IRS Proposes Guidance on Employee Consents to FICA Refund Claims, Requests Comments
Author: Rena Pirsos, XpertHR Legal Editor
February 19, 2015
The IRS has issued a proposed Revenue Procedure (Rev. Proc.) that provides employer guidance on employee consents used to support FICA (Social Security and Medicare) tax overpayment refund claims, excluding overpayments of Additional Medicare Tax. The guidance is being issued in response to questions regarding what information employers must provide in employee consents and whether employers may request, provide and retain employee consents in an electronic format.
Under Internal Revenue Code §6402 , before the IRS will process an employer's claim, the employer must make a reasonable attempt to protect an employee's interest in any employee share of a refund or adjustment from the IRS for the employer's overpayment of prior-year FICA tax withheld from the employee's pay. Generally, the employer must certify to the IRS that it has either:
- Repaid or reimbursed the employee; or
- Secured the employee's written consent to the allowance of the refund or credit.
This confirms that the employee has not made a separate claim for refund or credit, or had such a claim rejected, and will not make a future claim for refund or credit of the amount the employer overwithheld. In general, employers may request a written consent on paper or in an electronic format.
The proposed Rev. Proc. clarifies that, in addition to providing an employee's name, address and taxpayer identification number, a valid employee consent must identify the basis of the claim for refund and be signed by the employee under penalties of perjury. The proposed Rev. Proc. also details what constitutes "reasonable efforts" to secure an employee consent when an employer is unable to obtain one.
The guidelines permit, but do not require, employers to request, provide and retain employee consents in an electronic format, as an alternative to a paper format. The guidelines also allow employers to retain in electronic format requests and consents submitted on paper. Electronic system requirements are detailed in the proposed guidelines.
Finally, the guidelines specify that employers are not required to solicit new employee consents for those requested before the proposed Rev. Proc. is published as final in the Internal Revenue Bulletin. However, employers are permitted to rely on the proposed Rev. Proc. for employee consents requested before the date the final Rev. Proc. is published.
Interested employers may submit comments on the proposed Rev. Proc. on or before April 31, 2015. Comments may be submitted electronically, with "Notice 2015-15" in the subject line, to: Notice.Comments@irscounsel.treas.gov.