We are receiving an unusual number of phone calls this year related to nanny e-Filing issues. Here are the most common issues. In all cases filing a paper tax return this year is the corrective action needed.
20 states who took Federal loans to continue funding the payment of unemployment benefits are in arrears in their repayment of the loans. As a consequence, employers in these states (called Credit Reduction States) have surcharges imposed on their FUTA taxes. The IRS e-filing systems are preventing the electronic submission of tax returns with a Schedule H with the Credit Reduction State Worksheet.
The states include: Arkansas, California, Connecticut, Florida, Georgia, Illinois, Indiana, Kentucky, Michigan, Minnesota, Missouri, North Carolina, New Jersey, Nevada, New York, Ohio, Pennsylvania, Rhode Island, Virginia, Virgin Islands and Wisconsin.
The IRS has very strict controls on its e-File system to protect against fraud and abuse. An EIN that is not associated with a previously filed Schedule-H is often unrecognized in the IRS's e-filing database. Consequently, the employees of newer household employers (typically starting in the tax year in question) will need to file a paper return. The second year after an Employer Identification Number (EIN) has been issued, the fraud control measures will recognize the EIN has having been used in a prior tax year and the employees will be able to e-File.
Similar to #2 above, fraud control measures do not recognize the newly issued Social Security Number and will block e-filing.
Our Annual Payroll Tax Filings FAQ will answer these and other questions that household employers may have.
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