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Transfer Consumers

Submit Consumer Records, Worker/Vendor Records, Tax Documents and Individual Budget Records to New F/EA

Policy: 

 

When a participant transfers to a new Fiscal/Employer Agent (F/EA), F/EA must provide the new F/EA with all Consumer Records, Worker/Vendor Records, Tax Documents and Individual Budget Records to New F/EA and other documentation relating to the participant within <<10 days>> of notification that the participant is transferring.
 
Forms and documentation are collected from the participant’s electronic files. All forms and documentation are submitted to the F/EA to which the participant is transferring.
 
The Individual Budget balance is provided to the F/EA to which the participant is transferring. An Individual Budget balance report showing all allocation amounts issued for the participant, the start and end date of the budget, the approved amount, the spent amount and the amount remaining is produced, verified and submitted to the new F/EA.
Procedure: 

<<Insert Process to Collect, Verify and Transfer Applicable Records>>

Internal Controls: 

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

  1. Per Policy and Procedures, documents are scanned to a participant’s scan folder and stored for a minimum of 7 years per File Retention Policy.
    • These electronic files are collected, printed and submitted to the new F/EA when a participant transfers
    • The scan folder is moved to a transferred consumers location on the network so that it is not confused with active participant folders
  2. Consumer’s records are printed and submitted to the transferring F/EA.

Manage Taxes for Transferring Consumers

Policy: 

When a participant transfers from F/EA to a new Fiscal/Employer Agent (F/EA), F/EA submits certain tax information to the new F/EA within 10 days of the participant transferring to the new F/EA. 

F/EA submits a final Payroll Summary to the new F/EA for transfers that occur within a calendar year and for those that occur at calendar year end.
 
For transfers that occur at calendar year end, special handling of Social Security and Medicare taxes (FICA), Federal Withholding Tax (FWT) and Federal Unemployment Tax (FUTA) is not required. For transfers that occur within a calendar year, (but not within a quarter) however, special procedures apply.   Consumers are never permitted to transfer from one F/EA to another within a calendar quarter.
 
The transition for state income tax unemployment tax can happen in a straightforward manner since generally these taxes are filed and paid under the participant employers’ separate EIN.  However, the current F/EA must make sure to retire any state Power of Attorney or Authorization it might have for the particular individual/representative-employer once all state taxes are filed and paid for the period in which the current F/EA served the employer (See Retire and Revoke Account Numbers and Authorization).  Upon transitioning from an old F/EA to new F/EA, the old F/EA must provide the new F/EA with reports showing all State Income Tax and State Unemployment Tax liabilities and deposits to date for the calendar year.
 
The process to manage Federal Employment taxes for an employer who transitions between F/EAs in a calendar year is tenuous and is described in detail in the below procedure.
 
Procedure: 

Process to Transfer State Tax Data when a Consumer Transfers from one F/EA to Another within a Calendar Year

  1. When F/EA is notified that a participant is transferring to another F/EA within a calendar year <<Staff Title>> records that the participant is transferring and the effective date
  2. <<Staff Title>> produces a Tax Report from the Payroll System
    • Report shows paid and yet unpaid taxes due to state tax agencies on the participant’s behalf
    • <<Staff Title>> verifies the report for mathematical accuracy
  3. <<Staff Title>> submits State Tax report to new F/EA for the participant
  4. New F/EA is responsible for filing State Income and Unemployment Taxes on behalf of participant for all future quarters.

Process to Transfer Federal Tax Data when a Consumer Transfers from one F/EA to Another within a Calendar Year

1.    F/EA 1 makes deposits to IRS for any FICA withheld throughout year.

2.    For any employer-employer who transfers from F/EA 1, F/EA 1 provides F/EA 2 with all information on wages paid to the employer’s workers(s) and federal employer and workers FICA taxes withheld and deposited.

  • At the time of transfer, F/EA 1 DOES NOT refund any FICA to transferring employer-employers and their applicable workers who did not earn wages equal to or in excess of the FICA wage threshold nor does the F/EA issue IRS Forms W-2 for the support service workers at this time. 

3.    F/EA 2 records wages paid to the employer-employer’s workers(s) by F/EA 1.  F/EA 2 will include wages paid by F/EA 1 when determining if a employer-employer and his/her workers are eligible for a refund of over collected FICA at the end of the calendar tax year.

  • F/EA 2 takes particular note of any employer-employer’s workers who have not yet been paid wages equal to or in excess of the FICA wage threshold.  These employer-employers and workers may qualify for a refund of over collected FICA if one or more workers do not earn wages equal to or in excess of the FICA wage threshold after F/EA 2 finishes paying wages to the applicable workers on behalf of the employer-employer at the end of the calendar tax year.

4.    By November 1st each year, F/EA 2 provides F/EA 1 with a report of wages it has paid and taxes it has deposited for all transferred employer-employers and their workers.

  • Based on what each F/EA has paid transferred employer-employers’ workers and the information each F/EA receives from the other about what the wages they have paid to these workers, F/EA 1 and 2 determine which employer-employers and workers are likely to be eligible to receive a refund of over collected FICA for the particular calendar tax year.
  • Each F/EA verifies each applicable workers’s address using the standard address verification process.
  • At year end, refunds of over collected FICA (employer and workers portions) are issued only to eligible employer-employers (most likely the state) and workers (i.e., workers who have been paid wages less than FICA wage threshold) and whose addresses has been verified.

