Form 4669, known as “Statement of Payments Received,” is used to document income from which no US federal income tax was withheld, capturing key information that affects both the payer (the entity distributing funds) and the payee (the person or entity receiving them). Understanding this form and its filing process is essential for staying compliant with tax regulations and minimizing risks tied to tax withholding. While consulting a qualified tax professional is always a good idea, familiarizing yourself with the key facts is a smart place to start.

Below we’ll explain what you need to know about Form 4669: what it is, when your business might need to file it, and how the filing process works.

What’s in this article?

• What is Form 4669?
  
• Who needs to file Form 4669?
  
• When does a business need to file Form 4669?
  
• How to file Form 4669
  
• How to fill out Form 4669
  
• Compliance factors
  
• When do businesses need to fill out Form 4669?
  
• Form 4669 and Form 4670: How they work together
  
• How Stripe Tax can help
  

What is Form 4669?

Form 4669, otherwise known as “Statement of Payments Received,” is a document the Internal Revenue Service (IRS) uses in the United States to record and verify payments from which income tax, Social Security tax, and Medicare tax have not been withheld by the employer. Essentially, this form serves as a way for the IRS to document the taxes that should have been withheld by the employer.

Form 4669 is typically completed by the payor and payee, often as part of or following an IRS audit or review. Employment taxes account for nearly 70% of the revenue collected by the IRS, as of 2016. Form 4669 can be key for employers in certifying that employment tax-related information is correct.

Who needs to file Form 4669?

Form 4669 is required when an employer hasn’t withheld the appropriate tax amounts from an employee’s wages. The following entities or individuals may need to file Form 4669.

• Employers: Employers are responsible for withholding the necessary taxes from their employees’ wages, and if they discover that they failed to do so, they must file Form 4669. This form allows the employer to report the omission and resolve the discrepancy with the IRS.

• Employees: In some cases, an employee may receive Form 4669 from their employer as an acknowledgment of the tax amounts they failed to collect. While employees are not typically responsible for filing this form, they are required to sign it to confirm that the underwithholding or lack of withholding occurred.

• Tax professionals: Accountants or other tax advisers may initiate the filing of Form 4669 if they discover that their clients have not correctly withheld taxes from employee wages.

• IRS auditors: During an IRS audit, if the IRS learns that Social Security, Medicare, or Railroad Retirement Tax Act (RRTA) taxes have not been collected adequately, the IRS auditor will require the business to file Form 4669. The form is a record of the discrepancy and provides the IRS with the information to proceed with further actions, which could include penalties or additional audits.

When does a business need to file Form 4669?

Businesses will need to file Form 4669 any time it’s discovered that they’ve made a payment from which they haven’t withheld the required federal income tax. Here’s a closer look at some scenarios where this might occur.

• Errors discovered in employee payments: Form 4669 is often used in the context of employee compensation. When an employer realizes that they have failed to withhold the necessary taxes from an employee’s paycheck, they need to complete and submit this form to the IRS. Submitting Form 4669 to the IRS upon discovering withholding errors is considered a form of voluntary compliance. While it isn’t technically required, failing to do this can expose the business to penalties in the future.

• Errors discovered in nonwage payments: Discovering that the necessary taxes have not been withheld from other types of payments, such as payments to contractors or landlords, is another reason that businesses may need to file Form 4669. Again, filing Form 4669 proactively upon discovering any errors is considered a best practice by many businesses and may protect them from complications later.

• IRS audit uncovers withholding errors: In some cases, an IRS audit may trigger the need for Form 4669. Auditors may flag missing or insufficient withholding amounts and could request that a business submit the form as a corrective action.

How to file Form 4669

Here’s an overview of the steps involved in filing Form 4669.

• Business issues Form 4669: If a business has distributed any kind of income without withholding the required federal income tax—whether that’s salaries, rent, or other types of payments—it will need to issue Form 4669 to the payee in question. Typically, this entails completing the form with all pertinent details such as the amount of payment, the type of income, and the tax year when this payment occurred. Once the form is complete, the business must send it to the payee promptly, either by mail or electronically, depending on IRS rules.

• Employee completes and returns the form: After the employer has sent the form, the payee is required to fill in their section of the form, which confirms that they’ve received the income listed and are aware that no federal taxes have been withheld from their payment. The payee must then sign and date the form before returning it to the employer. To expedite the process, businesses should set a deadline and explicitly communicate the timeline and requirements to the payee.

• Business submits the form to the IRS: Once the employer receives the signed form, it serves as an official acknowledgment from both parties that certain tax amounts were not withheld. At this point, the employer has the option of submitting this form to the IRS. While this is not mandatory, keeping an accurate record of such transactions is important for compliance and auditing purposes. If you choose to submit to the IRS, the form should be included when you file your regular payroll tax returns or as otherwise directed by IRS guidelines.

How to fill out Form 4669

Form 4669 is completed in three parts, split between the payor and the payee. Here's a step-by-step breakdown of each part.

