A bit greater than per week earlier than the IRS issued a revised model of Kind 941-X (Adjusted Employer’s Quarterly Federal Tax Return or Declare for Refund), and its directions, the IRS reported that there are practically 1 million unprocessed amended employment tax returns.

Employers use Kind 941-X to appropriate errors on a beforehand filed Kind 941 for incorrectly reported wages, suggestions, and different compensation; revenue tax withheld from wages, suggestions, and different compensation; taxable Social Safety wages; taxable Social Safety suggestions; taxable Medicare wages and suggestions; and taxable wages and suggestions topic to Extra Medicare Tax withholding.

Extra just lately, employers may use a Kind 941-X to say sure COVID-19-era tax credit aimed to assist each companies and staff through the well being emergency. This contains the deferred quantity of the employer or worker share of Social Safety tax, quantities reported on Kind 941 for the credit score for certified sick and household go away wages, and the worker retention credit score (ERC).

A latest Treasury Inspector Normal for Tax Administration (TIGTA) report exhibits that though 95% of the full deferred Social Safety tax has been paid, some 384,314 employers nonetheless owe the IRS roughly $6 billion on this payroll tax and will likely be topic to assortment actions. Amended returns could be filed till 2024, which might influence the quantity of the deferral and likewise the quantity of the penalty for these employers that haven’t but paid the deferred Social Safety tax.

Different problems that could be impacting the IRS’s processing of Types 941-X is the notable quantity of ERC scams. The IRS has issued a number of warnings this previous tax season about taxpayers falling for fraudsters promising “large cash” with the ERC and mendacity concerning the employer’s eligibility. The rip-off even made the IRS’s 2023 “Soiled Dozen” listing of tax scams.

As of Might 17, 2023, the IRS said that its whole stock of unprocessed Types 941-X was roughly 879,000, a few of which can’t be processed till the associated 941s are accomplished. The Service defined that it really works on this stock in two websites (Cincinnati and Ogden) with skilled workers to work any attainable COVID-19 tax credit, such because the ERC.

Earlier in Might, Senator Kirsten Gillibrand (D-NY) held a video press convention to demand that the IRS tackle its backlog of unprocessed employment tax kinds, noting that she continues to listen to from companies in her state that haven’t but acquired their ERC tax refunds for claims filed in March of 2021 for wages paid in 2020.

The IRS additionally has a Kind 941 backlog of two.1 million, as of Might 18, 2023, which might solely add to the delay in processing the Kind 941-X backlog. New IRS Commissioner Daniel Werfel mentioned that the IRS’s 10-year funding plan will embody extra digital scanning of kinds that embody Types 941 to assist expedite processing.

He just lately said this in an April 27, 2023 Methods and Means Committee listening to on accountability and transparency, the place Werfel mentioned the Service goals to scan multiple million kinds this yr. “We’re getting more healthy,” the fiftieth IRS Commissioner mentioned through the listening to relating to the Service’s operational enhancements for the reason that COVID-19 pandemic. “The paper piled up…comparable to the worker retention credit,” Werfel added.

Werfel famous that the IRS had been processing about 20,000 ERC credit score claims per week, “however that was not sufficient to maintain up with the demand as a result of extra are available” and said that there’s nonetheless ERC eligibility by means of 2025. “It is a rising goal, not a steady one,” he defined, however mentioned that since tax submitting season is over, the IRS goals to double the speed of processed claims from 20,000 to 40,000 or extra.

“Plus, we have now groups methods we will enhance the method and be extra aggressive to handle that backlog,” he mentioned, referring to the unprocessed Types 941 and 941-X containing ERC or different COVID-19 tax credit score info. “It’s an absolute precedence,” Werfel assured the Committee through the listening to.

The April 2023 revised model of Kind 941-X, issued by the IRS on Might 25, 2023, is just like the draft model of the shape and directions that the Service posted earlier this month and in April (see IRS Points 2023 Draft Kind 941 -X With Minor Modifications As Backlog Continues to Develop, 04/20/22; and IRS Releases Draft of 941 -X Directions, Updates Payroll Tax Credit score Data, 05/08/22). The return should nonetheless be filed on paper. Whether or not the IRS funding will make an digital submitting choice for Kind 941-X sooner or later stays to be seen.

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