Form 941 and 941-X: An IRS update for the second quarter and beyond

While we’re no longer dealing with the quarter-by-quarter changes to Form 941 that occurred during the pandemic, there are some recent updates employers should know.

The latest revision date for the 941 as well as its instructions is March 2023. Check for that date when you’re working on second quarter forms. That’s the version Finance pros used to report their first quarter federal employment taxes, too.

Meanwhile, Form 941-X has a more recent revision date: April 2023. Final versions of the form and its instructions were posted in May, IRS said during its June Payroll Industry Call.

The instructions explain that you can use the new version of the 941-X for past years, provided the statute of limitations on corrections hasn’t expired. But you should supplement the 941-X instructions with the 941 instructions that correspond to the quarter you’re correcting.

Backlog has decreased

For employers that have been waiting for IRS to process 941s and/or 941-Xs, you’ll be glad to hear improvements have been made to the COVID-related backlog.

In IRS Operations: Status of Mission-Critical Functions, IRS said that:

• 2 million 941s still needed to be processed as of June 1, 2023.
• 740,000 941-Xs remained as of May 31, 2023.

Compare that to December 31, 2020, when 5.5 million paper 941s and other forms in the 94x series were on hold.

E-filing and Form 941

During the Social Security Administration’s Spring 2023 Wage Reporting Community Meeting, IRS commented on how Form 941 does (or rather, doesn’t) fit into its new electronic filing regulations.

As a reminder, the regs lowered the e-filing threshold from 250 individual returns to 10 returns in aggregate.

The list of forms to add up is long and – as in the past – includes Forms W-2. However, the following forms shouldn’t be included in the tally to determine if you’ve met the 10-return threshold:

• 940
• 941
• 943
• 944, or
• 945.

You still have time to prepare for the new regulations, as they come into play for tax year 2023 – i.e., forms Payroll will submit during the 2024 filing season.

Mobile-friendly format

The plan is for Form 941 (and other forms in the 94x series) to be offered in a mobile-friendly format, available in multiple languages. That’s according to Tax Tip 2023-72.

But no word yet from IRS on when that might happen.