If you did not file your 2010 Form 940, be aware that the issue remains unresolved over time. The IRS still expects the return, and until it’s filed, you may face penalties, interest charges, and collection notices. Because Form 940 covers federal unemployment taxes, it’s one of the most essential filings for employers, even more than a decade later.

Unfiled employment tax returns can create long-term problems for businesses and, in some cases, for owners personally. The IRS may calculate a tax balance independently, assess a failure to file penalty, and add daily interest. These actions continue until the correct tax return is filed, so addressing an old 2010 Form 940 is still necessary.

This article provides a clear roadmap for filing an unfiled 2010 Form 940 and resolving IRS issues tied to it. You’ll learn the form, who must file, the due date rules, and the penalties involved. We’ll also cover step-by-step filing instructions, payment and installment agreement options, and practical examples to help you understand what resolution looks like in real life.

Understanding the Basics 

Form 940, the Employer’s Annual Federal Unemployment Tax Return, is required under the Federal Unemployment Tax Act (FUTA), which funds unemployment benefits. Businesses meeting the filing rules must submit this form each year. For the 2010 tax year, the due date was January 31, 2011, or February 10 if all FUTA deposits were made on time. The tax applied to the first $7,000 of wages per employee at 6.2 percent, typically reduced to 0.8 percent with timely state unemployment payments, though credits could be limited in credit-reduction states.

Who Must File Form 940

Businesses must file Form 940 if either of the following applies:

• An employer paid wages of $1,500 or more in any calendar quarter during the tax year. This requirement ensures that employers with meaningful payroll obligations contribute to FUTA.
  
  
• An employer had at least one employee for part of a day in any 20 weeks of the tax year. This includes part-time, full-time, and temporary workers. Household and agricultural employers may have different filing thresholds.

Failure to file Form 940 can result in penalties and interest charges, even if the business has since closed. The IRS may prepare a substitute return that overstates the tax owed because it does not include state tax credits. Filing the correct tax return is the only way to ensure the IRS calculates the proper liability.

You can visit the official IRS page about Form 940 for more details.

Key Requirements and Eligibility 

Who Must Comply

• Employers were required to file Form 940 if they paid wages of $1,500 or more during any calendar quarter of 2010. This ensured that businesses with significant payroll obligations contributed to the FUTA system.
  
  
• If an employer had one or more employees for at least part of a day during 20 or more weeks of 2010, filing was also necessary. This applied to full-time, part-time, and temporary workers.
  
  
• Even if the business closed during 2010, the employer was still responsible for filing a final return.

Important Deadlines and Thresholds

• The official due date for the 2010 Form 940 was January 31, 2011. Employers that had deposited all FUTA taxes on time had until February 10, 2011, to file without penalty.
  
  
• Filing after the deadline could result in a filing penalty or a late filing penalty, increasing the overall tax owed.
  
  
• Using the correct version of the form was essential. Employers can still access the 2010 Form 940 and its instructions in the IRS’s prior year forms and instructions archive.

Why These Rules Matter

Following these requirements is essential because late or missing returns often trigger IRS penalties, interest charges, and notices. Understanding the eligibility rules and original deadlines helps taxpayers determine whether they must still file a 2010 return and how to correct an unfiled account today.

Step-by-Step Process 

Filing an unfiled 2010 Form 940 may feel complicated, but breaking the process into clear steps can make it manageable. The IRS expects complete and accurate reporting, and following each step helps you avoid additional notices, penalties, or delays. The process begins with preparation, moves through completing the form, and ends with submission and confirmation of the filing.

Step 1 – Preparation (documents, information, prerequisites)

Proper preparation is the foundation of filing a correct return. Collecting all the necessary records before you begin ensures that your calculations are accurate and that you can claim every credit available. The following items are essential for completing the 2010 Form 940:

• Payroll information for all employees in 2010 is necessary because it verifies total wages paid and identifies which amounts are subject to FUTA tax.
  
  
• Documentation for state unemployment taxes is essential since proof of timely payments qualifies you for FUTA credits that lower your federal liability.
  
  
• Confirmation of federal unemployment tax deposits made during 2010 helps prevent duplicate reporting and ensures that the IRS applies payments correctly.
  
  
• Detailed employee wage summaries provide totals, exempt wages, and amounts that exceeded the $7,000 FUTA wage base per employee.
  
