2003 HTML Instructions for Form 945,

This is archived information that pertains only to the 2003 Tax Year. If you
are looking for information for the current tax year, go to the Tax Prep Help Area.

Table of Contents

Enhanced Third Party Designee authority. The authority given to a representative when a filer completes the Third Party Designee section of Form 945 has been enhanced and is now revocable. Third-party designees will now be able to exchange information with the IRS concerning Form 945. They may also request and receive written tax information relating to Form 945 including copies of specific notices, correspondence, and account transcripts. The named third-party designee may now be any individual, corporation, firm, organization, or partnership. As a result, the enhanced Third Party Designee authorization will be substantially equivalent to Form 8821, Tax Information Authorization. See Third Party Designee on page 4 for details.

Web-based application for an EIN. You may now apply for an employer identification number (EIN) online by visiting the IRS website at www.irs.gov/smallbiz. See also Employer identification number (EIN) on page 2.

General Instructions

Purpose of form. Use Form 945 to report Federal income tax withheld from nonpayroll payments. Nonpayroll payments include the following:

Pensions (including governmental section 457(b) plan distributions), annuities, and IRA distributions
Military retirement
Gambling winnings
Indian gaming profits
Voluntary withholding on certain government payments
Backup withholding

Report all Federal income tax withholding from nonpayroll payments or distributions on one Form 945. Do not file more than one Form 945 for any calendar year.

All Federal income tax withholding reported on Forms 1099 (e.g., Form 1099-R or 1099-MISC) or Form W-2G must be reported on Form 945. Do not report Federal income tax withholding from wages on Form 945.

All employment taxes and Federal income tax withholding reported on Form W-2, Wage and Tax Statement, must be reported on Form 941 (or Form 943 for agricultural employees, Schedule H (Form 1040) for household employees, or Form CT-1 for railroad employees).

Do not report on Form 945 Federal income tax withheld on distributions to participants from nonqualified pension plans (including nongovernmental section 457(b) plans) and some other deferred compensation arrangements that are treated as wages and are reported on Form W-2. Report such withholding on Form 941. See Circular E (Pub. 15), Employer's Tax Guide, for more information.

Related publications. Circular E (Pub. 15) explains the rules for withholding, depositing, and reporting Federal income tax. Pub. 15-A, Employer's Supplemental Tax Guide, includes information on Federal income tax withholding from pensions, annuities, and Indian gaming profits. For information on withholding from gambling winnings, see the Instructions for Forms W-2G and 5754. These publications are available on the IRS website at www.irs.gov or by calling 1-800-TAX-FORM (1-800-829-3676).

Telephone Help. You can call the IRS toll free at 1-800-829-4933 to order FTD coupons (Form 8109) and for answers to your questions about completing Form 945, tax deposit rules, or obtaining an employer identification number (EIN).

Who must file. If you withhold Federal income tax (including backup withholding) from nonpayroll payments, you must file Form 945. You are not required to file Form 945 for those years in which you do not have a nonpayroll tax liability. Do not report on Form 945 withholding that is required to be reported on Form 1042, Annual Withholding Tax Return for U.S. Source Income of Foreign Persons.

When to file. For 2003, file Form 945 by February 2, 2004. However, if you made deposits on time in full payment of the taxes for the year, you may file the return by February 10, 2004. Your return will be considered timely filed if it is properly addressed and mailed First-Class or sent by an IRS-designated private delivery service on or before the due date. See Circular E (Pub. 15) for more information on IRS-designated private delivery services.

Where to file. In the list below, find the location of your legal residence, principal place of business, office, or agency. Send your return to the Internal Revenue Service at the address listed for your location. No street address is needed.

Where you file depends on whether or not you are including a payment with the return.

Exception for exempt organizations and government entities. If you are filing Form 945 for an exempt organization or government entity (Federal, state, local, or Indian tribal government), use the following addresses, regardless of your location:

Return without payment: Ogden, UT 84201-0042

Return with payment: P.O. Box 660443, Dallas, TX 75266-0443

Connecticut, Delaware, District of Columbia, Illinois, Indiana, Kentucky, Maine, Maryland, Massachusetts, Michigan, New Hampshire, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, South Carolina, Vermont, Virginia, West Virginia, Wisconsin
Return without payment: Cincinnati, OH 45999-0042	Return with payment: P.O. Box 105092 Atlanta, GA 30348-5092
Alabama, Alaska, Arizona, Arkansas, California, Colorado, Florida, Georgia, Hawaii, Idaho, Iowa, Kansas, Louisiana, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Mexico, North Dakota, Oklahoma, Oregon, South Dakota, Tennessee, Texas, Utah, Washington, Wyoming
Return without payment: Ogden, UT 84201-0042	Return with payment: P.O. Box 660443 Dallas, TX 75266-0443
If you have no legal residence or principal place of business in any state–
Return without payment: Philadelphia, PA 19255-0042	Return with payment: P.O. Box 80108 Cincinnati, OH 45280-0008

Employer identification number (EIN). If you do not have an EIN, apply for one on Form SS-4, Application for Employer Identification Number. Get this form by calling 1-800-TAX-FORM (1-800-829-3676) or from the IRS website at www.irs.gov/smallbiz. If you do not have an EIN by the time your return is due, write “Applied For” and the date you applied in the space shown for the number.

