# Presentation: 792306

- The New Form 940 for 2006: “Plain & Simple”

**IRS TAXPAYER BURDEN**** REDUCTION INITIATIVE**

## Project Purpose

- To reduce taxpayer burden and increase voluntary compliance by redesigning Form 940 and reengineering the processing.

## History of Form 940 Redesign 

- Began May 2004
- Led by Office of Taxpayer Burden Reduction (TBR)
- IRS team of experts
- Input from internal & external stakeholders
- Partnered with DOL, NASWA & Treasury
- Plain language document

## History of Form 940 Redesign

- Developed objective
- Defined scope of project
- Redesign 940, 940EZ, 940 PR
- Simplify instructions
- Ensure optical scanning
- Line-by-line review – “who uses data?”
- Reviewed internal processing
- Began redesign

## The new Form 940 for 2006 – “Plain & Simple”

- Combined Forms 940 & 940EZ
- No more need to determine which to use
- All advantages of 940EZ retained
- Reduced burden for over one million current “long form” filers
- Set up in logical sequence from _taxpayer’s _point of view
- Administrative-type questions first
- Most commonly answered questions next
- Adjustments and more complex issues follow
- Fill out only lines that apply; skip those that don’t

## The new Form 940 for 2006 – “Plain & Simple”

- Information organized into 8 segments
- Taxpayers can complete one segment at a time
- Breaks major task into smaller ones
- Large **X** at place for signature
- Reduces chance of omission
- Instructions on form – every line explained
- Form and instructions guide you through math calculations

## The new Form 940 for 2006 – “Plain & Simple”

## The new Form 940 for 2006 –  “Plain & Simple”

- New check boxes in top right corner
- No more A, B, C, questions
- New boxes for successor employers, final & amended returns
- Will promote accuracy, reduce unnecessary correspondence

## The new Form 940 for 2006 –  “Plain & Simple”

- No more hand-written explanations of exempt payments required
- Check boxes capture exempt payments

## The new Form 940 for 2006 –  “Plain & Simple”

- New section for computing adjustments
- Replaced old Part II, lines 1-6 with new Part 3 (lines 9 & 10)

## The new Form 940 for 2006 –  “Plain & Simple”

- New worksheet for computing adjustments
- Worksheet, with decision points, guides you through computation if you have late payments or exempt employees
- No more requirement to submit computations with return; you keep with your records

## The new Form 940 for 2006 –  “Plain & Simple”

**The new Form 940 for 2006 – **** ****“Plain & Simple”**

## The new Form 940 for 2006 –  “Plain & Simple”

- New Schedule A
- Part 1 for multi-state employers to report state unemployment account numbers
- Part 2 for credit reduction information
- Will simplify computation, increase processing accuracy, and reduce unnecessary taxpayer correspondence

## The new Form 940 for 2006 –  “Plain & Simple”

## The new Form 940 for 2006 –  “Plain & Simple”

- Form 940-V Payment Voucher removed from form
- Now in instruction booklet
- Less likelihood of being detached
- Will expedite processing, prevent unnecessary correspondence

## The new Form 940 for 2006 –  “Plain & Simple”

- Form will be optically scanned
- More accurate and efficient
- Reduces chance of errors

## Next Steps

- Gathering feedback
- Send comments to: _Form940redesign@irs.gov_
- Focus groups & cognitive testing of form
- May to September 2005
- November 1, 2005
- Target date for finalizing design, submitting to IRS programmers & software developers
- 2006 – roll out redesigned Form 940
- 2007 processing season – begin scanning forms

## Project Contact

- Lisa McLane, Technical Project Manager, Office of Taxpayer Burden Reduction
- Phone: (202) 283-2315
- Email: _Lisa.A.McLane@irs.gov_