American employers might find that a practical way to file their employees' W-4 forms is to use the electronic filing system offered by the IRS. The transmitted forms will not get lost or misplaced.
Filers can use the electronic filing system 24 hours a day 7 days a week. The convenient filing can shorten the time the payroll department or tax department takes to get the routine tax information filing done.
1. Get approval from the IRS to file the W-4 electronically. Send in an Application for Filing Information Returns Magnetically/Electronically. The IRS gives an approval or a rejection within 30 days.
A five character alpha numeric Transmitter Control Code (TCC) is assigned by the IRS. The employer chooses a password and sets up the electronic filing system on the Filing Information Returns Electronically System (FIRE). The number used to access the FIRE system by an analog or ISDN BRA connection is available in IRS Revenue Procedure 2001-16, Specifications for Filing Form W-4 Employee's Withholding Allowance Certificate Magnetically or Electronically. Revenue Procedures are available from the IRS. Or, just call the IRS and ask for the number.
2. Complete a W-4 form electronic record for each employee that will have a report on their tax withholding sent to the IRS. Copies of the paper form W-4 are available on the IRS website. The paper form can serve as a guide.
Put the same information in the file records as on the W-4.
Make sure to include each employee's name and social security number in their record that tells the IRS the number of allowances claimed and the additional amount to withhold. The Employer Identification Number (EIN) and the TCC belongs in each employee's record.
The specific format for the electronic W-4 records is printed in the Rev. Proc. 2001-16.
3. Save the files in an electronic ASCII Code format (a text file).
4. Send in the file on the FIRE system. Connect to the FIRE system using an analog or ISDN BRI connection and transmit the employee W-4 records.
Files can be compressed in a WinZip or PKZip file.
5. Mail in a signed copy of the Transmittal of Forms W-4 Reported Magnetically/Electronically to the IRS Martinsburg Computing Center in Kearneysville, WV. The file name is written on the form before signing.
The filing is done if the data transmitted to IRS MCC had the total number of complete records the transmittal form informs the IRS the employer sent in electronically.
IRS Publication, Transmittal of Forms W-4 Reported Magnetically or Electronically.
IRS Form W-4 (2012).