Question #64:
When should the name and EIN of a third-party payer be included on Form 7200?
Found under the M. Special Issues for Employers: Use of Third-Party Payers section of the Employee Retention Credit (ERC) IRS Notice 2021-20 with updated guidance to help business owners follow the current ERC rules.
The answer to question #64, When should the name and EIN of a third-party payer be included on Form 7200?, can be found below.
ERC IRS Notice 2021-20 Question #64:
M. Special Issues for Employers: Use of Third-Party Payers
When should the name and EIN of a third-party payer be included on Form 7200?
Common law employers who file Form 7200 to claim an advance payment of credits are required to include on the form the name and EIN of the third- party payer they use to file their federal employment tax returns (such as the Form 941) if the third-party payer uses its own EIN on the federal employment tax returns. This will ensure advance payment of the credits received by the common law employer is properly reconciled to the federal employment tax return filed by the third-party payer for the calendar quarter for which the advance payment of the credits is received.
To help expedite and ensure proper processing of Form 7200 and reconciliation of advance payment of the credits to the federal employment tax return for the calendar quarter, only those third-party payers who will file a federal employment tax return on behalf of a common law employer using the third-party payer’s name and EIN should be listed on the Form 7200. Typically, CPEOs, PEOs, and other 3504 agents fall into this category of third-party payers.
If a third-party payer will file the federal employment tax return on a common law employer’s behalf using the common law employer’s name and EIN and not the name and EIN of the third-party payer, the common law employer should not include the name and EIN of the third-party payer on the Form 7200. Typically, reporting agents and payroll service providers fall into this category of third-party payers.
For more information about the Employee Retention Credit (ERC) IRS Notice 2021-20, visit the Internal Revenue Service (IRS) Department of the Treasury, official IRS.gov tax website.
Conclusion and Summary on When should the name and EIN of a third-party payer be included on Form 7200? – #64 ERC IRS Notice 2021-20
The answer to Question #64: “When should the name and EIN of a third-party payer be included on Form 7200?” was answered in detail above. It was found under section “M. Special Issues for Employers: Use of Third-Party Payers” in IRS Notice 2021-20.
Leave a comment below if you have further questions on the Employee Retention Credit (ERC) or for clarifications on When should the name and EIN of a third-party payer be included on Form 7200?
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