Form 941 and Form W2 Combined Annual Wage Reporting

Form 941 and Form W-2 Combined Annual Wage Reporting

Kristy Maitre ? Tax Specialist Center for Agricultural Law and Taxation August 7, 2015

When Would Your Client Receive a CAWR Notice?

? If your inaccurately compute payroll tax calculations and withholding, a Combined Annual Wage Report (CAWR) Notice will be issued

The Purpose of the CAWR Program and a bit of History

? To verify that employers paid and reported the correct amount of tax: ? Federal Income Tax Withholding (W/H) ? Filed all necessary Forms W-2 with the SSA

? In 1976, a law was passed to simplify employer reporting of wages ? The Form W-2, Wage and Tax Statement, was redesigned to include Social Security information, and Form W-3, Transmittal of Income and Tax Statements, was amended to include cumulative totals of each Money Field appearing on the associated Forms W-2

? This resulted in the creation of the Combined Annual Wage Reporting System (CAWR) ? The CAWR Program is worked two years behind the current year to allow employers time to file Forms W-2 and/or Forms W-2c with the Social Security Administration (SSA) and Employment Tax Returns with the IRS

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Possible IRS Notices

? Notice CP253 or Letter 99C regarding missing Form(s) W-2 relate to Missing Form W-2

? Notice CP251 or Letter 99C relate to the underreporting employment taxes

What is the Internal Revenue Service/Social Security Administration (IRS/SSA) Reconciliation Process?

? The IRS/SSA Reconciliation Process compares the employer's earnings report data processed by SSA with the employer's tax report data processed by IRS

? Earnings report data and tax report data, are submitted to SSA and IRS by employers, their representatives, third parties, and agents

? If wage data processed by SSA is less than the amount reported to IRS, we assume that the processed earnings are incorrect

? SSA sends a notice and questionnaire, asking the employer to explain and resolve the differences

? If they do not receive a response after 45 days, they send the employer a second notice

? If the employer still does not respond, they refer the case to IRS for investigation

SSA Notices

? First Request ? SSA-L-93-SM (Notice) and SSA-95-SM (Employer Questionnaire - SSA Has No Record of Employer Report) ? SSA-L-93-SM (Notice) and SSA-97-SM (Employer Questionnaire - Discrepancy Between IRS and SSA Records)

? Second Request ? SSA-L-94-SM (Notice) and SSA-95-SM (Employer Questionnaire - SSA Has No Record of Employer Report) ? SSA-L-94-SM (Notice) and SSA-97-SM (Employer Questionnaire - Discrepancy Between IRS and SSA Records)

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Social Security Administration SSA Publication No. 16-002

? One of two questionnaires is enclosed with this pamphlet:

? A "missing report" questionnaire which is sent to employers for whom IRS has received a employment tax return but Social Security has no corresponding wage report; or

? A "discrepancy" questionnaire, which is sent to employers who reported a larger Social Security and/or Medicare wage amount to IRS than they reported to Social Security

First Notice

SSA-95-SM

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SSA-95-SM SSA-95-SM SSA-95-SM

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SSA-95-SM Second Notice SSA-L-93-SM

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