1.Regulation of payroll tax
deposit agents
(a)Chapter 77 of the Internal Revenue Code of 1986 (relating
to miscellaneous provisions) is amended by adding at the end the following new
section:
7529.Payroll tax
deposit agents
(a)
(1)The Secretary shall establish a system to require the
initial registration and the annual renewal of the registration of persons
seeking to act as payroll tax deposit agents authorized to make Federal
employment tax deposits on behalf of employer taxpayers. Such system shall
also—
(A)establish a
registration and renewal fee for each payroll tax deposit agent in an amount
not to exceed $100,
(B)provide the
payroll tax deposit agent the option of either submitting a bond as specified
in subsection (b) or submitting to an annual audit as specified in subsection
(c),
(C)require such
disclosures as are specified in subsection (d),
(D)require that such
agent ensure the direct notification of the employer by any Federal employment
tax authority (and State employment tax authority if such agent contracts to
make State employment tax deposits for the employer) regarding the nonpayment
of such employment taxes, and
(E)provide penalties
for unregistered persons acting as payroll tax deposit agents with respect to
Federal tax deposits in an amount not to exceed $10,000 for each 90 days of
noncompliance.
(2)Definition of
payroll tax deposit agentFor purposes of this section, the term
payroll tax deposit agent means any person which provides payroll
processing or tax filing and deposit services to 1 or more employers (other
than an employer acting on its own behalf) if such person has the contractual
authority to access such employer’s funds for the purpose of making employment
tax deposits. Such term shall not include any person which only transfers such
funds (regardless if such person has the authority to determine the amount of
such transfer) and does not have the authority to impound such funds for such
purpose.
(3)For purposes of this section, the term employment
tax includes unemployment insurance contributions.
(b)
(1)If a payroll tax deposit agent elects to submit a bond
under subsection (a)(1)(B), the amount of such bond shall be not less than
$50,000 nor more than $500,000, and shall be determined with respect to each
payroll tax deposit agent under regulations prescribed by the Secretary.
(2)Any
bond or security furnished pursuant to this section shall be in such form and
with such surety or sureties as may be prescribed by regulations issued
pursuant to section 7101.
(c)If a payroll tax deposit agent elects to submit to an
annual audit under subsection (b)(1)(B), such audit shall be performed by an
independent third party and shall be based on such audit principles as the
Secretary determines necessary, including the following:
(1)The escrow
account of the payroll tax deposit agent in which such agent holds its
employers’ taxes is balanced each year to the total of the quarterly
reconciliation statements.
(2)The escrow
account funds of the payroll tax deposit agent are not commingled with such
agent's operating funds.
(3)No evidence that
the payroll tax deposit agent used any of the funds in such agent's escrow
account to pay such agent's own operating costs.
(4)Receipt evidence
that such agent paid the required employment taxes on behalf of the employers
to the proper government employment tax authority.
(d)The
Secretary shall require payroll tax deposit agents to disclose to each
potential and existing client prior to or at the time of contracting for
payroll services—
(1)the client’s
continuing liability for payment of all Federal and State employment taxes
notwithstanding any contractual relationship with a payroll tax deposit
agent,
(2)the mechanisms
available to the client to verify the amount and date of payment of all tax
deposits made by the payroll tax deposit agent on behalf of such client,
including the Internet address, postal address, and telephone number of each
Federal and State employment tax authority related to such deposits, and
(3)such other
information that the Secretary determines is necessary or appropriate to assist
employers in the selection and use of payroll tax deposit agents.
(e)Only persons registered under this section
may—
(1)make Federal tax
deposits on behalf of an employer,
(2)sign and file
Federal employment tax returns on behalf of a taxpayer, and
(3)have access to
confidential tax information relating to such employer.
(f)The
Secretary shall prescribe such regulations as may be necessary to carry out the
provisions of this
section.
.
(b)Payroll tax
deposit agents subject to penalty for failure To collect and pay over tax, or
attempt To evade or defeat tax
(1)Section 6672(a) of the Internal Revenue Code of 1986 is
amended by inserting , including any payroll tax deposit agent (as
defined in section 7529(a)(2)),
after Any person
.
(2)The
amendment made by paragraph (1) shall not be construed to create any inference
with respect to the interpretation of section 6672 of the Internal Revenue Code
of 1986 as such section was in effect on the day before the date of the
enactment of this Act.
(c)The table of sections for such chapter 77 is amended by
adding at the end the following new item:
Sec. 7529. Payroll tax deposit
agents.
.
(d)
(1)Except as provided in paragraph (2), the amendments made
by this section shall take effect on the date of the enactment of this
Act.
(2)The
amendments made by subsection (b) shall apply to failures occurring after the
date of the enactment of this Act.