SEC. 5. ALTERNATE PROCEDURE

.01 In general. If, in connection with the circumstances described in section 1.01, the predecessor and successor so agree, the predecessor will be relieved from furnishing Forms W–2 to any employees who will be employed in the same calendar year by the successor (acquired employees). In such circumstances the acquired employees presumably will be paid wages by the successor in the same calendar year and the Forms W–2 furnished to the acquired employees by the successor for the year will include wages paid, and taxes withheld, by both the predecessor and the successor. The predecessor will also be relieved from filing Forms W–2 with SSA for the acquired employees. The predecessor’s entire Form W–2 reporting obligations for the acquired employees will be assumed by the successor. The predecessor remains responsible for the Form W–2 reporting obligations for those employees who are not employed by the successor.

.02 Forms W–2.

(1) In general. If, under the circumstances described in section 1.01, the predecessor is not required to file a final Form 941, the predecessor must furnish Forms W–2 to employees who are not employed by the successor by January 31 of the following calendar year. Forms W–2 and W–3 filed by the predecessor with SSA for employees who are not employed by the successor are due the last day of February of the following calendar year. If the successor assumes the predecessor’s obligation to furnish Forms W–2 to the acquired employees for a calendar year, the successor must assume the predecessor’s entire Form W–2 reporting obligation. Thus, Forms W–2 furnished by the successor to the acquired employees must include the wages paid and the taxes withheld by both the predecessor and the successor. The successor must include on the Forms W–2 any amount reportable by the predecessor, including ‘‘Other compensation’’ or uncollected employee tax on tips, if applicable.

Forms W–2 must be furnished by the successor to its employees (both the acquired employees and any other employees of the successor) by January 31 of the following calendar year. Forms W–2 and W–3 must be filed by the successor with SSA by the last day of February of the following calendar year.

(2) Expedited Forms W–2. If, under the circumstances described in section 1.01, the predecessor is required to file a final Form 941, the predecessor must furnish Forms W–2 to the employees who are not employed by the successor on an expedited basis. Forms W–2 and W–3 filed with SSA by the predecessor must also be filed on an expedited basis. The successor is not required to either furnish Forms W–2 to the acquired employees or to file the Forms W–2 and W–3 with SSA on an expedited basis.

.03 Form 941 filed by predecessor. To the extent the wages paid and the taxes withheld by the predecessor are to be included in the Forms W–2 furnished to the acquired employees by the successor, there will be a difference between the amounts shown on the predecessor’s Form W–3 and its Form 941. When the predecessor files its Form 941, it should attach a statement explaining the discrepancy and include the name, address, and identification number of the successor and a reference to this revenue procedure. This Form 941 cannot be filed electronically. See Rev. Proc. 96–19, 1996–4 I.R.B. 80, section 3.03. .04 Form 941 filed by successor. There will be a corresponding difference between the amounts shown on the successor’s Form W–3 and its Form 941. When the successor files its Form 941, it should also attach a statement to its Form 941 explaining the discrepancy, and include the name, address, and identification number of the predecessor and a reference to this revenue procedure. This Form 941 cannot be filed electronically. See Rev. Proc. 96–19, 1996–4 I.R.B. 80, section 3.03. For instructions relating to annual wage limitations, see § 31.3121(a)(1)–1.

.05 Forms W–4. The predecessor must transfer to the successor all current Forms W–4 that were provided to the predecessor by the acquired employees. The successor must keep the transferred Forms W–4 on file and deduct and withhold from the wages it pays to the acquired employees according to the information supplied on those forms until an employee submits a revised

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form. The successor employer must submit to the Service, in accordance with § 31.3402(f)(2)–1(g), copies of the Forms W–4 received by the predecessor during the current calendar quarter and the preceding calendar quarter.

.06 Transfer of Forms W–4 furnished electronically. If the predecessor and successor both maintain an electronic system for use by employees in filing Forms W–4, and the systems are compatible, the predecessor may electronically transfer the Forms W–4 of the acquired employees to the successor. The successor may also choose to acquire and maintain the predecessor’s system. If these options do not apply, the transferred employees must provide the successor with a new Form W–4, either electronically or on paper, as prescribed by the successor.

.07 Forms W–5. The predecessor must transfer to the successor all Forms W–5 for the current year that were provided to the predecessor by the acquired employees.