Publication 80
Circular SS
(Revised: 1/2003)

Federal Tax Guide for Employers in the U.S. Virgin Islands, Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands

A Change To Note

The social security wage base for 2003 is $87,000. There is no wage base limit for Medicare tax. The tax rate remains 6.2% for social security tax and 1.45% for Medicare tax.

Reminders

Electronic deposits.   You may deposit your taxes electronically using the Electronic Federal Tax Payment System (EFTPS). Although use of EFTPS is required for certain employers (see section 8 for details), all employers may use this electronic payment system. Using EFTPS, you can transmit your payment information by telephone or your personal computer. To get more information or to enroll in EFTPS, call 1-800-555-4477 or 1-800-945-8400. You can also visit the EFTPS Web Site at www.eftps.gov.

Change of address.   If you changed your business mailing address or business location, notify the IRS by filing Form 8822, Change of Address.

Private delivery services.   You can use certain private delivery services designated by the IRS to send tax returns or payments. If you mail by the due date using any of these services, you are considered to have filed on time. The most recent list of designated private delivery services was published in September 2002. The list includes only the following:

• Airborne Express (Airborne): Overnight Air Express Service, Next Afternoon Service, and Second Day Service.
• DHL Worldwide Express (DHL): DHL Same Day Service, and DHL USA Overnight.
• Federal Express (FedEx): FedEx Priority Overnight, FedEx Standard Overnight, FedEx 2 Day, FedEx International Priority, and FedEx International First..
• United Parcel Service (UPS): UPS Next Day Air, UPS Next Day Air Saver, UPS 2nd Day Air, UPS 2nd Day Air A.M., UPS Worldwide Express Plus, and UPS Worldwide Express.

The private delivery service can tell you how to get written proof of the mailing date.

Private delivery services cannot deliver items to P.O. boxes. You must use the U.S. Postal Service to mail any item to an IRS P.O. box address.

When hiring new employees.   Record the number and name from each new employee's social security card. An employee who does not have a social security card should apply for one on Form SS-5, Application for a Social Security Card (see section 3).

Unresolved tax issues.   If you have attempted to deal with an IRS problem unsuccessfully, you should contact the Taxpayer Advocate. The Taxpayer Advocate independently represents your interests and concerns within the IRS by protecting your rights and resolving problems that have not been fixed through normal channels.

While Taxpayer Advocates cannot change the tax law or make a technical tax decision, they can clear up problems that resulted from previous contacts and ensure that your case is given a complete and impartial review.

Your assigned personal advocate will listen to your point of view and will work with you to address your concerns. You can expect the advocate to provide:

• A fresh look at a new or ongoing problem.
• Timely acknowledgment.

• The name and phone number of the individual assigned to your case.
• Updates on progress.

• Timeframes for action.
• Speedy resolution.
• Courteous service.

When contacting the Taxpayer Advocate, you should provide the following information:

• Your name, address, and employer identification number.
• The name and telephone number of an authorized contact person and the hours he or she can be reached.
• The type of tax return and year(s) involved.
• A detailed description of the problem.
• Previous attempts to solve the problem and the office that had been contacted.
• A description of the hardship you are facing (if applicable).

You may contact a Taxpayer Advocate by calling a toll-free number, 1-877-777-4778. Persons who have access to TTY/TDD equipment may call 1-800-829-4059 and ask for Taxpayer Advocate assistance. If you prefer, you may call, write, or fax the Taxpayer Advocate office in your area. See Pub. 1546, The Taxpayer Advocate Service of the IRS, for a list of addresses and fax numbers.

Recordkeeping.   Keep all records of employment taxes for 4 years. These should be available for IRS review.

There is no required format for such records, but they should include your EIN; the amounts and dates of all wage payments (including fringe benefits) and tips reported; the names, addresses, and occupations of employees receiving such payments, and their social security numbers; copies of returns filed; dates of employment; and the dates and amounts of deposits made in accordance with section 8. Farm employers must keep a record of the name, permanent address, and EIN of each crew leader (see Farm Crew Leaders on page 4).

Calendar

The following are important dates and responsibilities. Also see Pub. 509, Tax Calendars for 2003.

Note: If any date shown below falls on a Saturday, Sunday, or legal holiday, the due date is the next business day. A statewide legal holiday delays a filing due date only if the IRS office where you are required to file is located in that state. For any due date, you will meet the file or furnish requirement if the form is properly addressed and mailed First-Class or sent by an IRS designated delivery service on or before the due date (see Private delivery services earlier).

