New procedure for withholding income taxes on the wages of nonresident alien employees. For wages paid on or after January 1, 2006, employers are required to apply a new procedure in calculating the amount of federal income tax withholding on the wages of nonresident alien employees. For more information, see New procedure for withholding income taxes on the wages of nonresident alien employees on page 8.

New form for reporting wages of nonfarm employees. Soon, certain small employers may be qualified to file Form 944, Employer's Annual Federal Tax Return, rather than Form 941, Employer's Quarterly Federal Tax Return, to report their employment taxes. IRS will publish more information about this new form and who will qualify for this form as it becomes available.

New forms in Spanish. Your Spanish-speaking employees may now claim withholding allowances using Forma W-4(SP), Certificado de Exención de la Retención del(la) Empleado(a), in place of Form W-4, Employee's Withholding Allowance Certificate. Instructions, in Spanish, for completing Form W-4 or Forma W-4(SP) are available in Publication 579SP, Cómo Preparar la Declaración de Impuesto Federal. Also, they may ask for payments of advance earned income credit using Forma W-5(SP), Certificado del Pago por Adelantado del Crédito por Ingreso del Trabajo, instead of Form W-5, Earned Income Credit Advance Payment Certificate. For nonemployees, new Forma W-9(SP), Solicitud y Certificación del Número de Identificación del Contribuyente, may be used in place of Form W-9, Request for Taxpayer Identification Number and Certification. References in this publication to Form W-4, Form W-5, or Form W-9 also apply to their equivalent Spanish translations—Forma W-4(SP), Forma W-5(SP), or Forma W-9(SP).

New IRS procedure for review of Forms W-4. Employers no longer have to routinely send copies of Forms W-4 claiming more than 10 allowances and certain “exempt” Forms W-4 to the IRS. However, Forms W-4 are still subject to review by the IRS. See IRS review of Forms W-4 on page 9 for details.

Ordering employer tax products. This is the last year that you will receive an order blank (Form 7018-A, located at the end of this publication) for employer tax products and information returns. For faster service, order your 2005 and 2006 forms online at www.irs.gov/businesses. Select “Online Ordering for Employer Forms.” Instead of ordering paper Forms W-2 and W-3, consider filing them electronically using the Social Security Administration's (SSA) free e-file service. Visit SSA's Employer Reporting Instructions and Information website at www.socialsecurity.gov/employer, select “Electronically File Your W-2s,” and provide registration information. You will be able to create and file “fill-in” versions of Forms W-2 with SSA and can print out completed copies of Forms W-2 for filing with state and local governments, distribution to your employees, and for your records. Form W-3 will be created for you based on your Forms W-2.

Social Security and Medicare tax for 2006. Do not withhold social security tax after an employee reaches $94,200 in social security wages. (There is no limit on the amount of wages subject to Medicare tax.) Social security and Medicare taxes apply to the wages of household workers you pay $1,500 or more in cash.

Substitute Forms W-4. You may use a substitute version of Form W-4 to meet your business needs. However, your substitute Form W-4 must contain language that is identical to the official Form W-4 and your form must meet all current IRS rules for substitute forms. For more information, see Substitute Forms W-4 on page 10.

941TeleFile discontinued. The second quarter 2005 Form 941 was the last quarterly return that could be filed using the 941TeleFile system. Former 941TeleFile users are encouraged to use other convenient IRS e-file options by accessing the IRS website at www.irs.gov and clicking on the e-file logo in the lower-left corner.

Additional employment tax information. Visit the IRS website at www.irs.gov and type “Employment Tax” in the search box for a list of employment tax topics. For employment tax information by telephone, call 1-800-829-4933; or call IRS TeleTax at 1-800-829-4477 for recorded information by topic.

Change of address. If you changed your business mailing address or business location, notify the IRS by filing Form 8822, Change of Address. For information on how to change your address for deposit coupons, see Making deposits with FTD coupons in section 7.

Contacting your Taxpayer Advocate. If you have attempted to deal with an IRS problem unsuccessfully, you should contact your Taxpayer Advocate. The Taxpayer Advocate independently represents your interests and concerns within the IRS by protecting your rights and resolving problems that have not been fixed through normal channels. While Taxpayer Advocates cannot change the tax law or make a technical tax decision, they can clear up problems that resulted from previous contacts and ensure that your case is given a complete and impartial review. To contact your Taxpayer Advocate:

For more information, see Publication 1546, How To Get Help With Unresolved Tax Problems (now available in Chinese, Korean, Russian, and Vietnamese, in addition to English and Spanish).

Correcting Form 943. If you discover an error on a previously filed Form 943, Employer's Annual Federal Tax Return for Agricultural Employees, make the correction using Form 943 for the year in which you discovered the error and attach Form 941c, Supporting Statement to Correct Information. For example, in March 2006, you discover that you underreported $10,000 in social security and Medicare wages on your 2005 Form 943. Correct the error by showing $1,530 (15.3% × $10,000) on line 8 of your 2006
Form 943 and attaching a completed Form 941c.

Electronic payment. Now, more than ever before, businesses can enjoy the benefits of paying their taxes electronically. Whether you rely on a tax professional or handle your own taxes, IRS offers you convenient programs to make it easier. Spend less time and worry on taxes and more time running your business. Use Electronic Federal Tax Payment System (EFTPS) to your benefit. For EFTPS, visit www.EFTPS.gov or call EFTPS Customer Service at 1-800-555-4477. Use the electronic options available from IRS and make filing and paying taxes easier.