  
• A copy of your 2009 Form 940 provides an invaluable reference comparison and helps maintain accuracy when completing the 2010 return.

Having this information on hand avoids guesswork, reduces the risk of errors, and allows you to complete the form in a single sitting.

Step 2 – Completing Form 940

The 2010 Form 940 guides you through reporting wages and calculating the FUTA tax liability. Each part must be completed carefully:

• Part 1 identifies your state information: You indicate whether you paid wages in only one state, multiple states, or a credit reduction state. This determines whether you need to attach Schedule A for multi-state employers.
  
  
• Part 2 calculates your FUTA tax before adjustments: You enter total employee payments, subtract exempt wages, and exclude salaries above the $7,000 limit per employee. The result is that the wages are subject to FUTA tax. Multiplying this figure by the 0.8 percent effective tax rate (after credits) gives you the base liability.
  
  
• Part 3 allows you to adjust for issues related to the timing of state taxes: If you paid state unemployment taxes late or not at all, your FUTA credit may be reduced, which increases your federal tax liability.
  
  
• Part 4 determines your final balance or overpayment: Here, you compare your calculated FUTA liability with deposits made in 2010. If deposits exceed the liability, you can request a refund or apply the excess to future obligations. If deposits are less, the balance due must be paid.

Taking the time to complete each part accurately ensures that the IRS receives the correct tax information and reduces the likelihood of further inquiries.

Step 3 – Filing and Submission

Even though the deadline has long passed, the IRS still accepts late-filed 2010 Forms 940. You may choose one of two filing methods:

• Electronic filing is available through approved providers and tax professionals. This method is faster, provides an immediate confirmation of receipt, and reduces the chance of clerical errors.
  
  
• Paper filing remains an option if electronic submission is impractical. You must send the completed form to the IRS address listed in the 2010 instructions. Always use certified mail or another tracking method to prove the submission date.

Both options are valid, but electronic filing is often preferred for speed and reliability.

Step 4 – Confirmation and Next Actions

After filing, confirm that the IRS has processed your return by reviewing your account transcript or contacting the agency directly. Always keep a copy of the form and proof of filing for your records. If a balance remains, the IRS will send a notice detailing the tax owed, penalties, and interest. You can pay in full or request an installment agreement at that stage. Acting promptly prevents added charges and shows good faith in resolving your account.

Common Mistakes and How to Avoid Them 

Filing an unfiled 2010 Form 940 requires accuracy. Many taxpayers make avoidable errors that increase balances, trigger IRS notices, or delay processing. Recognizing these mistakes can help you save time and reduce costs.

Mistake 1: Using the Wrong Form Year

Submitting the current-year Form 940 instead of the 2010 version can result in rejections or incorrect assessments. Always use the exact form and instructions for your filing tax year.

Mistake 2: Miscalculating Wages Subject to FUTA

FUTA applies only to the first $7,000 of wages per employee. Reporting total wages instead of taxable wages overstates liability and inflates penalties. Reviewing payroll records ensures accurate calculations.

Mistake 3: Forgetting State Tax Credits

Employers who fail to claim state unemployment tax credits pay more FUTA tax than necessary. Late filings compound this problem because penalties and interest are based on the higher amount. Always confirm that state payments are applied correctly.

Mistake 4: Ignoring Filing Deadlines

Each month—or even part of a month—that passes increases IRS penalties. Delaying until full payment is possible only raises costs. Filing immediately stops the late filing penalty, even if payment is partial.

Mistake 5: Not Keeping Proof of Filing

Without proof of filing, you may be unable to contest penalties or IRS notices. Always keep copies of the return, mailing receipts, or e-file confirmations to support waiver requests or disputes. Avoiding these mistakes increases the chance of resolving your 2010 Form 940 smoothly. Careful preparation, correct calculations, and timely filing are key to restoring compliance.

Penalties, Costs, or Consequences 

Failing to file your 2010 Form 940 on time does not simply result in a late notice. The IRS applies multiple penalties, adds interest charges, and may take further collection actions until the return is filed and the balance is resolved. Understanding these consequences helps you see the actual cost of leaving an old return unfiled.

Financial Penalties (fines, fees, or interest)

The IRS applies several financial penalties when a return is late or unpaid:

• Failure to file penalty: This penalty is typically 5 percent of the unpaid tax for each month or part of the month the return is late. It can reach a maximum penalty of 25 percent of the tax due.
  
