Filing Form 940 is required for employers who pay wages subject to the Federal Unemployment Tax Act (FUTA). This annual return helps fund unemployment benefits for workers who lose their jobs. If you missed the original deadline for your 2013 Form 940, the IRS still expects you to file, even years later. Leaving the return unfiled can lead to growing penalties, interest charges, and potential collection actions.

An unfiled 2013 Form 940 may feel overwhelming, but the IRS provides clear steps to bring your account back into compliance. Late filing does not erase your responsibility, yet submitting the return can stop specific penalties from increasing. Understanding the form, the filing process, and the consequences of delay is the first step in resolving the issue.

This guide offers a complete overview of how to file your unfiled 2013 FUTA tax return, what penalties and interest may apply, and the options available if you cannot pay your balance in full. Whether you are a small business owner, a former employer with outstanding obligations, or a financial officer responsible for payroll taxes, this resource will walk you through the filing process and the resolution strategies the IRS makes available.

Understanding Form 940 and Employer Obligations

Form 940, officially known as the Employer’s Annual Federal Unemployment (FUTA) Tax Return, is an annual filing requirement for most employers. It reports the amount of federal unemployment tax owed under the Federal Unemployment Tax Act (FUTA). The revenue collected helps the federal government provide unemployment benefits for workers who lose jobs. 

Form 940 works in coordination with state systems for unemployment tax. Employers typically pay both state and federal unemployment taxes. When state unemployment taxes are paid in full and on time, the IRS allows credits that reduce the employer’s FUTA liability.

The basic structure of FUTA taxation in 2013 was:

• The standard FUTA tax rate was 6.0% on each employee's first $7,000 in wages.
  
  
• Employers who paid state unemployment taxes on time could reduce their FUTA tax rate by up to 5.4%, creating a net tax rate of 0.6%.
  
  
• Employers in a credit reduction state received a smaller credit, which increased their total FUTA tax liability.

Who Must File Form 940

Not every employer is required to file, but most do. You must file Form 940 if either of the following applies:

• You paid employees $1,500 or more in any calendar quarter during 2012 or 2013.
  
  
• You had one or more employees who worked for you for at least part of a day in 20 or more different weeks during 2012 or 2013.

Additional points to keep in mind:

• This rule applies to corporations, partnerships, sole proprietors, and most employers with staff.
  
  
• Household employers and businesses with temporary employees may also need to file if they meet the wage or employee threshold.
  
  
• Payments to independent contractors are not subject to FUTA tax, but wages paid to regular employees generally are.
  
  
• Employers who are multi-state or operate in a credit reduction state may also need to complete Schedule A.

By filing the IRS Form 940 each year, employers demonstrate compliance with the annual federal requirements for the unemployment FUTA tax. Even if an employer owes little or no tax, submitting the form ensures proper reporting to the Internal Revenue Service and avoids potential compliance issues.

Step-by-Step Guide to Filing the 2013 Form 940

Gathering Required Information

Before completing your 2013 Form 940, it is essential to collect all relevant information. Having these details ready will make the process smoother and reduce the risk of errors. You will need:

• Employer Identification Number (EIN): Every employer must provide a valid EIN issued by the IRS. This number identifies your business for federal tax purposes.
  
  
• Total payments made to employees: Record all wages paid in 2013, including salaries, bonuses, and other taxable compensation.
  
  
• Payments exempt from FUTA tax: Certain costs, such as fringe benefits and group term life insurance, may be exempt. These should be identified before completing the form.
  
  
• State unemployment taxes paid: Document the amounts you paid to your state unemployment system, as this will affect your credit and final FUTA tax liability.
  
  
• Quarterly FUTA liability amounts: You should have made deposits if your liability exceeded $500 in any calendar quarter. Record these totals to ensure accurate reporting.

Completing the Form Line by Line

The IRS Form 940 is divided into several parts, each covering a different aspect of your business’s obligations. Below is a simplified explanation of key sections:

1. Part 1 - Tell Us About Your Return: Employers indicate whether they paid wages in one state, multiple states, or a credit reduction state. Multi-state employers must also file Schedule A.
   
   
2. Part 2 - Determine Your FUTA Tax Before Adjustments: Employers calculate their total payments to employees, subtract FUTA-exempt payments, and identify wages above the taxable threshold of $7,000 per employee. The result is multiplied by the FUTA tax rate to determine liability.
   