By January 31  

• Furnish wage and tax statements to employees. Give each employee a completed Form W-2VI, W-2GU, W-2AS, or W-2CM (see section 10).
• File Form 943, Employer's Annual Tax Return for Agricultural Employees, with the Internal Revenue Service. If you deposited all Form 943 taxes when due, you have 10 additional days to file.
• File Form 940 or 940-EZ - U.S. Virgin Islands employers. File Form 940 or 940-EZ, Employer's Annual Federal Unemployment (FUTA) Tax Return, with the U.S. Internal Revenue Service. Pay or deposit (if more than $100) any balance of the tax due. If you deposited the full amount of taxes when due, you have 10 additional days to file.

By February 28  

File wage and tax statements with the Social Security Administration (SSA). File Copy A of Forms W-2VI, W-2GU, W-2AS, or W-2CM with Form W-3SS, Transmittal of Wage and Tax Statements, with the Social Security Administration. For electronically filed returns, see By March 31 below.

By March 31  

File electronic Forms W-2VI, W-2GU, W-2AS, or W-2CM. File copy A of electronic (not magnetic media or paper) Forms W-2VI, W-2GU, W-2AS, or W-2CM with the Social Security Administration. See the SSA Web Site at www.ssa.gov/employer for more information.

By April 30, July 31, October 31, and January 31  

File Form 941-SS, Employer's Quarterly Federal Tax Return (American Samoa, Guam, the Commonwealth of the Northern Mariana Islands, and the U.S. Virgin Islands), with the Internal Revenue Service. If you deposited the full amount of taxes when due, you have 10 additional days to file.

Deposit FUTA tax for the quarter (including any amount carried over from other quarters) if over $100. If $100 or less, carry over to the next quarter (see section 11).

Introduction

Circular SS is for employers whose principal place of business is in the U.S. Virgin Islands, Guam, American Samoa, or the Commonwealth of the Northern Mariana Islands, or who have employees who are subject to income tax withholding for any of these jurisdictions. Employers and employees in these areas are generally subject to social security and Medicare taxes under the Federal Insurance Contributions Act (FICA). This circular summarizes employer responsibilities to collect, pay, and report these taxes.

Whenever the term United States is used in this circular, it includes the U.S. Virgin Islands, Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands.

Circular SS also provides employers in the U.S. Virgin Islands with a summary of their responsibilities in connection with the tax under the Federal Unemployment Tax Act, known as FUTA tax (see section 11).

Except as shown in the tables on pages 15 through 19, these taxes apply to every employer who pays taxable wages to employees or who has employees who report tips.

This circular does not include instructions relating to the self-employment tax (for social security and Medicare of self-employed persons). See Pub. 570, Tax Guide for Individuals With Income From U.S. Possessions, if you need this information.

This circular also does not include instructions relating to income tax withholding. In the U.S. Virgin Islands, Guam, American Samoa, or the Commonwealth of the Northern Mariana Islands, contact your local tax department for information about income tax withholding. See Circular E, Employer's Tax Guide (Pub. 15), for information on U.S. Federal income tax withholding.

Note:    Employers in the U.S. Virgin Islands may call 1-800-829-4933 for Federal tax information. If you have access to TTY/TDD equipment, call 1-800-829-4059 with your tax question or to order forms and publications.

How To Get Forms and Publications

Personal computer.   Access the IRS's Web Site at www.irs.gov to do the following:

• Download forms, instructions, and publications.
• See answers to frequently asked tax questions.
• Search publications on-line by topic or keyword.
• Send us comments or request help via e-mail.
• Sign up to receive hot tax issues and news by e-mail from the IRS Digital Dispatch.

You can also reach us using file transfer protocol at ftp.irs.gov.

By phone.   U.S. Virgin Islands employers can order forms and publications 24 hours a day, 7 days a week, by calling 1-800-TAX-FORM (1-800-829-3676). Others can get IRS forms and publications by writing to the Western Area Distribution Center, Rancho Cordova, CA 95743-0001.

1. Who Are Employees?

Generally, employees are defined either under common law or under special statutes for certain situations.

Employee status under common law.   Generally, a worker who performs services for you is your employee if you can control what will be done and how it will be done. This is so even when you give the employee freedom of action. What matters is that you have the right to control the details of how the services are performed. See Pub. 15-A, Employer's Supplemental Tax Guide, for more information on how to determine whether an individual providing services is an independent contractor or an employee.

Statutory employees.   There are also some special definitions of employees for social security, Medicare, and FUTA taxes.