5.    After the last payroll in the calendar tax year, F/EA 2 determines if any additional workers transferred from F/EA 1 have been paid wages by F/EA 1 and 2 equal to or in excess of the FICA wage threshold for that calendar tax year or not.

  • F/EA 2 provides wage information for applicable workers to F/EA 1.

6.    For each workers that has not earned wages equal to or in excess of the FICA wage threshold in the calendar tax year for services provided to their employer-employer, both F/EA 1 and 2 determine the total employer and workers share of FICA that was over-collected by each F/EA and that is to be refunded by each F/EA.

  • Both F/EAs deduct the amount of over collected FICA that is to be refunded from one or more final federal tax deposit(s) in the last quarter of the calendar tax year.
  • If the deposit(s) in the last quarter of the calendar tax year are not sufficiently large enough to cover the total amount of over collected FICA to be refunded, the F/EA may do the following:
  • The F/EA reports balance of the over collected FICA amount not deducted from the last deposit(s), on Box 15 of the 4th quarter IRS Form 941 for the calendar tax year and checks the box for “Send a Refund.” The 4th quarter IRS Form 941 is submitted to the IRS on or before January 31st.  The F/EA usually will receive the over collected FICA funds for distribution on or after April 15th. 
  • The F/EA should process all FICA refund checks for the workers portion of FICA to the applicable workers prior to issuing IRS Forms W-2.
  • The State may require the F/EA to refund the employer portion of FICA either to the employer-employer or the State (the majority of states currently choose to receive these funds).    If the F/EA can not obtain sufficient funds from withholding FICA from the last deposit(s) to cover the over collected FICA amount, the F/EA should refund the workers’ for over collected FICA first and then refund either the State or employer-employers for the employer portion of over collected FICA once the F/EA receives the FICA refund from the IRS, which is usually on or after April 15th.  The State must determine whether the State or the employer-employer will receive the employer portion of over collected FICA, the procedure for doing so (see footnote 3) and inform the F/EA.

7.    If the F/EA will operate as an agent in the next calendar year, it has another option for obtaining a refund of over collected FICA that was not deducted from the deposit(s) in the last quarter of the calendar tax year.  The F/EA can report the balance of over collected FICA (not obtained from deposit(s) in the last quarter of the calendar tax year) in Box 15 and check the box for “Apply to Next Return” on the 4th quarter IRS Form 941 submitted to the IRS on or before January 31st.

  • Then the F/EA deducts the amount included in Box 15 from a deposit made for wages paid in the first quarter of the next calendar year.
  • On the 1st quarter IRS Form 941 filed by the F/EA on or before April 30th, the F/EA includes that amount in the amount in Box 11 on the Form.

Once the balance of over collected FICA is received by the F/EA, the F/EA then issues the refund of over collected FICA to the applicable employer-employer or State based on the instructions provided by the State self-directed program agency.

8.    There may be a case where all IRS Forms 941 have been filed and all FICA has been deposited for employer-employers and workers for a particular calendar tax year, but over collected FICA has not been withheld for refunding.  In this case an F/EA must request a refund from the IRS of over collected FICA so it can refund FICA to eligible employer-employer(s) and support service workers.  To obtain a refund of over collected FICA, the F/EA can file an IRS Form 941X per IRS Form instructions.

  • Over-collected FICA reported on an IRS Form 941X will be sent to the F/EA by the IRS on or after April 15th.
  • It should be noted that when any adjustment is made to an IRS Form 941 after the form has been filed with the IRS (due to over collected FICA or other reasons), the F/EA must complete an IRS Form 941X for that quarter, showing any adjustments or corrections on the IRS Form 941X.

9.  Any FICA refund checks that are returned to the F/EA should be reported
per the state’s unclaimed or abandoned property law.

10.    When a workers does not receive wages equal to or in excess of the FICA wage threshold, they still can receive an IRS Form W-2.  In the case where a employer-employer transfers F/EA in a calendar tax year, the support service workers will receive an IRS Form W-2 from F/EA 1 and F/EA 2.  Both F/EAs should report FICA wages paid to the workers on the IRS Form W-2 they prepare and issue, completing the rest of the Form per IRS instructions for agents. 

However, it should be noted that currently the Social Security Administration (SSA) will not allow an F/EA to electronically file an IRS Form W-2 if the Form reports FICA wages greater than zero but below the FICA wage threshold.  However, F/EAs that file 250 or more Forms W-2 must file electronically or be penalized $50 per Form filed in hardcopy.  Discussions currently are underway with IRS to see if SSA will adjust their Form W-2 e-filing rules so as to allow F/EAs to electronically file IRS Forms W-2 that report FICA wages that are greater than zero but below the FICA wage threshold.
 

Internal Controls: 

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

  1. <<Staff Title>> reviews tax report received from reporting agent for mathematical accuracy.
  2. A control document is used to track each transfer requirement for a participant and the dates that each transfer requirement was met.