SECTION 2. BACKGROUND

.01 Form 944, Employer’s ANNUAL Federal Tax Return, was designed to reduce burden on small employers by permitting those employers to file one employment tax return to report their social security, Medicare, and withheld federal income taxes (referred to herein as their “employment tax liability”) for the entire taxable year instead of four employment tax returns (one for each quarter).

.02 The Treasury Department and the Internal Revenue Service (IRS) published a temporary regulation (T.D 9239, 2006–1 C.B. 401) related to Form 944 in the Federal Register (71 FR 11) on January 3, 2006. A notice of proposed rulemaking (REG–148568–04, 2006–1 C.B. 417) cross-referencing the temporary regulations was published in the Federal Register on the same day (71 FR 11). A correction to the temporary regulation was published in the Federal Register on March 17, 2006 (71 FR 13766). Revised temporary regulations (T.D. 9440) and proposed regulations (REG–148568–04) relating to Form 944 were published in the Federal Register (73 FR 79354 and 73 FR 79423) on December 29, 2008.

.03 For tax year 2009, employers are qualified to file Form 944 if their estimated annual employment tax liability is $1,000 or less. See Treas. Reg. §§ 31.6011(a)–1T(a)(5)(i) and 31.6011(a)–4T(a)(4)(i). The IRS will notify employers in writing of their qualification to file Form 944. Id . Employers who continue to be eligible in subsequent years will not receive another notification. The IRS will notify employers in writing when they no longer qualify to file Form 944 and must file Forms 941 instead. .04 Prior to the 2009 tax year, employers received written notification in one of three ways. Employers who had filed Forms 941 may have received a letter notifying them that the IRS had determined they were eligible based on the liability they reported on prior Forms 941. New employers may have received notification that they were eligible in the letter advising them of their employer identification number, depending on how they responded to lines 13 and 14 when they completed Form SS–4, Application for Employer Identification Number . Employers who

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