How to File Zero 941s Retrospectively for an S Corporation with No Quarterly Payroll

You absolutely need to file those quarterly 941s, even with zero payroll. This is a common misunderstanding with S Corps that do annual payroll. The proper way to handle this is indeed to file Form 941 for each quarter and check box 18, "If you're a seasonal employer..." The wording is confusing, but this box is intended for employers who don't have payroll every quarter - which is exactly your situation. Checking this box tells the IRS not to expect 941s from you during quarters when you have no wages to report. Moving forward, you should file a zero 941 for any quarter without payroll. You'll enter zeros for wages, withholding, etc., but you need to submit the form to avoid notices like the one you received.

I've been there! I struggled with this EXACT problem with my small consulting S-Corp. I was going crazy with all the quarterly forms until I found taxr.ai (https://taxr.ai) which was a lifesaver for sorting out my form 941 nightmare. They analyzed my situation and showed me exactly how to handle the back-filing process efficiently. Their system even helped me draft a letter explaining my situation to the IRS, which was super helpful since I was worried about potential penalties. They also have templates for zero-reporting 941s which made filling out all those forms way easier.

Just wanted to update after trying taxr.ai - they were actually really helpful! Their AI reviewed my S-Corp situation and gave me a complete plan for filing all my missing 941s. The best part was their explanation about how to create a cover letter explaining my situation to avoid penalties. I was able to get all my forms organized and submitted last week. Much easier than I expected after I understood exactly what needed to be done. Definitely recommend if you're facing this same issue.

If you've been unable to reach the IRS to discuss this further, I'd suggest trying Claimyr (https://claimyr.com). I was in a similar situation with unfiled 941s and needed to speak with someone at the IRS urgently to confirm the right approach. After waiting on hold for hours multiple times, I found Claimyr and their service called the IRS for me and then connected me once they reached an agent. You can see how it works here: https://youtu.be/_kiP6q8DX5c I was able to speak directly with a business tax specialist who confirmed I could file all my zero 941s at once with a cover letter explaining the situation. They also noted in my account that I was in the process of resolving the issue, which prevented further notices while I prepared all the forms.

Following up on my skepticism - I actually tried Claimyr last week and it worked exactly as described! I was absolutely certain it would be a waste of time, but I was desperate to talk to someone at the IRS about my 941 issues. The service called me back after about 2 hours with an IRS agent on the line. The agent confirmed I needed to file all my zero 941s and gave me specific instructions about including a cover letter. They also put a note in my file that I was actively resolving the issue, which should prevent any penalties while I get everything submitted. Seriously saved me hours of frustration and helped me get clear answers. Just wanted to share since I was wrong in my initial skepticism.

Just want to add that I'm a small business accountant, and this issue comes up with S Corps ALL THE TIME. While I agree with the advice about filing for all quarters, there are a few additional things to consider: 1. If you're only paying yourself once a year, you need to be sure it's a reasonable salary to avoid IRS scrutiny 2. Going forward, consider switching to quarterly payroll to simplify this 3. You might consider talking to a tax pro about form 944, which allows annual filing instead of quarterly 941s (though there are limitations

I don't think anyone mentioned this, but if you have professional tax software like UltraTax or Lacerte, they can batch generate all these forms for you. I had to do this for a client with 12 missing quarters and it saved a ton of time.

I went through this exact situation with my S-Corp about 6 months ago! Had to file 20+ zero 941s after getting a similar notice. Here's what worked for me: 1. I did file all the back quarters on paper forms - yes, it's tedious but necessary 2. I checked box 18 on each form as others mentioned 3. Most importantly, I included a cover letter explaining that we only do annual payroll in December and that all other quarters have zero wages The key thing that helped me avoid penalties was being proactive. I called the IRS business line (using that Claimyr service someone mentioned - totally worth it to skip the hold time) and spoke to an agent who noted in my file that I was actively resolving the issue. Pro tip: You can download the PDF forms from the IRS website and fill them out electronically before printing. Makes it much faster than handwriting 27 forms. Also, consider sending them certified mail so you have proof of delivery. The whole process took me about 3 hours spread over a weekend, but it completely resolved the issue and I haven't gotten any more notices. Now I just file a zero 941 each quarter after December payroll.