A reporting agent is any entity authorized to perform tax-related deposits and filings on behalf of a taxpayer or client under Internal Revenue Service Revenue Procedure 2012-32, said Scott Mezistrano, CPP, national account manager of relationship management and marketing for IRS at a pre-Congress workshop May 7 at  the 2013 American Payroll Association Congress in Grapevine, Texas.  

Reporting agents must have been designated by the client using IRS Form 8655, Reporting Agent Authorization. Reporting agents are distinguished from return preparers in that reporting agents perform a limited set of filing and taxpaying functions, while return preparers might advise clients on the content of their returns and need a Preparer Tax Identification Number, said Tony Tullo, director of government affairs at Automatic  Data Processing Inc.

As a result of Rev. Proc. 2012-32, payroll service providers like ADP are required to file all payments electronically and must notify clients in writing at least quarterly that the authorization does not eliminate the client’s liability for the failure to file employment tax returns or remit employment taxes, Mezistrano said. Employers can delegate certain tasks, but not the responsibility, he said.

Once an authorization is submitted to IRS, clients can add to the list of approved functions by submitting another Form 8655 with only the additional items selected because there is no need to repeat the earlier authorizations, Mezistrano said.  Because of the limited authority granted, reporting agents cannot represent clients in requesting penalty abatements, and cannot take a position on a tax matter on behalf of a client. Only return preparers, certified public accountants, enrolled agents, and attorneys are allowed to represent clients in that manner, he said.

Reporting agents can provide information to IRS and the client to aid in resolving tax liability issues using specific wording that requests the parties to consider particular information, Tullo said.

 IRS allows the use of a substitute form to meet some state and local requirements for designating a reporting agent, Tullo said.

When a client terminates an authorization under Form 8655 because it is switching service providers, the entire Form 8655 should not be revoked, Mezistrano said. This is because filings for the period the service provider was contracted may still need to be examined. By revoking the authorization, the former service provider will not be able to adjust or address issues that occurred under its watch, Tullo said.

IRS will send a list to reporting agents showing the employer identification numbers  of clients that have had a new 8655 submitted by a different reporting agent. Reporting agents should use this to ensure no further deposits filings are submitted for tax periods during which the reporting agent no longer has authority, Tullo said.

IRS’s modernized efile program is being rolled out first for employment tax returns and the reporting agent community in 2014, Mezistrano said. The plan is to have migrated all versions of Form 94X to the modernized program by the start of 2015, he said. The transmission protocols are different, and new data file schemas are being developed for the processor community, with drafts of the 941 schema possibly available later in May, he said, adding that final schemas are to be available in June.

Tullo noted that a pilot electronic signature program for Form 8655 is underway as a potential second alternative to the client e-signature method available in IRS Publication 1474.

IRS also has developed a program in which certain tax notices specific to clients can be emailed to reporting agents, saving paper, printing, and mailing costs, Mezistrano said.  The system was designed and is being built for reporting agents and, at this stage, rollout of this system to general employers is not contemplated, Tullo said.

Additional information on reporting-agent issues is available at the IRS website, Mezistrano said.

By Michael Baer