Published on Policy and Procedure Manual (https://mainsl.annkissamprojects.com)

Home > FMS Policies and Procedures CA > Establishment of Consumers as Employers of Workers > File Registration and Authorization Forms with Tax Agencies

File Registration and Authorization Forms with Tax Agencies

Policy: 

F/EA obtains applicable employer account numbers with the Internal Revenue Service (IRS) and State Department of Revenue (DOR) on behalf of each active participant served by F/EA in the participant direction program. F/EA registers consumers with the State Department of Labor (DOL) for State Unemployment Insurance, but only after the participant has been determined liable for State Unemployment Insurance (See Register Consumer with State Department of Labor (Unemployment)).

As employers of workers in the participant direction program, consumers must be established with applicable tax agencies as employers for the purposes of withholding, depositing and filing applicable employer taxes and returns. 
 
Consumers also delegate responsibility for withholding, depositing and filing applicable employer taxes and returns to the F/EA. This document outlines the policy, procedures and internal controls used by F/EA to file these registration and authorization forms with applicable tax agencies.
 
Below, each step is outlined. The Policy associated with each step is stated beneath the step header.
Procedure: 

Create Consumer Folder

After completing the procedure in Collect and Process F/EA Start Up Packages, a folder for participant F/EA Start-Up Package paperwork is created. This process is completed by a <<Staff Title>>. New folders are created daily as packets pass quality check and all other procedures in Collect and Process F/EA Start Up Packages.
 
  1. <<Staff Title>> or assigned staff selects a blank file folder from the F/EA supply
  2. <<Staff Title>> writes participant last name, first name and <<MMIS ID>> on file folder tab
  3. Before filing participant’s F/EA Start-Up package
  1. <<Staff Title>> places all F/EA Start-Up Package forms in folder.
    • This folder will be stored in alphabetical order by participant last name in the participant file cabinets after all paperwork has been filed
    •  These file cabinets are locked for HIPAA protection (See HIPAA Policy)
  1. The folder is placed in the box labeled “Paperwork” in the Customer Service Unit

 

Internal Controls: 

The internal controls used by F/EA to monitor this process establish responsibility, segregate duties, document procedures and ensure independent internal verification.

The methods of internal control utilized by F/EA to collect and process F/EA Start-Up Packages are:
1.            All systems are password protected
  •  Only staff authorized to perform certain duties are provided with password access to systems
2.            The New Weekly Consumer List is independently verified each week by the <<Staff Title>> to ensure paperwork is being processed timely
  • <<Staff Title>> initials and dates printed weekly participant list and stores in Payroll Department.
3.            An e-mail address is provided to State Department of Revenue (DOR) or equivalent during registration
  • If DOR cannot validate the registration, an e-mail is automatically sent to F/EA for resolution
4.            The Payroll Department submits a test to DOR monthly to verify that all employers liable for state withholding taxes are appropriately registered with DOR and that the reporting agent has accurate account numbers for consumers
5.            The Payroll Department provides an independent internal quality check of State Income Tax Account Number Registration Form when the employer is registered with DOR.
6.            The Payroll Department verifies that the reporting agent is correctly reporting an employer’s first payroll date by running a report for each employer who the reporting agent reports as liable for state withholding taxes
  • This report verifies the employer’s first payroll date
 

Apply for Employer Identification Number

Policy: 

Applying for an Employer Identification Number (EIN) from the IRS is the first step in registering the employer with tax agencies and authorizing the F/EA to file and pay taxes on the employer’s behalf. An Employer Identification Number is required on all other employer tax forms. As of 2013, the IRS now allows Fiscal/Employer Agents to apply for EINs online.

Procedure: 
 
  1. <<Staff Title>> (or assigned staff member) removes Form SS-4 from participant’s folder for all consumers for whom EINs have not yet been applied for
  2. <<Insert process for getting the EIN>>

If applying for EIN online:

  1. Visit the IRS EIN Application site and click "Apply Online Now" button
  2. Enter the information on the completed SS-4 for each step. For the question "What type of structure is applying for an EIN?", select "View Additional Types", then click Continue.
  3. Select "Household Employer" on the following screen.
  4. Finish the application process and save the CP 575 confirmation of EIN letter PDF file for recordkeeping.

