7/31/2019 Eye on Washington- New IRS Disclosure Requirements for Reporting Agents

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Nw IRS DISclSuR RquIRmNS fRRpRIN ANS

LEGISLATIVE UPDATE

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Background

Revenue Procedure 201232 added a new requirementin Section 5.05 to require that Reporting Agents notifytheir clients in writing on at least a quarterly basis thatan Authorization does not eliminate the taxpayers liabilityfor the failure to file employment tax returns or remitemployment taxes.

The statement must also recommend that the taxpayer

use the IRS EFTPS system to periodically confirm that theReporting Agent has timely made all required deposits,and advise that state tax authorities may offer similarverification programs. Notices should explain how to enrollin EFTPS, at www.eftps.gov, or by calling (800) 555-4477.The statement must be provided when the Reporting Agententers into a contract for services with an employer, and atleast quarterly thereafter.

This statement may be provided electronically, either as astand-alone communication or as a conspicuous elementof other communications. If provided as an element of othercommunications, the notice should have its own headingor caption, or otherwise be set apart from other text, and

should be labeled as important tax information.

This disclosure statement has long been a best practiceamong large payroll service organizations, whichcollaborated with the American Payroll Association andother industry associations, as well as the IRS TaxpayerAdvocate, the U.S. Department of the Treasury, IRS andcongressional tax-writing committees to require suchdisclosures in IRS rules.

The disclosure serves an important function in remindingemployers to be cautious in the selection and monitoringof any service provider entrusted with the administrationof federal taxes. It also advises employers how to registerwith the IRS EFTPS to electronically and securely view theemployers tax account to verify that tax deposits are in factbeing remitted in full and on time.

Revenue Procedure 2012-32 supersedes RevenueProcedure 2007-38 and is effective November 19, 2012.Reporting Agents must comply with Revenue Procedure201232 and other applicable IRS guidance in providing taxpayment and reporting services to clients.

On July 26, 2012, the Internal Revenue Service (IRS) released Revenue Procedure 201232, which setsout requirements for Reporting Agents and Reporting Agent Authorization forms (IRS Form 8655). Form8655 allows an employer to designate a Reporting Agent, such as ADP, to sign and electronically fileForm 940, Employers Annual Federal Unemployment (FUTA) Tax Return; Form 941, Employers Quarterly

Federal Tax Return, as well as to make federal tax deposits electronically via the Electronic Federal TaxPayment System (EFTPS).

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Last updated: August 21, 2012

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ADP is committed to assisting businesses with increasedcompliance requirements resulting from rapidly evolvinglegislation. Our goal is to minimize your administrativeburden across the entire spectrum of payroll, tax, HR andbenefits, so that you can focus on running your business.Neither the content nor the manner in which this noticeis presented reflects the thoughts or opinions of ADP orits employees. This notice is provided as a courtesy to our

clients, to assist in understanding the impact of certainregulatory requirements, and should not be construed astax or legal advice. Such information is by nature subjectto revision and may not be the most current informationavailable. ADP encourages interested readers to consultwith appropriate legal and/or tax advisors. Please be advisedthat calls to and from ADP may be monitored or recorded.

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