The total credit allowable may not be more than 5.4%
Make your deposits with an authorized financial
of the total taxable FUTA wages.
institution (e.g., a commercial bank that is qualified to
accept Federal tax deposits). To avoid a possible
Special credit for successor employers. A successor
penalty, do not mail deposits directly to the IRS. Records
employer is an employer who received a unit of another
of your deposits will be sent to the IRS for crediting to
employer’s trade or business or all or most of the
your business accounts.
property used in the trade or business of another
employer. Immediately after the acquisition, the
Electronic deposit requirement. You must make
successor employer must employ one or more individuals
electronic deposits of all depository taxes (such as
who were employed by the previous owner.
employment tax, excise tax, and corporate income tax)
using the Electronic Federal Tax Payment System
You may be eligible for a credit based on the state
(EFTPS) in 2002 if:
unemployment contributions paid by the previous
The total deposits of such taxes in 2000 were more
employer. You may claim these credits if you are a
than $200,000 or
successor employer and acquired a business in 2001
You were required to use EFTPS in 2001.
from a previous employer who was not required to file
If you are required to use EFTPS and fail to do so, you
Form 940 (or 940-EZ) for 2001. If you are eligible to
may be subject to a 10% penalty. If you are not required
take this credit, you must file Form 940; you may not
to use EFTPS, you may participate voluntarily. To enroll
use Form 940-EZ. See section 3302(e). Enter in Part II,
in or get more information about EFTPS, call
line 3, columns (a) through (i), the information of the
1-800-555-4477 or 1-800-945-8400.
previous employer as if you paid the amounts.
See section 11 in Circular E for more information.
If the previous employer was required to file Form 940
(or 940-EZ), see successor employer on page 5.
For deposits made by EFTPS to be on time, you
must initiate the transaction at least one business
Depositing FUTA Tax
day before the date the deposit is due.
When to deposit. Although Form 940 covers a calendar
year, you may have to make deposits of the tax before
Magnetic Media and Electronic
filing the return. Generally, deposit FUTA tax quarterly if
your FUTA tax exceeds $100. Determine your FUTA tax
for each of the first three quarters by multiplying by .008
You may file Form 940 electronically or by using
that part of the first $7,000 of each employee’s annual
magnetic media. See Rev. Proc. 96-18, 1996-1 C.B. 637,
wages you paid during the quarter. If any part of the
for the procedures and Pub. 1314 for the tape
amounts paid is exempt from state unemployment tax,
specifications. You can find Rev. Proc. 96-18 on page 73
you may be required to deposit an amount greater than
of Internal Revenue Bulletin 1996-04 at www. irs. gov .
that determined using the .008 rate. For example, in
For information on filing Form 940 electronically, visit the
certain states, wages paid to corporate officers, certain
IRS Web Site at .
payments of sick pay by unions, and certain fringe
benefits are exempt from state unemployment tax.
Not Liable for FUTA Tax?
If your FUTA tax for any of the first three quarters of
If you receive Form 940 and are not liable for FUTA tax
2001 (plus any undeposited amount of $100 or less from
any earlier quarter) is over $100, deposit it by the last day
for 2001, write “Not Liable” across the front of the form,
sign the form, and return it to the IRS.
of the first month after the end of the quarter. If it is $100
or less, carry it to the next quarter; a deposit is not
Penalties and Interest
required. If your FUTA tax for the fourth quarter (plus any
undeposited amount from any earlier quarter) is over
Avoid penalties and interest by making tax deposits when
$100, deposit the entire amount by January 31, 2002. If it
due, filing a correct return, and paying all taxes when
is $100 or less, you can either make a deposit or pay it
due. There are penalties for late deposits, insufficient
with your Form 940 by January 31. (If you deposit it by
deposits, failure to deposit using EFTPS (when required),
January 31, you may file Form 940 by February 11,
and late filing unless you can show reasonable cause. If
you file late, attach an explanation to the return. There
The deposit due dates are shown in the following
are also penalties for willful failure to pay tax, make
returns, and for filing false or fraudulent returns.
If undeposited FUTA tax is over $100 on —
March 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . April 30
Employer’s name, address, calendar year, and
June 30 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . July 31
employer identification number (EIN). If you are not
September 30 . . . . . . . . . . . . . . . . . . . . . . . . . . . October 31
using a preaddressed Form 940, type or print your name,
December 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . January 31
trade name, address, calendar tax year, and EIN on the
form. Enter your name, address, calendar tax year, and
EIN here, even if you must complete Form 940-V, Form
If any deposit due date falls on a Saturday,
940 Payment Voucher.
Sunday, or legal holiday, you may deposit on the
next business day.
If you do not have an EIN, apply for one on Form
SS-4, Application for Employer Identification Number. If
you do not have an EIN by the time a return is due, write
How to deposit. If you are not required to use EFTPS
“Applied For” and the date you applied for the number.
(see Electronic deposit requirement below), use Form
8109, Federal Tax Deposit Coupon, when you make
Questions A through C. If you answer “Yes” to all the
each tax deposit. The IRS will send you a book of deposit
questions, you may file Form 940-EZ, a simpler version
coupons when you apply for an employer identification
of Form 940. If you answer “No” to any of the questions
number (EIN). Follow the instructions in the coupon book.
(or you are a successor employer claiming a credit for
If you do not have Form 8109, see section 11 in
state unemployment contributions paid by the prior
employer), you must file Form 940.