IRS Issues Consent Guidance For Employee Refund Claims

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By Keith Hill

Guidance for employers on rules for employees requesting a credit or refund of overpaid taxes under the Federal Insurance Contributions Act and the Railroad Retirement Tax Act was issued March 20 by the Internal Revenue Service.

The guidance ( Revenue Procedure 2017-28) clarified basic requirements under tax code Section 6402 for an employee consent request as well as the requirement that an employee’s consent must include the reason for the refund claim. The consent must be signed by the employee under penalties of perjury. The employer must inform the employee of the purpose of the employee consent.

The revenue procedure adds a requirement that all requests for consent must indicate that an employee may not authorize the employer to claim a refund on the employee’s behalf for any overpaid additional Medicare taxes.

In 2015, the Internal Revenue Service asked for comments on a proposed revenue procedure that sought to clarify questions about what information was required in an employee consent and whether consent may be requested, furnished and retained electronically ( Notice 2015-15).

Employers must give an employee 45 days to respond to a consent request, but 21 days to respond to a second consent request. Employers may not receive refunds of the employer share of overpaid FICA tax without making reasonable efforts to protect employees’ interests, the IRS said.

To contact the reporter on this story: Keith Hill in Washington at khill@bna.com To contact the editor responsible for this story: Michael Trimarchi at mtrimarchi@bna.com

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