   
3. Part 3 - Determine Your Adjustments: Employers report adjustments, such as additional taxes owed on wages not subject to state unemployment tax. This section also accounts for credit reduction differences.
   
   
4. Part 4 - Determine Your FUTA Tax and Balance Due: This section determines your total FUTA tax after adjustments, subtracts deposits already made, and calculates the balance due or any overpayment.

Special Considerations for Late Filing

Filing the unemployment FUTA tax return late requires special attention. If you are submitting your 2013 Form 940 after the original due date, follow these steps:

• Mark the box for “Amended Return” if you are correcting a previously filed form.
  
  
• Attach a clear explanation for the late filing, noting any circumstances that caused the delay.
  
  
• Calculate penalties and interest that apply based on your outstanding tax liability.
  
  
• Mail the return to the appropriate IRS address. Use the correct payment voucher and business information if a payment is included.

Filing late does not eliminate penalties, but it does stop the failure-to-file penalty from increasing further. It also shows the IRS that you are making a good-faith effort to resolve your obligations.

Where to Find the Correct IRS Forms and Instructions

When dealing with an unfiled 2013 Form 940, using the correct and authoritative forms is essential for accuracy and compliance. Official IRS resources ensure you're referencing proper guidelines and avoiding outdated or incorrect versions of the IRS Form 940.

Key materials you will need include:

• 2013 Form 940 (PDF): This is the official document for reporting your annual federal unemployment (FUTA) tax liability for that year.
  
  
• 2013 Instructions for Form 940: These detailed instructions provide line-by-line explanations to help you complete the form correctly.
  
  
• Schedule A (if applicable): Use Schedule A only if your business operates in multiple states or a credit reduction state, as this form adjusts your FUTA tax credit.

You can find all these documents by visiting the IRS’s prior year forms and instructions page, where the IRS archives historical tax forms and related publications for past years. Accessing forms from this official source reduces the risk of errors and ensures you use the IRS-recommended version for your 2013 filing. Using only official IRS sources helps with correct filing, reflects best practices for tax compliance, and reduces complications should issues arise later.

IRS Penalties and Interest for Late Form 940 Filing 

Filing your 2013 Form 940 late does not remove your obligation to pay the federal unemployment tax. Instead, the IRS applies penalties and interest until the debt is fully resolved. Understanding these consequences helps employers calculate liability and plan the best resolution strategy.

Failure to File Penalty

The IRS applies a penalty for failure to file when a return is submitted after the original due date. The penalty is 5% of the unpaid FUTA tax liability for each month or part of a month where the return is late, up to a maximum of 25%. For example, if an employer owed $1,000 in FUTA tax and filed six months late, the penalty would reach $250.

Failure to Pay Penalty

Failing to pay a penalty applies if the return is filed, but the tax payments are not made on time. This penalty is 0.5% of the unpaid tax per month or part of a month, also capped at 25%. Importantly, when both the failure to file and failure to pay penalties apply for the same period, the failure to file penalty is reduced by the failure to pay penalty.

Failure to Deposit Penalties

Employers must make FUTA deposits quarterly if their quarterly liability exceeds $500. Missing these deposits leads to additional penalties, calculated based on how late the deposit is:

• Deposits made 1–5 days late incur a 2% penalty.
  
  
• Deposits made 6–15 days late incur a 5% penalty.
  
  
• Deposits made more than 15 days late incur a 10% penalty.
  
  
• Deposits unpaid for more than 10 days after the IRS issues a notice can reach a 15% penalty.

Interest Charges

The IRS also charges interest on unpaid FUTA tax and penalties. Interest accrues daily from the original due date until the balance is paid in full. Rates are adjusted quarterly and compounded daily, which means that even a modest balance can grow significantly over time. For example, a liability of $2,000 from 2013 will have accumulated more than a decade of compounded interest in addition to penalties.

These penalties and interest charges demonstrate why employers must file Form 940 and promptly address their tax liability, even if they cannot pay the full amount immediately. Filing reduces penalties, and establishing a resolution plan can prevent further costs from accumulating.

Trust Fund Recovery Penalty and Personal Liability

The Trust Fund Recovery Penalty (TFRP) is a penalty the IRS may impose when employment tax obligations are unmet. While the federal unemployment tax return filed on Form 940 is not a trust fund tax, unpaid FUTA wages may become part of broader compliance issues. These funds are intended to support unemployment compensation, and failure to report them puts the business and the responsible individuals at risk.

