Penalty Relief Pilot for Small Retirement Plans

IRS will begin a one-year pilot program in June to help small businesses with retirement plans that owe penalties for not filing reporting documents. By filing current and prior year forms during this pilot program, they can avoid penalties.

The IRS is reaching out to certain small businesses that maintain retirement plans and may have been unaware that they had a filing requirement. The IRS projects that this program will bring a significant number of small business owners into compliance with the reporting requirements.

Plan administrators and sponsors who do not file an annual Form 5500 series return can face stiff penalties — up to $15,000 per return. Those who have already been assessed a penalty for late filings are not eligible for this program. This program is open only to retirement plans generally maintained by certain small businesses, such as those in an owner-spouse arrangement or eligible partnership.

Multiple late retirement plan returns may be included in a single submission. If a retirement plan has delinquent returns for more than one plan year, penalty relief may be available for all of these returns. Similarly, delinquent returns for more than one plan may be included in a single penalty relief request. No filing fee will be charged during the pilot program.

Revenue Procedure 2014-32.

This revenue procedure establishes a temporary one-year pilot program providing administrative relief to plan administrators and plan sponsors of certain retirement plans from the penalties otherwise applicable under §§ 6652(e) and 6692 of the Internal Revenue Code (the “Code”) for a failure to timely comply with the annual reporting requirements imposed under §§ 6047(e), 6058, and 6059 of the Code. The administrative relief provided under this revenue procedure applies only to plan administrators (as defined in § 414(g) of the Code) and plan sponsors of retirement plans that are subject to the reporting requirements of §§ 6047(e), 6058, and 6059 of the Code, but that are not subject to the reporting requirements of Title I of the Employee Retirement Income Security Act of 1974 (“ERISA”). This revenue procedure also requests comments as to whether a permanent relief program should be established and, if so, how fees should be determined.

Both the Code and Title I of ERISA impose reporting requirements with respect to certain retirement plans. To minimize the filing burden on plan sponsors and plan administrators of employee benefit plans, the Internal Revenue Service (the “Service”) and the Department of Labor (the “DOL”) (as well as the Pension Benefit Guaranty Corporation) have consolidated various annual reporting requirements in the Form 5500 Series Annual Return/Report. The Form 5500 Series includes: the Form 5500, Annual Return/Report of Employee Benefit Plan; the Form 5500-SF, Short Form Annual Return/Report of Employee Benefit Plan; and the Form 5500-EZ, Annual Return of One-Participant (Owners and Their Spouses) Retirement Plan.
Plan sponsors and plan administrators who fail to file timely Form 5500 series annual returns/reports for their retirement plans may be subject to civil penalties under the Code (or under both Title I of ERISA and the Code). In particular, the Service may assess penalties under §§ 6652(e) and 6692 of the Code for the failure to satisfy the requirements for annual returns. Section 6652(e) generally provides, in part, that in the case of any failure to timely file a return or statement required under § 6058 (annual return of employee benefit plans) or § 6047(e) (returns and reports for employee stock ownership plans), the late filer shall pay, upon notice and demand, a penalty of $25 for each day the failure continues, up to $15,000 per return or statement. Section 6692 generally provides that, in the case of any failure to timely file a report required by § 6059 (actuarial report for employee benefit plans), the late filer shall pay a penalty of $1,000 for each failure. No penalty is imposed under these sections if it is shown that such failure to timely file is due to reasonable cause.

