What must an employer do if there are no taxes to report for a quarter?

If an employer has no taxes to report for a quarter, they are still required to file Form 941, even if the amount on the form reflects zero. Form 941 is the Employer's Quarterly Federal Tax Return, and it provides essential information to the IRS about the employer's payroll tax obligations. Filing this form ensures compliance with federal regulations and keeps the employer in good standing with the IRS.

By submitting Form 941, employers maintain accurate records and inform the IRS that they are still operating and subject to tax reporting requirements. This practice helps prevent any misunderstandings about the employer's activity and reporting obligations during that period. Additionally, non-filing can raise red flags and potentially lead to penalties or questions from the IRS regarding the employer's status.

In contrast, other choices may lead to misunderstandings about the employer's obligations. For instance, filing an exemption form might suggest that the employer is not subject to certain tax laws, which is not applicable when they still are required to report despite having no tax liabilities. Similarly, simply notifying the IRS without filing would not fulfill the legal obligation to submit a quarterly report. Lastly, not doing anything at all could result in compliance issues for the employer.