1999 Department of the Treasury Internal Revenue Service Instructions for Form 940 Employer's Annual Federal Unemployment (FUTA) Tax Return Section references are to the Internal Revenue Code unless otherwise noted. General Instructions Items To Note New electronic deposit requirement.   Beginning January 1, 2000, the following changes have been made to the electronic deposit requirement: l  The threshold that determines whether you must use the Electronic Federal Tax Payment System (EFTPS) has been increased from $50,000 to $200,000. l  All Federal tax deposits (such as deposits for employment tax, excise tax, and corporate income tax) made during a calendar year are combined to determine whether you exceeded the $200,000 threshold. If the total of your Federal tax deposits made in 1998 exceeded $200,000, you must use EFTPS beginning January 1, 2000. l  Participation in EFTPS is voluntary if your deposits do not exceed the new $200,000 threshold, even if you were required to electronically deposit under the previous $50,000 threshold. However, businesses that exceed the new $200,000 threshold must continue to use EFTPS in all later years. l  The waiver of the penalty for failure to use EFTPS, scheduled to expire on July 1, 1999, has been extended to January 1, 2000, for taxpayers whose total Federal tax deposits in 1998 did not exceed the new $200,000 threshold. However, taxpayers will remain liable for penalties if a deposit is not made in the required manner. To enroll in EFTPS, call 1-800-945-8400 or 1-800-555-4477.   For general information about EFTPS, call 1-800-829-1040.   Taxpayers who are not required to make electronic deposits may voluntarily participate in EFTPS. State unemployment information.   Employers must contact their state unemployment tax offices to receive their state reporting number, state experience rate, and details about their state unemployment tax obligations. Worksheet for computing the Part II, line 6 credit if state contributions were paid late.   Filers who made contributions to their state unemployment fund after the due date for filing Form 940 should complete the worksheet provided in the instructions for Part II, line 6, on page 5, to compute the allowable credit. Do not report such contributions in Part II, line 3, column (i) or on line 3b. Any credit allowed for such state contributions will appear on line 6. Photographs of Missing Children The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Photographs of missing children selected by the Center may appear in instructions on pages that would otherwise be blank. You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. Purpose of Form Use Form 940 (or 940-EZ) to report your annual Federal Unemployment Tax Act (FUTA) tax. FUTA tax, together with state unemployment systems, provides for payments of unemployment compensation to workers who have lost their jobs. Most employers pay both Federal and state unemployment taxes. Only the employer pays FUTA tax. Do not collect or deduct it from your employees' wages.   The tax applies to the first $7,000 you pay each employee in a year. The $7,000 amount is the Federal wage base. Your state wage base may be different. Form 940-EZ, Employer's Annual Federal Unemployment (FUTA) Tax Return, is a simpler version of Form 940. You may use it instead of Form 940 to report your annual FUTA tax if— 1. You paid unemployment contributions to only one state, 2. You paid all state unemployment contributions by January 31, 2000 (February 10 if you deposited all FUTA tax when due), and 3. All wages that were taxable for FUTA tax were also taxable for your state's unemployment tax. If, for example, you paid wages to corporate officers (these wages are taxable for FUTA tax) in a state that exempts these wages from its unemployment tax, you cannot use Form 940-EZ. CAUTION ! A successor employer claiming a credit for state unemployment contributions paid by the prior employer must file Form 940. For details, get Form 940-EZ. Do not file Form 940 if you have already filed Form 940-EZ for 1999. However, see Amended Returns on page 2. When To File File Form 940 for 1999 by January 31, 2000. However, if you deposited all FUTA tax when due, you may file on or before February 10, 2000. Your return will be considered timely filed if it is properly addressed and mailed First Class or sent by an IRS designated delivery service by the due date. See Circular E, Employer's Tax Guide (Pub. 15), for a list of designated delivery services. Also see Where To File on page 2. Cat. No. 13660I