS Publication 4134, Low Income Taxpayer Clinic List. 2012.taxhow This publication is also available by calling 1-800-829-3676 or at your local IRS office. 2012.taxhow Free tax services. 2012.taxhow   Publication 910, IRS Guide to Free Tax Services, is your guide to IRS services and resources. 2012.taxhow Learn about free tax information from the IRS, including publications, services, and education and assistance programs. 2012.taxhow The publication also has an index of over 100 TeleTax topics (recorded tax information) you can listen to on the telephone. 2012.taxhow The majority of the information and services listed in this publication are available to you free of charge. 2012.taxhow If there is a fee associated with a resource or service, it is listed in the publication. 2012.taxhow   Accessible versions of IRS published products are available on request in a variety of alternative formats for people with disabilities. 2012.taxhow DVD for tax products. 2012.taxhow You can order Publication 1796, IRS Tax Products DVD, and obtain: Current-year forms, instructions, and publications. 2012.taxhow Prior-year forms, instructions, and publications. 2012.taxhow Tax Map: an electronic research tool and finding aid. 2012.taxhow Tax law frequently asked questions. 2012.taxhow Tax Topics from the IRS telephone response system. 2012.taxhow Internal Revenue Code—Title 26 of the U. 2012.taxhow S. 2012.taxhow Code. 2012.taxhow Links to other Internet based Tax Research Materials. 2012.taxhow Fill-in, print, and save features for most tax forms. 2012.taxhow Internal Revenue Bulletins. 2012.taxhow Toll-free and email technical support. 2012.taxhow Two releases during the year. 2012.taxhow  – The first release will ship the beginning of January. 2012.taxhow  – The final release will ship the beginning of March. 2012.taxhow Purchase the DVD from National Technical Information Service (NTIS) at www. 2012.taxhow irs. 2012.taxhow gov/cdorders for $30 (no handling fee) or call 1-877-233-6767 toll free to buy the DVD for $30 (plus a $6 handling fee). 2012.taxhow This image is too large to be displayed in the current screen. 2012.taxhow Please click the link to view the image. 2012.taxhow Fill-in Form 8300 Prev  Up  Next   Home   More Online Publications