  
• Failure to pay penalty: This penalty is 0.5 percent of the monthly unpaid balance, also capped at 25 percent. It applies separately from the failure to file penalty, which means both may be charged together.
  
  
• Late payment penalty: If you filed on time but did not pay by the original due date, the IRS charges this penalty and interest.

Example: If a business owed $2,000 in FUTA tax for 2010 and filed its return six months late, the failure to file penalty alone could total $600. Additional penalties and interest would increase the balance even further.

Legal or Administrative Consequences

The IRS may escalate collection efforts if penalties remain unpaid:

• The agency may file a federal tax lien, which attaches to business or personal property.
  
  
• Collection actions may include wage garnishments, bank levies, or property seizures.
  
  
• Continued noncompliance can affect eligibility for IRS programs, such as installment agreements or penalty abatements.

These measures remain active until the debt is paid in full or resolved through another IRS program.

Long-Term Impacts (on credit, compliance, or eligibility)

Unresolved employment tax debts do not disappear with time. Interest charges compound daily, making the balance larger each year. Businesses with outstanding tax liabilities may struggle to qualify for loans, renew business licenses, or maintain good standing with state agencies. In addition, repeated noncompliance can limit access to IRS relief programs designed to help taxpayers in hardship. Filing the 2010 Form 940 and addressing any unpaid tax can stop additional penalties and interest from building and avoid escalating collection actions. Taking action quickly reduces costs and helps restore compliance with IRS requirements.

Options for Resolution or Assistance

After filing your unfiled 2010 Form 940, you may still face unpaid tax, penalties, and interest. The IRS offers several ways to resolve balances, from self-help steps to formal relief programs. Choosing the right option depends on your financial situation and helps demonstrate good faith in addressing the debt.

DIY Approaches

• Filing the return immediately stops the failure-to-file penalty from growing. Even if you cannot pay in full, submitting the correct form shows compliance.
  
  
• Making partial payments lowers the balance subject to penalties and interest. Any amount applied reduces future charges.
  
  
• Requesting penalty abatement may reduce costs if you acted in good faith. Events such as illness or natural disasters may qualify as reasonable cause.

Professional Help

Employment tax cases often involve large balances or complex calculations. Professional assistance may be worthwhile if:

• You are unsure how to complete the 2010 form correctly.
  
  
• The IRS has issued a notice, lien, or levy.
  
  
• Multiple years of unfiled returns are involved.
  
  
• You want to explore advanced options such as an Offer in Compromise (OIC).

Tax attorneys, certified public accountants, and enrolled agents are authorized to represent taxpayers before the IRS.

Government and Official Programs

• Installment agreements allow monthly payments, with streamlined terms for debts under $25,000 and stricter requirements for larger balances.
  
  
• Penalty abatement may be granted if you prove reasonable cause, such as reliance on incorrect IRS advice or lack of records.
  
  
• Currently, the Not Collectible status pauses collection efforts when making a payment would cause financial hardship, but penalties and interest will still accrue.
  
  
• Offer in Compromise may settle your liability for less than the full amount if repayment would create economic hardship or if the debt is legally disputable.

Each option requires documentation and IRS approval. Exploring these resources promptly helps limit penalties, control interest charges, and restore compliance.

Practical Examples or Case Studies

Real-world situations show how unfiled employment tax returns create problems and how taxpayers can resolve them. These examples highlight the consequences of not filing Form 940 and the outcomes when corrective action is taken.

Case Study 1: Small Business With Unpaid Tax

A small business failed to file Form 940 for 2010. The IRS assessed unpaid tax, penalties, and interest without estimated tax payments. By the return date, a minimum penalty had already been applied, and interest continued for each part of a month, but the return remained unfiled. After visiting an IRS office, the taxpayer was told to file their return and enter an installment plan. By paying your taxes on time, you avoided other penalties and restored compliance.

Case Study 2: Closed Business and Income Tax Overlap

A closed business assumed no filing was required. The IRS later issued a bill that included FUTA liability and balances from an income tax return. The owner believed no income tax meant no FUTA obligation and chose not to file a return. The IRS clarified that FUTA is separate, and the employer still had to pay the tax. Because of the delay, the interest rate increased on the balance. This example shows how tax laws apply regardless of closure and why filing within the correct time frame prevents underpayment from compounding.

