IRS Announces Revisions to Form 941

The IRS announced that in mid-March it will start sending employers new Forms 941, Employer’s Quarterly Federal Tax Return. Employers will use the revised form to claim the new COBRA premium assistance payments credit, which was introduced by the recent stimulus act, the American Recovery and Reinvestment Act of 2009, PL 111-5.

Under the act, eligible former employees who were enrolled in their employer’s health plan when they lost their jobs are required to pay only 35% of the cost of COBRA coverage. Employers must treat the 35% payment by eligible former employees as full payment, but the employers are entitled to a credit for the other 65% of the COBRA cost on their payroll tax return.

Employers will use the revised Form 941 starting with the first quarter of 2009.