IRS Updates Rules for Substitutes of Revised Form 941

NOTE. This revenue procedure will be reproduced as the next revision of IRS Publication 4436, General Rules and Specifications for Substitute Forms and Schedules.

Rev. Proc. 2014-57

                          TABLE OF CONTENTS

.01 The purpose of this publication is to provide general rules and specifications from the Internal Revenue Service (IRS) for paper and computer-generated substitutes for Form 941, Employer's QUARTERLY Federal Tax Return, Schedule B (Form 941), Report of Tax Liability for Semiweekly Schedule Depositors (referred to in this publication as "Schedule B"), Schedule D (Form 941), Report of Discrepancies Caused by Acquisitions, Statutory Mergers, or Consolidations (referred to in this publication as "Schedule D"), and Schedule R (Form 941), Allocation Schedule for Aggregate Form 941 Filers (referred to in this publication as "Schedule R").

Note. Substitute territorial forms (941-PR, Planilla para la Declaracion Federal TRIMESTRAL del Patrono, 941-SS, Employer's QUARTERLY Federal Tax Return (American Samoa, Guam, the Commonwealth of the Northern Mariana Islands, and the U.S. Virgin Islands) and Anexo B (Formulario 941-PR, Registro de la Obligación Contributiva para los Despositantes de Itinerario Bisemanal) should also conform to the specifications outlined in this revenue procedure.

.02 This publication provides information for substitute Form 941, Schedule B, Schedule D, and Schedule R. If you need more in-depth information on who must complete the forms and how to complete them, see the Instructions for Form 941, Instructions for Schedule B (Form 941), Instructions for Schedule D, the instructions included in Schedule R, and Publication 15 (Circular E), Employer's Tax Guide, or visit IRS.gov.

Note. Failure to produce acceptable substitutes of the forms and schedules listed in this publication may result in delays in processing and penalties.

.03 Forms that completely follow the guidelines in this publication and are exact replicas of the official IRS forms do not need to be submitted to the IRS for specific approval. Substitute forms and schedules need to be scanned using IRS scanning equipment.

If you are uncertain of any specification and want clarification, do the following.

1. Submit a letter citing the specification.

2. State your understanding of the specification.

3. Enclose an example (if appropriate) of how the form would appear if produced using your understanding.

4. Be sure to include your name, complete address, phone number, and, if applicable, your email address with your correspondence. Email to SCRIPS@irs.gov or substituteforms@irs.gov or use the following address.

.04 However, software developers and form producers should send a blank copy of their substitute Form 941 and Schedule B (Form 941) in pdf format to SCRIPS@irs.gov. The purpose is not specifically for approval but to assist the IRS in preparing to scan these forms. Submitters will only receive comments if a significant problem is discovered through this process. Submitters are not expected to delay marketing their forms in order to receive feedback. In no case should Submitters include "live" taxpayer data.

.05 The six-digit form ID code (beginning 950114) on Form 941, Schedule B (Form 941), and Schedule D (Form 941) identifies the official paper form. The six-digit form ID code (beginning 970114) identifies substitute 6x10 grid Form 941 and Schedule B (Form 941). The six-digit ID code (beginning 990114) identifies the official IRS issued Form 941 and Schedule B (Form 941). Generally, the last two digits of the code represent the last year in which major formatting changes were made to the layout of the forms.

Section 1.2 -- What's New

.01 Future Developments. The IRS has created a page on IRS.gov for information about Form 941 at www.irs/gov/form941. Information about any future development affecting form 941 (such as legislation enacted after we release it) will be posted on that page.

.02 IRS mailing address change. The address for the Substitute Forms Program has changed to:

.04 Form 941. Section 4 of the payment voucher, text has been added for a business to report their foreign address, when applicable.

.05 Form 941. Page 1, Line 3. We added "Federal" at the beginning of the line 3 title to provide clarity. Form 941 may be filed by employers in the U.S. territories and those employers may be subject to income tax withholding that is not "federal" income tax withholding.

.06 Form 941. Page 1, three new fields were added to the entity section to capture, "Foreign Country Name," "Foreign province/county," and "Foreign postal code."

.07 Form 941. Page 1, lines 12a, 12b, and 13 were removed. As a result, subsequent lines were renumbered.

.08 Form 941. Page 3, box 1-Employer Identification Number (EIN). It was clarified that FormSS-4 is faxed or mailed to the IRS.

.09 Form 941. Page 4, under Privacy Act and Paperwork Reduction Act Notice, the language was updated to clarify that Subtitle C, Employment Tax, of the IRC "provides for income tax withholding."

