Never filed Form 945? Why the IRS cannot prepare one for you, and what it does instead

How the IRS knows a Form 945 is missing

A Form 945 filing requirement is set on the business's account the first time a 945 is filed or when an EIN application says the business will have non-payroll withholding, and it stays until a final return or a closing code removes it (IRM 5.1.11.2.2, Nov. 29, 2023, lists "Discharged all employees" and "Business discontinued" closures that end the 940, 941, 943, 944 and 945 requirements together). Sixteen weeks after January 31 the delinquency check runs, and a payer whose 1099s show box 4 withholding and whose account shows no 945 is a productive case by definition: the IRS can see the money that should have been deposited. The notice sequence is the return-delinquency CP259 series; "Nonfilers generally receive one or two notices about their delinquent return," after which "a delinquent return (Del Ret) module is generated" and routed to Collection (IRM 5.1.11.2.2).

What the IRS cannot do: a substitute Form 945

The automated campus program is explicit about its scope: it "enforces compliance for certain taxpayers who have not filed Form 941, Form 943, Form 944 and/or Form 940 employment tax returns," by "Securing valid employment tax returns from taxpayers, or Filing on behalf of the taxpayer," and its module criteria require "The MFT is either 01, 10, 11 or 14" (IRM 5.18.2.2, 5.18.2.2.1, Jan. 2, 2020). Form 945 is MFT 16. The program computes its substitute returns from the last return filed, inflated 2.5% a quarter, at a 20% assumed withholding rate (IRM 5.18.2.2.2.1, 5.18.2.2.2.2); none of that machinery exists for non-payroll withholding, where the right figure is simply the sum of box 4 on the 1099s.

In the field, "A field call is required before using IRC 6020(b) authority," the officer sets "a specific date for filing and paying," warns that failure to file by that date "will be considered a refusal to file" exposing the business to IRC 7203, and is told to "Explain the trust fund recovery penalty, if applicable" (IRM 5.1.11.7.7.1, Nov. 29, 2023). But when the date passes the officer prepares "employment, excise, and/or partnership tax returns" from the list above. For Form 945 withholding the manual's instruction is a referral: "Contact an employment tax specialist to discuss potential underreported tax on employment tax returns. Refer underreported tax on employment tax returns (Form 940, Form 941, Form 943, Form 944 and Form 945) to the Employment Tax Examination Program" (IRM 5.1.11.6.3.1, Nov. 29, 2023).

What it does instead

The assessment comes from Examination. The campus version is the compliance check described in the Letter 6112 guide: the IRS reads the 1099s, totals the withholding or the payments made without TINs, and proposes a Form 945 liability by letter. The field version is the backup withholding examination, which ends in Form 4668-B, the "Report of Examination of Withheld Federal Income Tax for Withholding Reported on Forms 1099 and W-2G" (IRM 4.23.10.10.9.1, June 1, 2023), with the agreement on Form 2504. Either way the figure is built from what you reported in box 4, and from payments to payees whose TINs you never had.

Two things follow from the examination route rather than the 6020(b) route. First, the examiner has more to work with than a revenue officer does: an examination of your records is an examination, with the solicitation-date review, the CP2100 recreates and the worker-classification step the examination guide describes. Second, the trust fund recovery penalty sits behind it. Backup withholding is withheld tax, "Backup withholding adjustments are subject to IRC 6672" (IRM 4.23.8.14, Apr. 17, 2024), and for Form 945 the penalty is 100% of the tax; the TFRP guide covers who is exposed.

Six years, and no statute

Policy Statement 5-133 is why a revenue officer asks for six years of returns and not more, and the factors that decide whether to pursue at all include "Whether the delinquency involves trust fund monies collected" (IRM 5.1.11.7.1, Aug. 14, 2025). Backup withholding is trust fund money. The manual's grounds for closing a delinquency without a return, that there would be no tax or minimal tax due or that collection costs more than it yields, are judged with "'Net tax due' on employment tax returns ... determined before the application of credits."

The six-year practice is a policy, not a statute. For the return itself, "There is no limitation period for assessing the TFRP on withholding ... until a return is filed," and a substitute prepared under IRC 6020(b) does not start it either (IRM 5.7.3.6, Nov. 12, 2010); the same is true of the Form 945 assessment, which runs three years from April 15 of the following year or from a later actual filing (IRM 25.6.1.9.3). A year with withholding on the 1099s and no Form 945 stays open indefinitely for the business and for its responsible persons. The statute page lays the clocks side by side.

Filing the late return

Filing is the one action that changes the position. A late Form 945 starts the assessment statute, replaces an Examination estimate with your own figures, and ends the delinquency case: the manual's closure for a secured return is a TC 150 posting (IRM 5.18.2.5.1.4.6). File the actual year's form, report line 2 equal to the box 4 total of the 1099s under the payees' TINs, and pay what you can with it. The failure-to-file and failure-to-pay penalties and the deposit penalty will be assessed on the balance; those are reasonable-cause penalties and the relief order applies to them. If the money was never withheld in the first place, the return is still due for the year and Forms 4669 and 4670 are the route to reduce the tax for payees who reported the income; the Form 4669 guide covers the package.

If a revenue officer is already assigned, "set a specific date for filing" is the officer's script; meet it. If an examination has started, the return you file goes to the examiner, who treats it as a secured delinquent return; the Form 945-X page covers corrections after that point.

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