Who Can Be Held Responsible

The IRS can hold individuals personally liable if they control payroll funds and do not use them to pay FUTA tax or other required employment taxes. Responsibility may extend to:

• Corporate officers and partners: Individuals with authority over employees’ wages and company finances can be assessed a penalty.
  
  
• Successor employers: If a new owner takes over obligations from a prior business, the IRS may hold them accountable for unpaid liabilities.
  
  
• Household employers: Those who employ domestic workers and meet the annual federal unemployment tax threshold may also be required to file.
  
  
• Business decision-makers: Anyone who directed the use of company funds, including choosing to pay vendors instead of making quarterly payments, may be liable.

How Willfulness is Determined

The IRS does not need to prove criminal intent. Instead, it looks for evidence that a person knew of unpaid taxes and chose not to pay. Willfulness may be established when:

• A person may be considered willful if they were aware of the unpaid liability but did not address it.
  
  
• Willfulness can also be established if funds were available but deliberately used for other business expenses.
  
  
• The IRS may find willfulness when FICA taxes or vendor bills were paid while required payments were ignored.

During an investigation, the IRS reviews basic information, including the business address, business name, trade name, and prior year filings. The agency also evaluates whether the employer reported total taxable FUTA wages and if payments were made correctly. Even if a return is filed annually, unpaid balances can lead to liability for those in control of the finances.

Why Compliance Matters

Individuals can protect themselves by correctly handling FUTA and other payroll obligations. Working with a qualified tax preparer or using e-filing may reduce errors, but ultimate responsibility rests with the person in charge. Compliance helps safeguard the company and its officers from personal liability, even when operations shift to the next quarter or the company closes.

IRS Resolution Options for Tax Debt and Penalties

The IRS provides several resolution programs when an employer has an unfiled 2013 Form 940 or an unpaid balance. These options help businesses or individuals manage their tax liability while preventing further penalties and interest from accumulating. Understanding each program allows taxpayers to select the solution best suited to their situation.

Payment Plans and Installment Agreements

If an employer cannot pay the full balance immediately, the IRS offers several installment agreement options:

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1. Short-term payment plan: This plan is available when the full amount can be paid within 120 days and does not require a setup fee.

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2. Long-term installment agreement: This option allows monthly payments over an extended period, though setup fees apply and costs vary by payment method.

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3. Streamlined installment agreement: This program simplifies approval for businesses with balances under certain thresholds, and employers who qualify can often be approved automatically.

Penalty Abatement Options

The IRS recognizes that penalties can create financial hardship, and relief may be available through specific programs:

• First Time Abate: Employers may qualify if they filed and paid on time for the three tax years before 2013. This administrative waiver removes specific penalties once.
  
  
• Reasonable cause relief: Penalties may be abated if the employer demonstrates a legitimate reason for late filing or payment, such as serious illness, natural disaster, or inability to obtain records.

Offer in Compromise (OIC)

An Offer in Compromise allows taxpayers to settle their debt for less than the total owed. The IRS considers several factors when reviewing an offer:

• The employer’s ability to pay based on income and assets is carefully reviewed.
  
  
• Necessary living and business expenses are taken into account.
  
  
• The IRS evaluates whether paying the balance in full would create financial hardship.

If accepted, taxpayers may choose between two payment methods. A lump-sum offer requires a 20 percent initial payment with the balance due in up to five installments. A periodic payment plan allows smaller payments to continue while the IRS reviews the offer.

Currently Not Collectible (CNC) Status

In cases of severe financial hardship, the IRS may place an account in Currently Not Collectible status. This designation temporarily halts collection efforts when taxpayers show they cannot pay without giving up essential living or operating expenses.

• Interest and penalties continue to accrue while an account remains in CNC status.
  
  
• The IRS may file a tax lien to protect its interest during this period.
  
  
• The taxpayer’s financial situation is reviewed periodically to determine whether payment ability has changed.

These resolution options demonstrate that while penalties and interest are severe, the IRS provides structured pathways for employers to address overdue FUTA tax and other employment tax obligations. Choosing the right program can reduce stress, prevent enforced collection actions, and return the business to compliance.

Preventing Future Compliance Issues

FUTA Tax Recordkeeping Best Practices

Employers can avoid future problems by maintaining detailed records related to the FUTA tax. Secure files should contain organized payroll reports, employee wage statements, and evidence of state unemployment contributions. These records make verifying amounts reported on the employer’s annual federal unemployment return easier.