.10 Schedule B. Page 1, in the introductory instructions, employers are advised NOT to change their tax liability by adjustments reported on Form 944-X.

.11 Schedule B. Page 1, at the bottom center of the page, a link to the product page was added.

.12 Schedule R. Pages 1 and 2, the reference to "COBRA payments" was removed from column (g). All references to the COBRA premium assistance credit were removed from all employment tax products (except amended returns) beginning with tax year 2014.

.13 Schedule R. Pages 1 and 2. We updated column (g) for the Form 941, line 13 to Form 941,line 11.

.14 Schedule R. Under the section Client and Employee Information, we changed the reference to Form 941, line 11 (formerly line 13), as a result of removing the COBRA premium assistance credit lines from Form 941.

.15 COBRA premium assistance credit. Effective for tax periods beginning after December 31,2013, the credit for COBRA premium assistance payments cannot be claimed on 941. Instead, after filing your Form 941, file Form 941-X, Adjusted Employer's QUARTERLY Federal Tax Return or Claim for Refund, to claim the COBRA premium assistance credit. Filing a Form 941-X before filing a Form 941 for the quarter may result in errors or delays in processing your Form 941-X. For more information, visit IRS.gov and enter "COBRA" in the search box.

.16 Schedule R. Page 1, at the bottom center of the page, a link to the product page was added.

.17 Editorial Changes. We made editorial changes throughout, including updated references. Redundancies were eliminated as much as possible.

Section 1.3 -- General Requirements for Reproducing IRS Official Form 941, Schedule B, Schedule D, and Schedule R

.01 Submit substitute Form 941, Schedule B, Schedule D, and Schedule R to the IRS for specifications review. Substitute Form 941, Schedule B, Schedule D, and Schedule R that completely conform to the specifications contained in this revenue procedure do not require prior approval from the IRS, but should be submitted to SCRIPS@irs.gov to ensure that they conform to IRS format and scanning specifications.

.02 Print the form on standard 8.5 inches wide by 11-inch paper.

.03 Use white paper that meets generally accepted weight, color, and quality standards (minimum 20 lb. white bond paper).

Note. Reclaimed fiber in any percentage is permitted provided that the requirements of this standard are met.

.04 The IRS prefers printing Form 941 on both sides of a single sheet of paper, but it is acceptable to print on one side of each of two separate sheets of paper.

.05 Make substitute paper forms as identical to the official IRS-printed forms as possible.

.06 Print the substitute forms using nonreflective black (not blue or other-colored) ink. Printing in an ink color other than black may reduce readability in the scanning process. This may result in figures being too faint to be recognizable.

.07 Use typefaces that are substantially identical in size and shape to the official forms and use rules and shading (if used) that are substantially identical to those on the official forms. Use font size as large as possible within the fields.

.08 Print the six-digit form ID codes in the upper right-hand corner of each form using nonreflective black, carbon-based, 12-point. The use of non-OCR-A font may reduce readability for scanning. Use the official paper over-the-counter IRS forms to develop your substitute paper forms.

Note. Maintain as much white space as possible around the form ID code. Do not allow character strings to print adjacent to the code.

The year digits represent the year of the form layout and the tax year filed. For tax year 2014, print "950114" on page 1 of Form 941; "950214" on page 2 of Form 941; "960314" on Schedule B (Form 941); "950413" on page 1 of Schedule R (Form 941); "950513" on page 2 of Schedule R (Form 941) (continuation sheet); and "950613" on page 3 of Schedule R (Form 941) (instructions). See Section 4 for information on form ID codes for software-generated forms.

NOTE. The last two digits of the ID code generally represent the last year in which major formatting changes were made to the layout of the forms.

Therefore, the last two digits may not always be of the current tax year. Some forms will not undergo formatting changes, and therefore will carry the ID code of a prior year. For example, the January 2014 revision of Schedule R, the ID code is "954013." The tax year is 2014, however, the last two digits are "13" since the last extensive formatting changes occurred in 2013.

.09 Print the OMB number in the same location as on the official forms. Be sure to include the OMB number on Form 941 and Schedules B, D, and R.

.10 Print all entry boxes and checkboxes exactly as shown (location and size) on the official forms.

Note. Instead of a four-sided checkbox for the entry, just the bottom line of the box can be used as long as the location and size remain the same.

.11 Print your IRS-issued three-letter substitute form source code in place of the Cat. No. on the left at the bottom of page 1 of Form 941, Schedule B, or Schedule R.