In 1995, the DOL established the Delinquent Filer Voluntary Compliance (“DFVC”) program to reduce ERISA late-filing penalties on filers of delinquent annual reports. In Notice 2002-23, 2002-1 C.B. 742, the Service determined that it would not impose the penalties under §§ 6652(c)(1), (d), (e) and 6692 (to the extent applicable) on a person who is eligible for, and satisfies the requirements of, the DFVC program with respect to the filing of a Form 5500. The relief under Notice 2002-23 was available only to filers who are required to file under both Title I of ERISA and the Code. Notice 2002-23 has been superseded by Notice 2014-35, which will appear in 2014-23 I.R.B. As under Notice 2002-23, the penalty relief provided by Notice 2014-35 does not apply to a delinquent filing of a Form 5500-EZ for retirement plans that do not cover any common law employees (such as a plan under which a business owner and the owner’s spouse are the only participants). See 29 C.F.R. 2510.3-3(b) and (c).
Certain retirement plans that are not subject to Title I of ERISA are exempt from some of the annual reporting requirements if they satisfy certain criteria specified by statute or by the Service in published guidance. For example, for years beginning after 2006, section 1103 of the Pension Protection Act of 2006 (Pub. L. No. 109-280, 120 Stat. 780, 1057) provides that “one-participant plans” with assets of $250,000 or less at the end of the plan year are not required to file a Form 5500 series return/report. (The Service has determined that such plans must, however, file an annual return/report when the plan is terminated and all assets have been distributed.)

Penalty Relief

The relief applies to filers who are eligible to participate under Section 4 of this revenue procedure and who satisfy the requirements of Section 5 of this revenue procedure by no later than June 2, 2015. However, in lieu of the relief provided under this revenue procedure, filers may continue to file for the relief currently available for a failure to timely file that is due to reasonable cause.


Seattle Minimum Wage Raise – Beginning April 1, 2015

Seattle City Council unanimously approved the adoption of a $15 per hour minimum wage. Beginning April 1, 2015, the legislation will phase-in a $15 per hour minimum wage annually over 3 to 7 years, depending on employer size.

Twenty-four percent of Seattle workers earn hourly wages of $15 per hour or less, and approximately 13.6 percent of the Seattle community lives below the federal poverty level, according to a University of Washington study. Washington State’s minimum wage is currently $9.32 per hour. Effective April 1, 2015, the minimum wage in Seattle will be $10.00 or $11.00 per hour depending on employer size. Here is a chart illustrating the subsequent annual minimum wage increase based on employer size.


Signed Ordinance and the  Resolution that were approved by City Council on June 2, 2014.


Additional Medicare Tax

The Additional Medicare Tax is added by the Affordable Care Act (ACA). It applies to wages, railroad retirement (RRTA) compensation, and self-employment income over certain threshold amount received in taxable years beginning after Dec. 31, 2012. Employers are responsible for withholding the tax on wages and RRTA compensation in certain circumstances.

Tax rate is 0.9 percent.

An individual is liable for Additional Medicare Tax if the individual’s wages, compensation, or self-employment income (together with that of his or her spouse if filing a joint return) exceed the threshold amount for the individual’s filing status:


Filing Status

Threshold Amount

Married filing jointly $250,000
Married filing separate $125,000
Single $200,000
Head of household (with qualifying person) $200,000
Qualifying widow(er) with dependent child $200,000

Read more about Additional Medicare Tax

IRS final regulations (TD 9645)

Employer’s Annual Information Return Tip Income and Allocated Tips – for 2013

All employees receiving $20 or more a month in tips must report 100% of their tips to their employer.

Form 8027 is used by large food or beverage establishments when the employer is required to make annual reports to the IRS on receipts from food or beverage operations and tips reported by employees.

You must file Form 8027 if you are an employer who operates a large food or beverage establishment. If you own more than one establishment, you must file Form 8027 for each one. There may be more than one establishment (business activity providing food or beverages) operating within a single building, and, if gross receipts are recorded separately, each activity is required to file a Form 8027.

A return is required only for establishments in the 50 states and the District of Columbia.

A large food or beverage establishment is one to which all of the following apply.

  • Food or beverage is provided for consumption on the premises.
  • Tipping is a customary practice.
  • More than 10 employees who work more than 80 hours were normally employed on a typical business day during the preceding calendar year.