Federal Unemployment Tax Compliance with Payroll Tools

Investing in payroll software or working with an outside provider helps businesses meet their obligations under the federal unemployment tax rules. Automated systems calculate liabilities, generate reminders, and reduce the risk of missed payments. This is especially helpful for companies that operate across multiple states or face complex reporting needs.

Monitoring Credit Reduction Exposure

Employers should consider whether their state is classified as a credit reduction state. Businesses in these areas may face higher costs because their credit is reduced, which increases the total federal unemployment FUTA tax owed. Reviewing IRS updates each year helps employers plan.

Staying Ahead of the Annual Federal Unemployment FUTA Due Date

The annual federal unemployment FUTA return must be filed by the established due date each January. Employers should mark deadlines on calendars, set electronic reminders, and delegate responsibility to ensure filing occurs on time. Missing the due date increases the chance of penalties and interest.

When to Seek Professional Help

Employers sometimes reach a point where professional assistance becomes the best solution. Seeking help is especially important if penalties and interest are increasing or IRS notices have already been issued. A qualified professional can explain your rights, evaluate your options, and represent you directly with the IRS.

Professional guidance is recommended in the following situations:

• The total balance, including penalties and interest, is over $10,000, and the IRS is considering enforcing collections.
  
  
• The IRS has raised the possibility of a Trust Fund Recovery Penalty, which could make you personally responsible for unpaid taxes.
  
  
• You are preparing an Offer in Compromise or another complex settlement that requires detailed financial documentation.
  
  
• You are managing several years of unfiled employment tax returns and need a plan for restoring compliance.

Tax professionals can also clarify how your FUTA responsibilities interact with other obligations, such as federal income tax, social security, and Medicare taxes. Employers who manage household employees should pay particular attention to this, as they may overlook their obligations. A tax advisor can also identify additional reporting requirements for your business structure or workforce. Working with an experienced tax preparer, CPA, or attorney ensures that all filings are accurate, complete, and submitted on time while helping to reduce penalties, prevent errors, and provide peace of mind when dealing with the IRS.

Next Steps for Unfiled 2013 Form 940

If you still have an unfiled 2013 Form 940, it is essential to act quickly. Filing late will not erase your responsibility, but it will stop the failure-to-file penalty from increasing and show the IRS you are cooperating. Start by gathering payroll records, employees’ wages, bank statements, and prior filings. Use the correct 2013 tax form and calculate your FUTA tax liability, including adjustments and deposits. Then file the federal unemployment tax return with your business name, address, and Employer Identification Number. Keep copies of all records to confirm compliance.

Frequently Asked Questions (FAQs)

Is it too late to file my 2013 Form 940?

No, filing an unfiled 2013 Form 940 is not too late. The IRS requires employers to submit all missing forms, even from a prior year. Filing the overdue federal unemployment tax return now is essential because it stops additional failure-to-file penalties from increasing. While interest and some charges may still apply, completing the return demonstrates good faith and helps move you closer to compliance with the IRS.

Can I file my 2013 Form 940 electronically?

Older returns, like the 2013 Form 940, cannot be submitted through e-filing. Instead, you must print the correct annual federal unemployment tax form for that year and mail it to the IRS. If you have already made deposits, you should include a payment voucher, if any, with your return when mailing. Filing on paper ensures the IRS records your submission and begins processing your compliance.

What penalties apply for filing late?

The IRS charges penalties when a federal unemployment tax return is late. Failing to file a penalty usually amounts to five percent of the unpaid balance per month, up to 25 percent. If you filed but did not pay, the IRS may charge a failure to pay penalty of 0.5 percent per month, also capped at 25 percent. Interest is added daily until the balance, including payments, is paid in full.

Can penalties be removed if this is my first violation?

Yes, the IRS offers penalty abatement for qualifying employers. The First Time Abate program may apply if you filed all required returns for the three years before 2013 and had no previous penalties. The IRS penalties are tied to the 2013 Form 940 if you qualify. Even if you do not meet the First Time Abate standard, you may still request relief if you show reasonable cause for the delay.

What happens if my business is closed but I still owe FUTA taxes?

Closing a business does not erase unpaid tax obligations. The IRS can still collect if your company failed to file the employer’s annual federal unemployment return for 2013 or make required FUTA payments. You may also face personal responsibility if you are found to be at fault. Officer. Even after closure, filing the return and arranging tax payments with the IRS is essential to reduce penalties and prevent liens or levies.