What is an IRS Form 941-X, and why is it useful in a TFRP assessment process?

An IRS Form 941 is used to report withheld taxes to the federal government. Failure to make payments as recorded on the Form 941 is the basis for an assessment of Trust Fund Penalties against Responsible Persons (TFRP).

In limited circumstances, business owners may find that they have by reason of error, omission, or sloth, over reported their 941 liabilities. Business owners should review their 941 reporting with their accountant, CPA, bookkeeper, or tax lawyer to determine if an amended 941 is an appropriate mechanism for correcting the over reporting.

Form 941-X correlates with Form 941, the Employer’s Quarterly Federal Tax Return. You may need a corporate tax lawyer to help file.

Form 941-X is a stand-alone form that relates line-by-line with the employment tax return it is correcting. You can file Form 941-X at any time when you discover an error, rather than having to wait to file it at the end of the quarter with the next employment tax return. Contact our tax lawyers at JDKatz: Attorneys at Law for information on how to properly file the Form 941-X.

Some Notes on Completing This Form

  • You may use the form for one quarter only. If you are reporting more than one quarter, you must use a separate form for each quarter.
  • You may choose (a) an adjustment, if you under-reported, or if you under-reported and over-reported, or (b) a claim, if you over-reported. You may not use an adjustment and a claim on the same form; you will have to use separate forms.
  • The process differs if you file less than 90 days from the expiration of the period of limitations on credit or refund for Form 941, or more than 90 days from this date. Read the Instructions (included with the form) for more information, or reach out to your team of Maryland tax attorneys for guidance.
  • If your error affected employee withholding, you must obtain written consent from each affected employee. You will have to certify: “I have a written statement from each employee stating that he or she has not claimed (or the claim was rejected) and will not claim a refund or credit for the over collection.” If you cannot find all employees or you cannot get written consent from each employee, you can only make changes in the employer portion.
  • Part 3 of the form follows the outline of Form 941. For each item, you will need to include the total corrected amount, the previously reported amount, and the difference.
  • You must include a detailed explanation of how you determined your corrections, which is where our small business and corporate tax lawyer can help avoid errors.

If you suspect your business may have made an error on its quarterly withholding obligations, contact the business tax lawyers at JDKatz: Attorneys at Law to learn how we can help. Avoiding tax evasion penalties and fines is one thing our tax attorneys can assist with.