The filing requirement (more than 10 employees) is based on the total of all employees who provided services in connection with the provision of food and beverages at the establishment, not just the number of directly tipped employees. Include employees such as waitstaff, bussers, bartenders, seat persons, wine stewards, cooks, and kitchen help. See Regulations section 31.6053-3(j)(10) for more information.

A person who owns 50% or more in value of the stock of a corporation that runs the establishment is not considered an employee when determining whether the establishment normally employs more than 10 individuals.


File Form 8027 (and Form 8027-T when filing more than one Form 8027) by February 28, 2014. However, if you file electronically, the due date is March 31, 2014.

Extension of time to file.   Filers of Form 8027 submitted on paper or electronically may request an extension of time to file on Form 8809, Application for Extension of Time To File Information Returns. File Form 8809 as soon as you know an extension of time to file is necessary, but not later than February 28, 2014 (March 31, 2014 if you file electronically).



Employer’s Quaterly Federal Tax Return 2014

Use Form 941 to report the following amounts.

  • Wages you have paid.
  • Tips your employees have received.
  • Federal income tax you withheld.
  • Both the employer’s and the employee’s share of social security and Medicare taxes.
  • Additional Medicare Tax withheld from employees.
  • Current quarter’s adjustments to social security and Medicare taxes for fractions of cents, sick pay, tips, and group-term life insurance.


Do not use Form 941 to report backup withholding or income tax withholding on nonpayroll payments such as pensions, annuities, and gambling winnings. Report these types of withholding on Form 945, Annual Return of Withheld Federal Income Tax.

After you file your first Form 941, you must file a return for each quarter, even if you have no taxes to report, unless you filed a final return or one of the exceptions listed next applies.

Form 941

Instructions for Form 941 (HTML)

When To File Form 941

Your Form 941 is due by the last day of the month that follows the end of the quarter.
The Quarter Includes . . . Quarter Ends Form 941
Is Due
1. January, February, March March 31 April 30
2. April, May, June June 30 July 31
3. July, August, September September 30 October 31
4. October, November, December December 31 January 31


For example, you generally must report wages you pay during the first quarter—which is January through March—by April 30. If you made timely deposits in full payment of your taxes for a quarter, you have 10 more days after the due date to file your Form 941.

2014 News

Social security and Medicare tax for 2014.   The social security tax rate is 6.2% each for the employee and employer, unchanged from 2013. The social security wage base limit is $117,000.   The Medicare tax rate is 1.45% each for the employee and employer, unchanged from 2013. There is no wage base limit for Medicare tax.   Social security and Medicare taxes apply to the wages of household workers you pay $1,900 or more in cash or an equivalent form of compensation in 2014. Social security and Medicare taxes apply to election workers who are paid $1,600 or more in cash or an equivalent form of compensation in 2014.

COBRA premium assistance credit.   Effective for tax periods beginning after December 31, 2013, the credit for COBRA premium assistance payments cannot be claimed on Form 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 and enter “COBRA” in the search box.