Note:

If you are reporting withholding on pension distributions, be sure to be consistent in using the same name and EIN for all reporting and depositing of taxes (e.g., on Forms 945, 1099-R, and 8109/EFTPS). Filing Form 945 with an incorrect name and EIN or failure to use the same name and EIN in all reporting and depositing of taxes may result in penalties and delays in processing your return.

Penalties and interest. There are penalties for filing Form 945 late and for paying or depositing taxes late, unless there is reasonable cause. See section 11 of Circular E (Pub. 15) for more information on deposit penalties. There are also penalties for failure to furnish information returns (e.g., Forms 1099-MISC, 1099-R, or W-2G) to payees and failure to file copies with the IRS.

If amounts that must be withheld are not withheld or are not deposited or paid to the United States Treasury, the trust fund recovery penalty may apply. The penalty is the full amount of any unpaid trust fund tax. This penalty may apply when these unpaid taxes cannot be immediately collected from the employer or business. The trust fund recovery penalty may be imposed on all persons who are determined by the IRS to have been responsible for collecting, accounting for, and paying over these taxes, and who acted willfully in not doing so. Willfully in this case means voluntarily, consciously, and intentionally. A responsible person acts willfully if the person knows that the required actions are not taking place.

Voluntary income tax withholding. States must allow unemployment compensation recipients to elect to have Federal income tax withheld at a 10% rate in 2004. Recipients paid under the Railroad Unemployment Insurance Act may also elect withholding at a 10% rate in 2004.

Recipients of any of the following Federal payments may request Federal income tax withholding in 2004 at a rate of 7%, 10%, 15%, or 25%:

Social security and Tier 1 railroad retirement benefits
Certain crop disaster payments
Commodity Credit Corporation loans

The payee may request withholding on Form W-4V, Voluntary Withholding Request, or you may develop your own substitute form. Any voluntary withholding on these payments must be reported on Form 945 (and on Form 1099-G) and is subject to the deposit rules.

Depositing Withheld Taxes

Deposit all nonpayroll (Form 945) Federal income tax withholding, including backup withholding, using Form 8109, Federal Tax Deposit Coupon, at an authorized financial institution, unless you are required to use the EFTPS electronic deposit system (see below). Combine all Form 945 taxes for deposit purposes. Do not combine deposits for Forms 941, 943, or CT-1 with deposits for Form 945. If you deposit using Form 8109, be sure to darken the space for Form “945” on Form 8109.

Generally, the deposit rules that apply to Form 941 also apply to Form 945. However, because Form 945 is an annual return, the rules for determining your deposit schedule (discussed below) are different from those for Form 941. See section 11 of Circular E (Pub. 15) for a detailed discussion of the deposit rules.

Determining your deposit schedule. There are two deposit schedules—monthly or semiweekly—for determining when you must deposit withheld Federal income tax. These schedules tell you when a deposit is due after a tax liability arises (i.e., you make a payment subject to Federal income tax withholding, including backup withholding). Before the beginning of each calendar year, you must determine which of the two deposit schedules you must use.

For 2004, you are a monthly schedule depositor for Form 945 if the total tax reported on your 2002 Form 945 (line 4) was $50,000 or less. If the total tax reported for 2002 exceeded $50,000, you are a semiweekly schedule depositor.

If you are a monthly schedule depositor and accumulate a $100,000 liability or more on any day during a calendar month, your deposit schedule changes to semiweekly for the remainder of the year and for the following year. See section 11 of Circular E (Pub. 15) for more information on the $100,000 next-day deposit rule.

Electronic deposit requirement. You must make electronic deposits of all depository taxes (such as employment tax, withheld income tax, excise tax, and corporate income tax) using the Electronic Federal Tax Payment System (EFTPS) in 2004 if:

The total deposits of such taxes in 2002 were more than $200,000 or
You were required to use EFTPS in 2003.

If you are required to use EFTPS and use Form 8109 instead, you may be subject to a 10% penalty. If you are not required to use EFTPS, you may participate voluntarily. To enroll in or get more information about EFTPS, call 1-800-555-4477 or 1-800-945-8400. Or to enroll online, visit www.eftps.gov.

Changes To Note