If applying for EIN via fax:

  1. Put all F/EA Start-Up package forms for Forms SS-4 faxed to IRS in a folder
  2. Label this folder with the date that Forms SS-4 were faxed to the IRS
  3. Staple the SS-4 to the front of the folder
  4. Any EIN fax confirmation forms received are placed in the above folders
  5. Review folders daily to check for EIN confirmations received
  6. If an EIN has not been received within 7 days, call the IRS at 1-800-829-4933 If EIN confirmation is received over the phone, write the EIN on Form SS-4 and attach a sheet of paper to the SS-4 with the message “IRS gave EINs over the phone on DATE. Did not get confirmation from fax.”
  7. If EIN confirmation is received via fax, attach the fax confirmation sheet to the form SS-4
  8. Write the participant’s EIN on each form in the F/EA Start-Up package
  9. Enter participant’s EIN in Payroll System
 

 

Internal Controls: 

1. Forms SS-4 are quality checked prior to obtaining an EIN (see Collect and Process F/EA Start Up Packets)

2. After contact IRS to obtain EIN, the EIN or any issues with obtaining the EIN are recorded in the participant’s file

Register Employer with State Department of Revenue

Policy: 

A participant is registered with the State Department of Revenue (DOR) to allow the participant to deposit and file state income taxes that are withheld from the participant’s workers(s). Registration with DOR occurs after obtaining an EIN on the participant employer's behalf.

Procedure: 

 


 

Submit Form 2678, Employer Appointment of Agent, to the IRS

Policy: 

Filing a completed Form 2678 with the IRS authorizes F/EA to withhold, file and pay employment and Federal Withholding taxes on behalf of the participant. Form 2678 is not effective until the IRS approves F/EA to act on behalf of the participant employer. This approval is submitted to the F/EA with Notice LTR-1997C.

Because Form 2678 is not effective until the IRS approves the F/EA as an agent of the employer and therefore F/EA does not have joint liability for federal employer taxes until the IRS approves the Form 2678, F/EA includes language in each participant contract stating that F/EA is liable per the participant contract for employer taxes even before the IRS approves Form 2678.

Procedure: 

 
  1. <<Staff Title>> (or assigned staff member) separates Form 2678 from participant’s F/EA Start-Up package for those consumers for whom EINs were recently obtained
  2. Open Form 2678 letter template <<File Path>>
  • Collect up to 25 Forms 2678
  • Copy forms
  • Place copy of forms in consumers' folders and mail originals to IRS
  • No more than 25 Forms 2678 can be included in a single letter 
  • If more than 25 Forms 2678 will be submitted, prepare multiple letters
  • Review Forms 2678 for selected consumers
  • Ensure the participant’s EIN is written on Form 2678
  • Print completed 2678 Letter
  1. Mail 25 Forms 2678 and 2678 Letter to:

<<Insert address from IRS "Where to File" chart based on location of F/EA>>

  1. <<Staff Title>> opens Payroll System
  • In forms tracking module of payroll system, find participant by last name
  • Enter date Form 2678 mailed to IRS for each participant
  1. LTR-1997-C, notice from the IRS to approve F/EA to act as each participant’s agent should arrive by mail within 60 days
  • <<Staff Title>> opens Payroll System
  • In forms tracking module of payroll system
  • Find participant by last name
  • Enter date approval via LTR-1997-C received
  1. <<Staff Title>> reviews forms tracking module of payroll system weekly
  • Any consumers for whom 2678 approval has not been received within 75 days are followed-up on
  • <<Staff Title>> contacts IRS at 1-800-829-4933 and inquires about status of 2678 approval
  • Status is stored in participant’s Customer Service System
 

Submit Form 8821, Tax Information Authorization, to the IRS

Policy: 

Filing a completed Form 8821 with the IRS authorizes officers/staff of the F/EA to discuss employer tax matters on the participant’s behalf with the IRS. 8821 Appointee status does not authorize F/EA officers to represent the participant for the IRS.  Note that an executed Form 8821 is no longer required by the IRS for Fiscal/Employer Agent services, but it is a best practice to obtain executed Forms 8821 and file them with the IRS.

Procedure: 
  1. <<Staff Title>> (or assigned staff member) separates Form 8821 from participant’s F/EA Start-Up package for those consumers for whom EINs were recently obtained
  2. Open Form 8821 letter to IRS2 from <<File Path>>
  • Collect all not submitted Forms 8821
  • Copy Forms 8821
  • Store original in participant's folder
  • Mail copies to IRS
  • Unlike Form 2678, there is not a limit to how many Forms 8821 can be submitted to the IRS in a single mailing
  • Review Forms 8821 for selected consumers
  • Ensure the participant’s EIN is written on Form 8821

 3.   Mail Forms 8821, list of officers and 8821 Letter to:

Internal Revenue Service
Memphis Accounts Management Center
Stop 8423
5333 Getwell Road
Memphis, TN 38118

4.    <<Staff Title>> opens forms tracking module in Payroll System

  • Open tab labeled “8821”
  • Find participant by last name
  • Enter date Form 8821 mailed to IRS

5.   The IRS does not notify of 8821 approval

 

Internal Controls: 
  1. F/EA keeps a record of all forms not yet mailed to the IRS and reviews this record to ensure all forms get mailed to the IRS.
  2. When Forms 8821 are mailed to the IRS, it is recorded that they have been.
  3. Mailing records are periodically reviewed to ensure forms have not been missed.