Additional Medicare Tax withholding.   In addition to withholding Medicare tax at 1.45%, you must withhold a 0.9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. You are required to begin withholding Additional Medicare Tax in the pay period in which you pay wages in excess of $200,000 to an employee and continue to withhold it each pay period until the end of the calendar year. Additional Medicare Tax is only imposed on the employee. There is no employer share of Additional Medicare Tax. All wages that are subject to Medicare tax are subject to Additional Medicare Tax withholding if paid in excess of the $200,000 withholding threshold.   For more information on what wages are subject to Medicare tax, see the chart, Special Rules for Various Types of Services and Payments, in section 15 of Pub. 15 (Circular E), Employer’s Tax Guide. For more information on Additional Medicare Tax, visit and enter “Additional Medicare Tax” in the search box.
Work opportunity tax credit for qualified tax-exempt organizations hiring qualified veterans.   The work opportunity tax credit is available for eligible unemployed veterans who began work on or after November 22, 2011, and before January 1, 2014. Qualified tax-exempt organizations that hire eligible unemployed veterans can claim the work opportunity tax credit against their payroll tax liability using Form 5884-C, Work Opportunity Credit for Qualified Tax-Exempt Organizations Hiring Qualified Veterans. For more information, visit and enter “work opportunity tax credit” in the search box.
Section 3121(q) Notice and Demand—Tax due on unreported tips.   An employer enters the amount of social security and Medicare taxes on unreported tips shown on the Section 3121(q) Notice and Demand on line 5f of the employer’s Form 941 for the calendar quarter corresponding to the “Date of Notice and Demand.”
Aggregate Form 941 filers.   Agents must complete Schedule R (Form 941), Allocation Schedule for Aggregate Form 941 Filers, when filing an aggregate Form 941. Aggregate Forms 941 are filed by agents approved by the IRS under section 3504. To request approval to act as an agent for an employer, the agent files Form 2678, Employer/Payer Appointment of Agent, with the IRS.
Correcting a previously filed Form 941.   If you discover an error on a previously filed Form 941, make the correction using Form 941-X. Form 941-X is filed separately from Form 941. For more information, see section 13 of Pub. 15 (Circular E) or visit and enter “correcting employment taxes” in the search box.
Employers can choose to file Forms 941 instead of Form 944.   Employers that would otherwise be required to file Form 944, Employer’s ANNUAL Federal Tax Return, can notify the IRS if they want to file quarterly Forms 941 instead of annual Form 944. See Rev. Proc. 2009-51, 2009-45 I.R.B. 625, available at
Requesting to file Form 944 instead of Forms 941.   If you are required to file Form 941 but believe your employment taxes for the calendar year will be $1,000 or less, you may request to file Form 944 instead of Forms 941 by calling the IRS at 1-800-829-4933 between January 1, 2014, and April 1, 2014, or sending a written request postmarked between January 1, 2014, and March 17, 2014. You must receive written notice from the IRS to file Form 944 instead of Forms 941 before you may file this form. For more information on requesting to file Form 944, visit and enter “file employment taxes annually” in the search box.
Federal tax deposits must be made by electronic funds transfer.   You must use electronic funds transfer to make all federal tax deposits. Generally, electronic funds transfers are made using the Electronic Federal Tax Payment System (EFTPS). If you do not want to use EFTPS, you can arrange for your tax professional, financial institution, payroll service, or other trusted third party to make electronic deposits on your behalf. Also, you may arrange for your financial institution to initiate a same-day wire payment on your behalf. EFTPS is a free service provided by the Department of Treasury. Services provided by your tax professional, financial institution, payroll service, or other third party may have a fee.

IRS Employment Tax Reporting and Deposit Due Dates in 2014


Reporting Due Dates


Generally, employers must report wages, tips and other compensation paid to an employee by filing the required form(s) to the IRS. You must also report on the taxes you deposit.


By January 31



By February 28



By March 31


File electronic Forms 1099 and 8027 with the IRS. File electronic Forms W-2 with the SSA. For information on reporting Form W-2 information to the SSA electronically, visit the Social Security Administration’s Employer W-3 Filing Instructions & Information web page. We have two publications about filing information returns electronically.


  • Publication 1220 (PDF), Specifications for Filing Forms 1097, 1098, 1099, 3921, 3922, 5498, 8935, and W-2G Electronically
  • Publication 1239 (PDF), Specifications for Filing Form 8027


By April 30, July 31, October 31, and January 31



Deposit Due Dates


In general, you must deposit federal income tax withheld and both the employer and employee social security and Medicare taxes.


There are two deposit schedules, monthly and semi-weekly. Before the beginning of each calendar year, you must determine which of the two deposit schedules you are required to use. The deposit schedule you must use is based on the total tax liability you reported on Form 941 during a lookback period. See special rules for Forms 944 and 945. Schedules for depositing and reporting taxes are not the same.