Note. You can obtain a three-letter substitute form source code by requesting it by email atsubstituteforms@irs.gov. Please enter "Substitute Forms" on the subject line.

.12 Print "For Privacy Act and Paperwork Reduction Act Notice, see the back of the Payment Voucher" at the bottom of page 1 of Form 941.

.13 Print "For Paperwork Reduction Act Notice, see separate instructions" at the bottom of Schedule B, Schedule D, and Schedule R.

.14 Do not print the form catalog number ("Cat. No.") at the bottom of the forms or instructions.

.15 Do not print the Government Printing Office (GPO) symbol at the bottom of the forms or instructions.

Section 1.4 -- Reproducing Form 941, Schedule B, Schedule D, and Schedule R for Software-Generated Paper Forms

.01 You may use the pdf files to develop the layout for your forms. Draft forms found athttp://www.irs.gov/app/picklist/list/draftTaxForms.html can be used to develop interim formats until the forms are finalized. When forms become finalized, they are posted and can be found at http://www.irs.gov/app/ picklist/list/formsPublications.html. You may use 6x10 grid formats to develop software versions of Form 941 and Schedules B, D, and R. Please follow the specifications exactly to develop the fields.

.02 If you are developing software using the 6 x 10 grid, you may make the following modifications.

• "970114" for page 1 of Form 941, "970214" for page 2 of Form 941, "970314" for Schedule B (Form 941), "970413" for page 1 of Schedule R (Form 941), "970513" for page 2 of Schedule R (Form 941) (continuation sheet), and "970613" for page 3 of Schedule R (Form 941) (instructions) as the form ID codes.

• Place all 6 x 10 grid boxes and entry spaces in the same field locations as indicated on the official forms.

• Use single lines for "Employer Identification Number (EIN)" and other entry areas in the entity section of page 1 of Form 941 and Schedule B, and the first page and continuation page of Schedule R.

• Reverse type is not needed as shown on the IRS official form.

• Do not pre-print decimal points in the data boxes. However, where the amounts are required, the amounts should be printed with decimal points and place holders for cents.

• Use a single box for "state abbreviation" on Form 941, line 16.

• Delete the pre-printed formatting in any "date" boxes.

• Use a single box for "Personal Identification Number (PIN)" on Form 941.

• You may delete all shading when using the 6 x 10 grid format.

.04 If producing only the data on the form, print your four-digit software industry form code on Form941. The four-digit vendor code preceded by four zeros and a slash (0000/9876) must be pre-printed. If you have a valid vendor code issued to you through the National Association of Computerized Tax Processors (NACTP), you should use the code. If you do not have a valid vendor code, contact the NATCP via email at president@natcp.org for information on these codes.

.05 Print "For Privacy Act and Paperwork Reduction Act Notice, see the Payment Voucher." at the bottom of page 1 of Form 941.

.06 Print "For Paperwork Reduction Act Notice, see separate instructions." at the bottom of Schedule B, Schedule D, Schedule R.

.07 Be sure to print the OMB number in the same location as on the official forms on substitute Form941, Schedule B, and Schedule R.

.08 Do not print the form catalog number ("Cat. No.") at the bottom of the forms or instructions.

.09 Do not print the Government Printing Office (GPO) symbol at the bottom of the forms or instructions.

.10 To ensure accurate scanning and processing, enter data on Form 941, Schedule B, Schedule D, and Schedule R as follows.

• Display/print the name and EIN on all pages and attachments in the proper associated fields.

• Use 12-point (minimum 10-point) Courier font (where possible).

• Omit dollar signs, but use commas when showing amounts.

• Except for lines 1 and 2 on Form 941, leave blank any data field with a value of zero.

• Enter negative amounts with a minus sign. For example, report "-10.59" instead of "(10.59)."

Section 1.5 -- Specific Instructions for Schedule D

.01 To properly file and to reduce delays and contact from the Service, Schedule D must be produced as closely as possible to the official IRS form.

.02 Use Schedule D to explain why you have certain discrepancies. See the Instructions for Schedule D for more information. In many cases, the information on Schedule D helps the IRS resolve discrepancies without contacting you.

.03 If a substitute Schedule D is not submitted in similar format to the official IRS schedule, the substitutes may be returned, you may be contacted by the IRS, delays in processing may occur, and you may be subject to penalties.

Section 1.6 -- Specific Instructions for Schedule R

.01 To properly file and to reduce delays and contact from the Service, Schedule R must be produced as closely as possible to the official IRS form.