Eligibility for employment. You must verify that each new employee is legally eligible to work in the United States. This includes completing the U.S. Citizenship and Immigration Services (USCIS) Form I-9, Employment Eligibility Verification. You can get the form from USCIS offices or by calling 1-800-870-3676. Contact the USCIS at 1-800-375-5283, or visit the USCIS website at www.uscis.gov for further information.

Information reporting call site. The IRS operates a centralized call site to answer questions about reporting on Forms W-2, W-3, 1099, and other information returns. If you have questions related to reporting on information returns, you may call 1-866-455-7438 (toll free) or 304-263-8700 (not toll free). Hearing-impaired individuals may use the TTY/TTD service at 304-267-3367 (not toll free). The call site can also be reached by email at [email protected].

Information returns. You generally must furnish Form W-2, Wage and Tax Statement, to each employee by January 31. You also may have to file information returns to report certain types of payments made during the year. For example, you must file Form 1099-MISC, Miscellaneous Income, to report payments of $600 or more to persons not treated as employees (for example, independent contractors) for services performed for your trade or business. For general information about Forms 1099 and for information about required electronic or magnetic media filing, see the 2006 General Instructions for Forms 1099, 1098, 5498, and W-2G. Also see the separate instructions for each information return that you file (for example, 2006 Instructions for Form 1099-MISC). Do not use Form 1099 to report wages or other compensation you paid to employees; report these on Form W-2. See the Instructions for Forms W-2 and W-3 for information on filing Forms W-2.

New hire reporting.  You are required to report any new employee to a designated state new-hire registry. Many states accept a copy of Form W-4 with employer information added. Call the Office of Child Support Enforcement at 202-401-9267 or visit its website at www.acf.hhs.gov/programs/cse/newhire for more information.

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 this publication 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.

Private delivery services. You can use certain private delivery services designated by the IRS to send tax returns and payments. The list includes only the following.

Your private delivery service can tell you how to get written proof of the mailing date.

Web-based application for an EIN. You can apply for an employer identification number (EIN) online by visiting the IRS website at www.irs.gov/smallbiz and selecting “Employer ID Numbers (EINs).”

When a crew leader furnishes workers to you. Record the crew leader's name, address, and EIN. See sections 2, 10, and 11.

When you hire a new employee. Ask each new employee to complete the 2006 Form W-4, Employee's Withholding Allowance Certificate or its Spanish version, Forma W-4(SP). Also, ask the employee to show you his or her social security card so that you can record the employee's name and social security number accurately. If the employee has lost the card or recently changed names, have the employee apply for a duplicate or corrected card. If the employee does not have a card, have the employee apply for one on Form SS-5, Application for a Social Security Card. See section 1.

The following are important dates and responsibilities. See section 7 for information about depositing taxes reported on Forms 941, 943, and 945. Also see Publication 509, Tax Calendars for 2006.

Note. If any date shown below falls on a Saturday, Sunday, or legal holiday, the due date is the next business day. A statewide legal holiday delays a filing due date only if the IRS office where you are required to file is located in that state. For any due date, you will meet the “file” or “furnish” requirement if the form is properly addressed and mailed First-Class or sent by an IRS-designated delivery service by the due date. See Private delivery services earlier.

By January 31 . 

By February 15.  Ask for a new Form W-4 or Forma W-4(SP) from each employee who claimed exemption from federal income tax withholding last year.

On February 16.  Begin withholding federal income tax for any employee who previously claimed exemption from federal income tax withholding but has not given you a new Form W-4 for the current year. If the employee does not give you a new Form W-4, withhold as if he or she is single, with zero withholding allowances. The Form W-4 previously given to you claiming exemption is now expired. See section 5.

By February 28.  File Forms 1099 and 1096. File Copy A of all Forms 1099 with Form 1096, Annual Summary and Transmittal of U.S. Information Returns, with the IRS. For electronically filed returns, see By March 31 below. File Forms W-2 and W-3. File Copy A of all Forms W-2 with Form W-3, Transmittal of Wage and Tax Statements, or your magnetic diskette wage report to the Social Security Administration (SSA). For electronically filed returns, see By March 31 below.

By March 31.  File electronic Forms W-2 and 1099. File electronic (not magnetic diskette or paper) Forms W-2 with the SSA and Forms 1099 with the IRS. See Social Security's Employer Reporting Instructions and Information webpage at www.socialsecurity.gov/employer for more information about filing Forms W-2 and W-2c electronically.

By April 30, July 31, October 31, and January 31.  Deposit FUTA taxes. Deposit FUTA tax due if it is more than $500.

Before December 1.  Remind employees to submit a new Form W-4 if their withholding allowances have changed or will change for the next year.

On December 31 .  Form W-5, Earned Income Credit Advance Payment Certificate, expires. Employees who want to receive advance payments of the earned income credit for the next year must give you a new Form W-5.

This publication is for employers of agricultural workers (farmworkers). It contains information that you may need to comply with the laws for agricultural labor (farmwork) relating to social security and Medicare taxes, FUTA tax, and withheld federal income tax.

If you have nonfarm employees, see Publication 15 (Circular E), Employer's Tax Guide. If you have employees in the U.S. Virgin Islands, Guam, American Samoa, or the Commonwealth of the Northern Mariana Islands, see Publication 80 (Circular SS). Publication 15-A, Employer's Supplemental Tax Guide, contains more employment-related information, including information about sick pay and pension income. Publication 15-B, Employer's Tax Guide to Fringe Benefits, contains information about the employment tax treatment and valuation of various types of noncash compensation.