While the following persons may not be common law employees, they are considered employees for social security and Medicare purposes if the conditions under Tests later are met.

a.   An agent (or commission) driver who delivers food or beverages (other than milk) or picks up and delivers laundry or dry cleaning for someone else.

b.   A full-time life insurance salesperson who sells primarily for one company.

c.   A homeworker who works by the guidelines of the person for whom the work is done, with materials furnished by and returned to that person or to someone that person designates.

d.   A traveling or city salesperson (other than an agent-driver or commission-driver) who works full time (except for sideline sales activities) for one firm or person getting orders from customers. The orders must be for items for resale or use as supplies in the customer's business. The customers must be retailers, wholesalers, contractors, or operators of hotels, restaurants, or other businesses dealing with food or lodging.

Tests.   Withhold social security and Medicare taxes from statutory employees' wages if all three of the following tests apply.

1. The service contract states or implies that almost all of the services are to be performed personally by them.
2. They have little or no investment in the equipment and property used to perform the services (other than an investment in transportation facilities).
3. The services are performed on a continuing basis for the same payer.

Persons in a and d above are employees for FUTA tax purposes if tests 1 through 3 are met (U.S. Virgin Islands only).

Pub. 15-A gives examples of the employer-employee relationship.

Statutory nonemployees.   Certain direct sellers and certain real estate agents are by law considered nonemployees. They are treated as self-employed for employment tax purposes. See Pub. 15-A for details.

Treating employees as nonemployees.   If you incorrectly treated an employee as a nonemployee and did not withhold social security and Medicare taxes, you will be liable for the taxes. See Internal Revenue Code section 3509 for details.

IRS help.   If you want the IRS to determine whether a worker is an employee, file Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding.

Farm Crew Leaders

You are an employer of farmworkers if you are a crew leader. A crew leader is a person who furnishes and pays (either on his or her own behalf or on behalf of the farm operator) workers to do farmwork for the farm operator. If there is no written agreement between you and the farm operator stating that you are his or her employee, and if you pay the workers (either for yourself or for the farm operator), then you are a crew leader.

2. Employer Identification Number (EIN)

An employer identification number (EIN) is a nine-digit number the IRS issues. Its format is 00-0000000. It is used to identify the tax accounts of employers and certain other organizations and entities that have no employees. Use your EIN on all the items you send to the IRS and SSA for your business.

If you have not asked for an EIN, request one on Form SS-4, Application for Employer Identification Number. Form SS-4 contains information on how to apply for an EIN by mail or by telephone.

If you do not have an EIN by the time a return is due and you are filing a paper return, enter Applied For and the date you applied in the space shown for the number. If you took over another employer's business, do not use that employer's EIN. Make your check for any amount due on a return payable to the United States Treasury and show on it your name (as shown on Form SS-4), address, kind of tax, period covered, and date you applied for an EIN.

You should have only one EIN. If you have more than one, notify the Internal Revenue Service Center where you file your return. List the EINs you have, the name and address to which each number was assigned, and the address of your principal place of business. The IRS will tell you which EIN to use.

For more information, see Pub. 1635, Understanding Your EIN, or Pub. 583, Starting a Business and Keeping Records.

3. Employee's Social Security Number (SSN)

An employee's social security number (SSN) consists of nine digits separated as follows: 000-00-0000. You must get each employee's name and SSN because you must enter them on the employee's wage and tax statement, Form W-2VI, W-2GU, W-2AS, or W-2CM. If you do not provide the correct name and SSN, you may owe a penalty. You should ask the employee to show you his or her social security card. The employee is required to show it to you if it is available. You may, but you are not required to, photocopy the social security card if the employee provides it.

If an employee does not have a social security card or needs a new one, the employee should apply for one on Form SS-5, Application for a Social Security Card. See the back cover of this circular for information on how to get and where to send the form. If your employee has applied for an SSN but does not have one when you file his or her Form W-2 and you are filing the form on paper, enter Applied For on the form. When the employee receives the SSN, file Form W-2c, Corrected Wage and Tax Statement, to show the employee's SSN.

Note:   Record the name and number of each employee exactly as they appear on his or her social security card. If the employee's name is not correct as shown on the card (for example, because of marriage or divorce), the employee should request a new card from the SSA. Continue to use the old name until the employee shows you the new social security card with the new name.

Employees who apply for social security cards must supply proof of age, identity, and citizenship. If they are not citizens of the United States, they must submit evidence of their alien status.

If your employee is given a new social security card following an adjustment to his or her resident status that shows a different name or SSN, file a Form W-2c for the most current year only.

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