Case Study 3: Multi-State Employer Facing Complex Rules

A company with employees in several states failed to submit Form 940 for 2010. Divided payroll made it challenging to calculate credits, and the IRS applied penalties for paying late, basing liability on the tax shown in a substitute return. The balance dropped after the return was last reviewed or updated with accurate data. This shows how following the law and attaching Schedule A helps employers pay taxes correctly, reducing errors and avoiding reporting problems.

Final Note

These scenarios show how the IRS responds to unfiled returns. Compliance begins with proper filing, whether facing overdue balances, transcript notices with a locked padlock icon, or repeated reminders to pay the tax. Acting quickly limits costs, prevents penalties from growing, and helps resolve accounts effectively.

Taking Action: Your Next Steps 

Filing an unfiled 2010 Form 940 may feel intimidating, but breaking it into immediate, short-term, and long-term actions can make the process manageable. This checklist gives you a practical roadmap to regain compliance and reduce the risk of future penalties.

Immediate Steps (within 30 days)

1. Gather all payroll, wage, and unemployment tax records for 2010. Having complete documentation ensures accurate calculations and prevents underreporting.
   
   
2. Download the correct 2010 Form 940 and instructions from the IRS archive. Using the proper form avoids processing delays and rejection.
   
   
3. Prepare and file your return as soon as possible. Filing quickly prevents the failure-to-file penalty from increasing.
   
   
4. Contact the IRS if you receive a notice about your account. Speaking with an agent helps clarify your balance and available resolution options.

Short-Term Actions (within 90 days)

• Pay as much balance as possible, even if you cannot pay in full. Partial payments reduce interest charges and late payment penalties.
  
  
• If the balance is too large for immediate payment, request a payment plan or installment agreement. This option allows you to spread the cost over time.
  
  
• Ask for penalty abatement if you qualify under reasonable cause standards. Demonstrating good faith through documentation may reduce or remove some charges.
  
  
• Keep up with current tax obligations while resolving past debts. Staying compliant shows the IRS you are working toward full resolution.

Long-Term Considerations

• Review your payroll and tax systems to prevent future filing problems. Accurate recordkeeping reduces errors and simplifies annual reporting.
  
  
• Understand ongoing FUTA deposit requirements for current and future years. Making deposits on time avoids new penalties.
  
  
• Monitor your IRS account for updates and notices. Regular checks ensure you stay informed about balances, deadlines, and adjustments.
  
  
• If your situation is complex, consider consulting a tax professional. Expert guidance can save time and reduce stress when resolving old tax issues.

Taking action promptly limits penalties, reduces interest charges, and demonstrates responsibility to the IRS. Whether you pay in full or request a payment plan, consistent follow-up prevents the problem from growing larger over time.

Frequently Asked Questions (FAQs)

Can I still file my 2010 Form 940 if it is over 10 years late?

Yes, the IRS will still accept a late Form 940, even if the due date passed over a decade ago. Filing the correct form version is essential because it stops the failure-to-file penalty from increasing. Even if you cannot pay the full balance immediately, filing your return shows compliance and can help reduce additional penalties and interest.

What happens if I do not pay the tax shown on my return?

If you file but do not pay the tax shown, the IRS will begin adding penalties and interest to your balance. Failing to pay a penalty of 0.5 percent per month applies, and interest compounds daily. Ignoring the debt may also lead to IRS collection actions such as liens or levies. The longer you wait to pay the tax, the more costly the balance becomes.

How much can penalties and interest add up to?

Penalties and interest can increase a balance significantly over time. Failing to file a penalty can reach 25 percent of the unpaid tax, while failing to pay a penalty adds another 25 percent. Daily compounding interest continues until the balance is paid. For example, a $2,000 FUTA liability left unpaid for years could grow to more than double the original amount because of penalties and interest charges.

What is the minimum penalty for filing late?

The IRS applies a minimum penalty if a return is filed over 60 days late. This penalty is $485 or 100 percent of the tax owed, whichever is smaller. The minimum penalty applies even if the balance is relatively low. Filing promptly, even without full payment, can prevent this charge from applying and demonstrate good faith in addressing your tax obligations.

Can I set up an installment agreement if I cannot pay in full?

An installment agreement allows you to make monthly payments toward your balance. Streamlined contracts are available for debts under $25,000, while larger balances require detailed financial disclosures. The IRS generally expects you to propose a realistic payment amount within your budget. If you stay current on new tax obligations, an installment agreement can prevent additional collection actions while paying the debt.