TaxBandits Knowledge Base

How does the IRS process notice CP136?

The IRS uses a specific notice to inform employers about filing Form 944. Here's how the process typically works:

• Notice Type: The IRS sends out Notice CP136 to notify eligible employers that they should file Form 944 instead of Form 941.
   
• Timing: This notice is usually sent out in February of the tax year for which it applies.
   
• Content of the Notice: It informs you that the IRS has determined you're eligible to file Form 944 annually instead of Form 941 quarterly.
  • It provides instructions on how to proceed.
  • It may include information on how to opt-out if you prefer to continue filing Form 941.
     
• Automatic Enrollment: If you receive this notice, you're automatically enrolled to file Form 944 unless you choose to opt-out.
   
• Continuation: Once you start filing Form 944, you generally continue to do so each year unless the IRS notifies you otherwise or your tax situation changes significantly.
   
• Opting Out: If you receive the notice but prefer to file Form 941 quarterly, you must follow the instructions in the notice to opt-out, usually by contacting the IRS in writing.
   
• New Employers: If you're a new employer expecting to owe $1,000 or less in annual payroll taxes, you won't receive this notice automatically. Instead, you need to call the IRS to request permission to file Form 944.
   
• Changing Circumstances: If your tax liability increases and exceeds $1,000, you should contact the IRS. They may instruct you to switch back to filing Form 941 quarterly.

Remember, you cannot decide on your own to file Form 944 without IRS approval or notification. If you believe you're eligible but haven't received Notice CP136, you should contact the IRS directly to discuss your situation.