Note. Do not present the information in spreadsheet or similar format. We may not be able to properly process nonconforming documents with an excessive number of entries. Complete as many Continuation Sheets for Schedule R as necessary. If Continuation Sheets are not used or they vary in form from the official form, processing may be delayed and you may be subject to penalties.

.02 Use Schedule R to allocate the aggregate information reported on Form 941 to each client. If you have more than 15 clients, complete as many Continuation Sheets for Schedule R (page 2) as necessary. Attach Schedule R, including any Continuation Sheets, to your aggregate Form 941 and file it with your return. Enter your business information carefully.

Make sure all information exactly matches the information shown on the aggregate Form 941. Compare the total of each column on line 19 (including your information on line 18) of Schedule R to the amounts reported on the aggregate Form 941. For each column total of Schedule R, the relevant line from Form 941 is noted in the column heading. If the totals on line 19 of the Schedule R do not match the totals on Form 941, there is an error that must be corrected before submitting Form 941 and Schedule R.

.03 Do:

• Develop and submit only conforming Schedules R.

• Follow the format and fields exactly as on the official IRS Schedule R.

• Maintain the same number of entry lines on the substitute Schedule R as on the official IRS form.

• Add or delete entry lines.

• Submit spreadsheets, database printouts, or similar formatted documents instead of using the Schedule R format to report data.

• Reduce or expand font size to add or delete extra data or lines.

Section 1.7 -- OMB Requirements for Substitute Forms

.01 The Paperwork Reduction Act (the Act) of 1995 (Public Law 104-13) requires the following.

• The Office of Management and Budget (OMB) approves all IRS tax forms that are subject to the Act.

• Each IRS form contains the OMB approval number, if assigned. (The official OMB numbers may be found on the official IRS-printed forms.)

• Each IRS form (or its instructions) states:

• 1. Why the IRS needs the information,

  2. How it will be used, and

  3. Whether or not the information is required to be furnished to the IRS.

.03 The OMB requirements for substitute IRS forms are the following.

• Any substitute form or substitute statement to a recipient must show the OMB number as it appears on the official IRS form.

• For Form 941, Schedule B, Schedule D, and Schedule R, the OMB number (1545-0029) must appear exactly as shown on the official IRS form.

• For Form 941, Schedule B, Schedule D, and Schedule R, the OMB number must use one of the following formats.

• 1. OMB No. 1545-0029 (preferred).

  2. OMB # 1545-0029 (acceptable).

Section 1.8 -- Order Forms and Instructions

.01 You can obtain copies of federal tax forms by calling your local IRS location. You can access tax material and/or order official IRS Forms 941, Schedule B, Schedule D, and Schedule R, online at IRS.gov. Click on the Forms and Pubs tab, and then click on the Order Forms and Pubs link to the left. You may also order these forms and instructions by calling 1-800-TAX-FORM (1-800-829-3676).

Section 1.9 -- Effect on Other Documents

.01 Publication 4436, Revised 05-2014, is superseded.

Section 1.10 -- Helpful Information

.01 Please follow the specifications and guidelines to produce substitute Form 941, Schedules B,D, and R.

.02 These forms are subject to review and possible changes as required. Therefore, employers are cautioned against overstocking supplies of privately printed substitutes.

.03 Here is a review of references that were listed throughout this document.

• Form 941, Employer's QUARTERLY Federal Tax Return Schedule

• Schedule B (Form 941), Report of Tax Liability for Semiweekly Schedule Depositors (referred to in this publication as "Schedule B").

• Schedule D (Form 941), Report of Discrepancies Caused by Acquisitions, Statutory Mergers, or Consolidations (referred to in this publication as "Schedule D").

• Schedule R (Form 941), Allocation Schedule for Aggregate Form 941 Filers (referred to in this publication as "Schedule R").

• Substitute territorial forms (941-PR, 941-SS, and Anexo B (Formulario 941-PR)).

• Instructions for Form 941.

• Instructions for Schedule B (Form 941).

• Publication 15 (Circular E), Employer's Tax Guide.

• SCRIPS@irs.gov for submissions.

• Substituteforms@irs.gov for questions.

• For questions:

•  

  Internal Revenue Service

   

  Attn: Substitute Forms Program

   

  SE:W:CAR:MP:P:TP

   

  5000 Ellin Road, C6-440

   

  Lanham, MD 20706

   

• http://www.irs.gov/app/picklist/list/draftTaxForms.html. for draft forms.

• http://www.irs.gov/app/picklist/list/formsPublications.html. for final forms.