What This Notice Means
The IRS received your Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return. You aren't required to file it. Federal, state, and local government agencies are exempt from paying federal unemployment tax.
What to Do
- Don't file Form 940.
- Don't make any deposits for federal unemployment tax.
Tell your payroll department or payroll provider. If your software is set to produce Form 940 and FUTA deposits automatically, turn that off. Otherwise the same mistake repeats next year.
Form 941 Still Applies
This notice only covers federal unemployment tax. You must still file Form 941, Employer's Quarterly Federal Tax Return, for federal income tax and other amounts withheld from employees' pay. Publication 15, (Circular E), Employer's Tax Guide, explains those requirements.
If You Made FUTA Deposits
You can request a refund of deposits made for Form 940 by filing Form 843, Claim for Refund and Request for Abatement. Gather the deposit dates and amounts before you file the claim so the IRS can match them.
State Unemployment Tax
This notice doesn't decide your state obligations. Contact your state to find out whether you must make contributions under the state unemployment compensation law.
If You Disagree
Call the number on your notice. Keep a copy of the notice with your payroll records either way. It's the IRS's written confirmation that your agency doesn't file Form 940, and it answers the question if it comes up again.
If your agency has other payroll tax notices or deposit problems, call us at (813) 229-7100.