You must use electronic funds transfer (EFTPS) to make all federal tax deposits.


Monthly Depositor


Under the monthly deposit schedule, deposit employment taxes on payments made during a month by the 15th day of the following month. Employers who deposit monthly should only report their deposits quarterly or annually by filing Form 941 or Form 944.


Semi-weekly Depositor


Under the semiweekly deposit schedule, deposit employment taxes for payments made on Wednesday, Thursday, and/or Friday by the following Wednesday. Deposit taxes for payments made on Saturday, Sunday, Monday, and/or Tuesday by the following Friday. Report your deposits quarterly or annually only by filing Form 941 or Form 944.


FUTA Deposits


Deposit FUTA tax by the last day of the first month that follows the end of the quarter. If the due date for making your deposit falls on a Saturday, Sunday, or legal holiday, you may make your deposit on the next business day.


If your liability for the fourth quarter (plus any undeposited amount from any earlier quarter) is over $500, deposit the entire amount by the due date of Form 940 (January 31). If it is $500 or less, you can make a deposit, pay the tax with a credit or debit card, or pay the tax with your 2011 Form 940 by January 31.


San Francisco 2013 Payroll Expense Tax Statement

Link to 2013 Payroll Expense Tax Statement eFiling

As required by our Payroll Expense Tax and Business Registration Ordinance all businesses with a taxable San Francisco payroll expense greater than $150,000 must file a Payroll Expense Tax Statement for their business annually by the last day of February for the prior calendar year (Jan. 1st – Dec. 31st). The Payroll Expense tax rate is 1.5% or .015. You calculate the Payroll Expense Tax by multiplying the business’ annual San Francisco payroll expense by 1.5% or .015, the Payroll Expense Tax rate.

Businesses must also renew their Business Registration for the next fiscal year (July 1st – June 30th) if they plan to conduct business during the new fiscal year. The 2014 – 2015 business registration renewal is due on May, 31, 2014.

A business is required to file if its San Francisco payroll expense was over $150,000 and it was operating for any portion of time in 2013.

  • Statements must be filed online and transmitted before midnight 02/28/2014
  • Payments must be received or postmarked on or before 02/28/2014
  • Penalties, interest, and fees will be imposed after 02/28/2014
  • The Power of Attorney Declaration as referenced in the Certification tab can be viewed at
Please have the following data ready:
  • Amount of 2013 payroll expense (both globally and for San Francisco)
  • Number of taxable employees for each San Francisco location in 2013
  • Your seven (7) digit Business Account Number. Note that your Business Account Number is your Business Certificate Number with a leading zero
  • Last four (4) digits of your Federal Taxpayer Identification Number

Deadline Dates to File W-2 Forms for 2013


Deadline to distribute Forms W-2 to employee:  January 31, 2014

Deadline to file using paper Forms W-2:  February 28, 2014

Deadline to file using Business Services Online (e-filing): March 31, 2014

Each year, employers must send Copy A of Forms W-2 (Wage and Tax Statement) to Social Security to report the wages and taxes of your employees for the previous calendar year. In addition, a Form W-2 must be given to each employee. Forms W-2 are sent to Social Security along with a Form W-3 (Transmittal of Income and Tax Statements). Employers are required to file a Form W-2 for wages paid to each employee from whom:

  • Income, Social Security, or Medicare taxes were withheld, or
  • Income tax would have been withheld if the employee had claimed no more than one withholding allowance or had not claimed exemption from withholding on a Form W-4, (Employee’s Withholding Allowance Certificate).



Employer W-2 Filing Resources

You must register to use Business Services Online – Social Security’s suite of services that allows you to file W-2/W-2Cs online and verify your employees’ names and Social Security numbers against our records.

This service offers fast, free, and secure online W-2 filing options to CPAs, accountants, enrolled agents, and individuals who process W-2s (the Wage and Tax Statement) and W-2Cs (Statement of Corrected Income and Tax Amounts).

