[Andrew]

Client received notice from IRS about a discrepancy in the amounts reported on the 941s and amount reported on W-3. The 941 for the first quarter was filed under a different EIN (sole prop) than the 941 for the other 3 quarters (S Corp) in that same year. The payroll company reported all amounts from the 941s, including the amount from 941 Q1, under the EIN of the corp. How can this be solved?

[jon]

If the payroll company did all the work they should offer the reply as to differences and WHY.

[cp_acwt]

There were two different pay masters, the sole prop was one and the S Corp was the other. There should have been W-2's and a W-3 issued for the sole prop, and W-2's and W-3 issued for the S Corp.

[jon]

They have reasons maybe for the review. Each has received their own correspondence - respond to each, the quarterlys' are different why??? Hopefully you can reconcile each??

[Partly Sunny]

If the Sole prop and the S-Corp (as entities) both issue W-2s for a partial year, I would think that FUTA and SS max wages may be miscalculated.

One option is to respond to the IRS notice with an amended (corrected Q1) 941 with the Scorp EIN, and request that they include Q1 info to the Scorp EIN. Then 940 amounts will agree for the entire year. I would include all the information like the 2553 and a letter from taxpayer or Power of Attorney representative for both the taxpayer and the Scorp as an entity, so that whichever agent receives the package will be able to make the change. Include a copy of the old Q1 941 as well and make sure the Power of Attorney form specifies payroll tax matters & forms.

The other is to prepare 2 sets of W-2s, 940s, as suggested by cp_acwt?

[Joan TB]

See box h on Form W-3, and page 24 of the instructions for Form W-3.