No Employees This Quarter? You Still May Need to File IRS Form 941

Name: Tobi Li Marshall CPA, APC
Address: 100 Barranca Street Suite 737, West Covina, CA, 91791
Telephone: (626) 858-2037

As an employer, you have plenty of obligations when it comes to filing taxes. Among these is the need to file IRS Form 941, the Employer’s Quarterly Federal Tax Return, on the last day of each month following the end of a quarter. Sticking to these deadlines — April 30, July 31, Oct. 31 and Jan. 31 — is essential for remaining in compliance and avoiding an inquiry from the Internal Revenue Service.

What is Form 941 and Who Has to Submit It?

Form 941 is a summary of the total taxes withheld during the previous quarter by anybody —business or individual — that compensates an employee or employees.

If you are an employer who pays wages to household employees or agricultural employees, you are exempt from this rule. Those who employ seasonal workers who don’t get paid during one or more quarters of the year are exempt as well.

All other employers are required to submit the form, regardless of whether they pay employees during a given quarter or not. This is a common misconception that is important to be aware of in order to remain compliant.

What the Form Contains

Form 941 requires a significant amount of information, including how many employees a business pays, what the total wages paid were for the quarter, as well as what the total withholding of taxes was for the quarter.

In order to fill the information out accurately, it’s necessary to gather all payroll records and other documentation for the quarter, including reports of any taxable tips that your employees indicated that they received. Once calculated, the employer must send in the form, the appropriate withholding and federal income tax, and 1.45 percent of all taxable wages for the Medicare tax payment. Social Security payments of 6.2 percent of each employee’s wages must also be submitted (up to $132,900 for tax year 2019). For those employees paid more than $200,000 per year, employers are also required to withhold the Additional Medicare Tax.

Penalties for Failure to File

The Form 941 must be submitted four times per year by the above-referenced dates, and employers who fail to do so face significant penalties of a percentage of whatever tax had been due for each month or portion of a month that is delayed. As you may imagine, this penalty can add up quickly. According to IRS Publication 15 (2020), these are the penalty rates for amounts not properly or timely deposited:

2% - Deposits made 1 to 5 days late.
5% - Deposits made 6 to 15 days late.
10% - Deposits made 16 or more days late, but before 10 days from the date of the first notice the IRS sent asking for the tax due.
10% - Amounts that should have been deposited, but instead were paid directly to the IRS, or paid with your tax return. (See “Payment with return” within Pub. 15 for an exception.)
15% - Amounts still unpaid more than 10 days after the date of the first notice the IRS sent asking for the tax due or the day on which you received notice and demand for immediate payment, whichever is earlier.

Balancing Out the Year

At tax time, businesses need to reconcile the amount reported on the four Form 941s they submitted with the employee wages reported on the W-2 forms provided to employees so that they can fill out their own tax returns. The total of the Form 941s should be the same as the total on the W-2s, as well as on the Form W-3 that employers file with the IRS. Contact this office for assistance or any questions regarding your Form 941 requirements.

Share this article...

Facebook

Twitter WhatsApp LinkedIn Pinterest Reddit Email

Want our best tax and accounting tips and insights delivered to your inbox?

I confirm this is a service inquiry and not an advertising message or solicitation. By clicking “Submit”, I acknowledge and agree to the creation of an account and to the and .

Privileged And Confidential
This communication and any accompanying documents are confidential and privileged. They are intended for the sole use of the addressee. If you receive this transmission in error, you are advised that any disclosure, copying, distribution, or the taking of any action in reliance upon this communication is strictly prohibited. Moreover, any such disclosure shall not compromise or waive the attorney-client, accountant-client, or other privileges as to this communication or otherwise. If you have received this communication in error, please contact me at the above email address. Thank you.

Disclaimer
Any accounting, business or tax advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues, nor a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties. If desired, Tobi Li Marshall CPA, APC would be pleased to perform the requisite research and provide you with a detailed written analysis. Such an engagement may be the subject of a separate engagement letter that would define the scope and limits of the desired consultation services.