The Social Security Number Verification Service allows employers to verify the names and Social Security numbers of current and former employees for wage reporting purposes only.


Forms W-2/W-3 Instructions

Specifications for Filing Forms W-2 and W-2c Electronically (EFW2/EFW2C)

Electronic W-2/W-2c Filing Handbook

Social Security has a free electronic filing option available for small businesses that allows you to prepare and submit up to 20 W-2s (per report) over a
secure Internet service. When you register to file electronically, here’s what you get:
Freedom from buying paper forms;
W-2s for your employees and for your records;
Electronic receipts you can use as proof that you filed on time;
andUntil March 31 to file

Helpful Hints to Electronic W-2c/W-3c Filing

  • File Forms W-2c (Corrected Wage and Tax Statement) and W-3c (Transmittal of Corrected Wage and Tax Statement) as soon as possible after you discover an error. Also, provide a Form W-2c to the employee as soon as possible.
  • To correct a Form W-2 you have already submitted, file a Form W-2c with a separate Form W-3c for each year needing correction.
  • File a Form W-3c whenever you file a Form W-2c, even if you are only filing a Form W-2c to correct an employee’s name or Social Security number (SSN).
  • Follow the General Instructions for Forms W-2c/W-3c.
  • If you use your own software to prepare and submit paper Forms W-2c, follow the instructions in Social Security’s Information for Software Developers.
  • If you expect to file 250 or more W-2cs during a calendar year, you are now required to file them electronically. (W-2cs for years before 2002 are not counted for purposes of the new threshold.) Submitters must follow the formatting specifications in Social Security’s Specifications for Filing Forms W-2 Electronically (EFW2). If you believe the 250 threshold requirements (published in Internal Revenue Service (IRS) Pub. 1223) will create a hardship, contact the IRS Employer Call Site in Martinsburg, West Virginia, toll-free at (866) 455-7438 about the possibility of a waiver.
  • If any item shows a dollar amount change and one of the amounts is zero, enter “-0-”. Do not leave the box blank.
  • If you reported your EIN incorrectly, please file a W-3c to correct it.
  • Make sure you use the Employer Identification Number (EIN) issued by IRS on all Forms W-2c/W-3c. Note: The same EIN number should be used on the Form 941-x, Supporting Statement to Correction Information, when applicable.
  • When you discover an error on a previously filed Form 941, you must:
    • Correct that error using Form 941-X;
    • File a separate Form 941-X for each Form 941 you are correcting;
    • File a Form 941-X separately. Do not file a Form 941-X with a Form 941.


AccuWage Software 2013

Accuwage software 2013 download links

Main Accuwage download page

A new Informational alert will display if the Submitter EIN (RA or RCA Record) and Employer/Agent EIN (RE or RCE Record) fields are matching. This is an informational only alert. If you intended for the fields to match and there are no other errors in the file to correct, please leave AccuWage/AccuW2C and go to the BSO Webpage to upload your file. You will not receive the pop-up to go directly to the BSO Webpage from AccuWage/AccuW2C TY13 if you received the informational alert.

AccuWage/AccuW2C is free software from Social Security.

  • AccuWage is for use with Electronic Filing W-2 – EFW2
  • AccuW2C is for use with Electronic Filing W-2c – EFW2C

The software allows you to check W-2 (Wage and Tax Statement) and W-2c (Corrected Wage and Tax Statement) reports for correctness before you send them to Social Security.

After downloading and installing AccuWage/AccuW2C software on your PC specify the directory where your W2REPORT or W2CREPORT file is located. AccuWage/AccuW2C reads the file and informs you of any errors it detects.

The AccuWage/AccuW2C software identifies most of the common format errors in wage submissions. Using this software greatly reduces submission rejections. Please be aware that even if no errors are identified by AccuWage/AccuW2C, your submission could be returned because of other errors.