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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.

CAUTION

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

Reporting

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

2002.)

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

chart:

returns, and for filing false or fraudulent returns.

If undeposited FUTA tax is over $100 on —

Deposit it

by —

Specific Instructions

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.

TIP

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

Circular E.

employer), you must file Form 940.

-3-

Instructions For Form 940 - Employer'S Annual Federal Unemployment (Futa) Tax Return - 2001 Page 3

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