Employers that were worried about receiving potential penalty notices because of a backlog processing Form 941-X, Adjusted Employer’s Quarterly Federal Tax Return or Claim for Refund, can rest easier.
Many companies claimed the payroll tax exemption under the Hiring Incentives to Restore Employment (HIRE) Act by amending their quarterly returns , then received word from IRS about a processing backlog that could take months to clear up.
That meant these employers faced potential federal tax deposit penalty notices if IRS didn’t take the amended returns into account on time.
Now that’s a dead issue, though, because IRS is again processing forms on schedule and has caught up. That’s what Shelley Dockstader, national account manager, IRS Electronic Tax Administration, told participants of a recent teleconference with payroll industry representatives.
Affected employers had claimed the payroll tax exemption under the HIRE Act, which let employers off the hook from their 6.2% share of Social Security taxes on wages paid to certain new hires.
Rather than waiting until the end of the second quarter of 2010 to claim the exemption on Form 941, some employers amended their returns by filing a 941-X. The processing delay concerned those who had reduced their payroll tax deposits when claiming the credit.
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