SMLLC choosing to be taxed as S Corp in 2011 and taking 2011 salary

[David]

SMLLC has decided to elect S Corp status for 2011 and has filed an extension. TP made quarterly estimated tax payments during 2011. The payroll service has processed an annual 2011 salary and the the related 2011 employer reports.

The payroll service reported the TP's quarterly estimated tax payments as taxes paid/deposited on the employer reports, resulting in no tax due.

I'm sure that was the result of miscommunication between the payroll service and the TP. The payroll service probably asked the TP if he paid taxes during the year. Of course the TP said they did and gave the payroll service the total amounts of the quarterly payments made in 2011.

Before I tell the TP that they have to pay the amounts stated on the employer reports and that he will get a refund for the quarterly estimated taxes when he files his tax return, I thought I would check with any of you who may have encountered this situation.

I don't think the IRS will consider/apply the quarterly estimated tax payments as payroll taxes paid for purposes of the 941, 940, etc.

Does anyone know if this can be done which results in no taxes due with the employer reports being filed for 2011?

Thanks for your help.

[rfassett]

If he made the quarterly estimated payments under his SSN then they will not be credited to the 941 (this is a separate entity). The 941 was prepared inaccurately if the service used his quarterly payments as "deposits". If the 941's were filed that way, your client will receive notices from the IRS stating the info does not match their records and he will get a bill for the unpaid tax as well as any late payment penalties and interest.