Step 1: Payor information and payment details

The payor (the business or individual who made the payment) fills out this section first. In the form’s designated fields, you’ll need to enter:

1. The payee's name and address
   
2. The payee's taxpayer identification number (TIN)
   
3. The calendar year the payments relate to
   
4. The payor's name and address
   
5. The payor's employer identification number (EIN)
   
6. The payment amounts by category, including:
   
   • Income tax withholding
     
   • Backup withholding
     
   • Withholding on payments to foreign persons
     
   • Additional Medicare Tax withholding
     

Step 2: Payee certification of reporting

Once the payor has filled in the payment details, the payee certifies how the payments were reported on their own tax return:

1. Confirm that the payments in question were included as income (or otherwise reported) on their tax return.
   
2. Specify the exact form and line number where the payments were reported.
   
3. Confirm that the related tax liability has been paid in full.
   

Step 3: Signature and return to payor

The final part finalizes the certification and sends the form back to the payor:

1. Sign the form under penalties of perjury, attesting that the information provided is true and accurate.
   
2. Print your name below the signature line.
   
3. Provide a daytime phone number in case the IRS or payor needs to follow up.
   
4. Return the completed form to the payor—not to the IRS—since the payor uses it to support a claim for relief from liability for the tax that wasn't withheld.
   

Form 4669 isn't filed with the IRS directly by the payee. Instead, it's typically submitted by the payor along with Form 4670 (Request for Relief of Payment of Certain Withholding Taxes) to support their case for relief from having to pay the tax it failed to withhold.

Compliance factors

Form 4669 comes with specific obligations and rules. Here are some aspects to consider when filing this form.

• Accuracy:The form must contain accurate information about the uncollected tax amounts. Any inaccuracy can lead to further complications, including penalties and potential legal action.

• Timeliness: File the form promptly. Failure to do so may incur further consequences, such as accruing interest on the unpaid taxes.

• Employee confirmation: Form 4669 is only considered complete when it includes the employee’s signature confirming acknowledgment of the tax discrepancy. If the employee refuses to sign, the employer should make a written statement to that effect and attach it to the form.

• Keep digital records: Maintaining a digital copy of all completed Form 4669s will make it easier to retrieve details during any potential audits or inquiries.

• Consult a tax adviser: Given the complexity—and potential penalties—associated with tax withholding, consulting a tax advisor may be beneficial to understanding your responsibilities and next steps.

When do businesses need to file Form 4669?

Filing Form 4669 at the right time is important for compliance and mitigating risks. Here’s a closer look at the timelines for filing Form 4669.

• No universal deadline: Form 4669 doesn’t come with one deadline that applies to all situations. The timing largely hinges on the circumstances of why you’re filing, and it will vary based on factors such as what kind of payment you’ve failed to withhold taxes on.

• Postdiscovery filing: Businesses should take action as soon as they discover they have failed to withhold the appropriate taxes. The quicker you file Form 4669, the less likely you are to incur penalties.

• Audit trigger: If you are required to file Form 4669 in accordance with an IRS audit, the auditors will typically provide a specific deadline. This deadline is nonnegotiable and failing to meet it can result in significant penalties or even legal action.

• Fiscal year considerations: Your business’s fiscal year may also influence the timing of filing. If the fiscal year is about to close, it’s advisable to file Form 4669 before this happens. This will allow you to reconcile your financial records more accurately and avoid carrying a tax issue over into a new fiscal year.

• Penalty prevention: Filing Form 4669 in a timely manner can help prevent or limit additional financial repercussions of withholding errors, an offense for which penalties—ranging from fines to more serious actions—can accrue over time.

• Tax return deadlines: If you discover that missed withholding is affecting an already-filed tax return, you may need to file an amended return. For payroll-related corrections, this typically means filing Form 941-X, Adjusted Employer's Quarterly Federal Tax Return or Claim for Refund, which is used to correct errors on a previously filed Form 941. Different deadlines might apply depending on the type of return being amended, and Form 4669 should be filed prior to or along with the amended return.

Form 4669 and Form 4670: How they work together

Form 4669 is completed on a per-payee, per-year basis, meaning a separate form is required for each payee and for each tax year relief is being requested. Once the payor has gathered signed Form 4669s from the relevant payees, these are submitted to the IRS as a package using Form 4670, Request for Relief of Payment of Certain Withholding Taxes. In other words, Form 4669 documents the payee's certification, while Form 4670 is the payor's formal request to the IRS for relief from liability based on that certification.

Timing for filing Form 4670 depends on the specific circumstances of the case, similar to Form 4669. In situations where a payee declines to sign and return Form 4669, the payor may still need to file Form 4670 to pursue relief. In that case, the payor would submit Form 4670 without the corresponding signed Form 4669, along with a written explanation describing the payee's refusal to sign.

How Stripe Tax can help

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• Digital goods and services in all US states and over 100 countries
  
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