E-file 940 & 941 forms

[Paul J. Berg]

Tax professionals will now be able to file employment taxes for business
clients for the first time as part of a new Employment Tax e-filing
System offered by the Internal Revenue Service.

The IRS expects the e-file upgrades will continue to reduce the
paperwork burden on small businesses. The enhanced e-file system is part
of a continuing effort to reduce barriers for small businesses to
electronic filing.

"This e-file option will replace outdated technology that was a burden
to both businesses and the IRS," said Acting IRS Commissioner Bob
Wenzel. "It is the first in a series of products being modernized to
expand e-file opportunities."

The IRS worked with small business taxpayers, software developers and
tax professionals to determine the users' needs, and how to increase the
volume of payroll returns filed electronically. Based on partner
feedback, the IRS developed the system to promote the development of
integrated software products. The result is e-file capability for the
software product that a business or tax professional already uses to
manage their payroll.

Key benefits of the new system are:

• More flexible filing – Forms 941 and 940 can be filed in a single
transmission,,

• More specific error conditions – New error conditions pinpoint the
location of the error and provide complete information for each error
identified,

• Faster acknowledgements –

Transmissions are now processed upon receipt and acknowledgments are
returned in near real-time, • Integrated payment options – Eligible
filers may submit a required payment along with their return, subject to
limitations imposed by the Federal Tax Deposit Rules.

The Employment Tax program is the first Extensible Markup Language (XML)
product that the IRS has delivered. The use of this standard gives the
IRS the capability to easily expand the suite of tax returns that can be
filed electronically. It also translates into cost savings and
processing benefits for both businesses and the IRS through the use of
commercial standards and best practices for information exchange.

E-filing of employment tax forms through the new Employment Tax e-file
System is one of many new steps being taken by the IRS to remove the
barriers to electronic transactions and reduce the burden on taxpayers.

Tax professionals prepare the vast majority of business tax returns, yet
they could not electronically file the employment tax forms. Now tax
professionals can assist businesses in filing employment tax forms.