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F MS Me mbe r F or um: E IN Q&A Mollie Murphy, FMS Lead - PowerPoint PPT Presentation

Mar 29, 2024 •5 likes •345 views

F MS Me mbe r F or um: E IN Q&A Mollie Murphy, FMS Lead Kate Murray, Policy Analyst We lc ome E IN Applic ation Issue s Who ne e ds an E IN? Per Revenue Procedure 2013-39, all Home Care Service Recipient (HCSR) employers,

  1. F MS Me mbe r F or um: E IN Q&A Mollie Murphy, FMS Lead Kate Murray, Policy Analyst

  2. We lc ome

  3. E IN Applic ation Issue s

  4. Who ne e ds an E IN?  Per Revenue Procedure 2013-39, all Home Care Service Recipient (HCSR) employers, including those served by government agents, must have an EIN  Prior to serving participants, agents can (but don’t have to) obtain a separate EIN for purposes of filing and depositing the following federal taxes:  Federal Income Tax  FICA (Social Security/Medicare)  FUTA

  5. Can we obtain E INs online , or is that still not allowe d?  Yes, you can!  The IRS made a long-awaited announcement in 2013 stating that EINs could be obtained on behalf of HCSRs online  NRCPDS developed a procedure that the IRS approved for how to do this  We will share this with members after the call

  6. If a par tic ipant has a guar dian or r e pr e se ntative , who should hold the E IN?  The IRS has recently confirmed that whenever possible, the HCSR should be the employer  It’s still allowable for the HCSR’s representative to be the employer, but not preferred by the IRS  Mollie would advise that the person acting in the role as the employer should generally also be the EIN holder

  7. Who c an sign for a par tic ipant?  A court-appointed guardian  If a court-appointed guardian signs, attach official guardianship papers with the SS-4  Someone with IRS authorization (attained via executing Form 2848, Power of Attorney and Declaration of Representative  A parent of a minor child

  8. What if no one is author ize d to sign for a par tic ipant?  The IRS also accepts an “X” and hand-over-hand signatures as valid  An “X” should be witnessed  Witness signatures can generally be done on the same page

  9. Can minor s hold E INs?  Yes, the IRS allows minors to hold EINs  If an EIN is obtained on the minor’s behalf, the IRS requires Form SS-4 to be completed in the minor’s name with the minor’s information, with one exception:  On the bottom of Form SS-4, the following should be written in:  Parent/Guardian of Minor’s SSN: XXX-XX-XXXX

  10. Can the E IN holde r be a paid e mploye e ?  No —if the person who is directing the services also provides the services, that makes that person self- employed from the viewpoint of the IRS  By design, F/EAs are not equipped to handle these situations  This scenario also creates a conflict of interest, which raises red flags for CMS  For example, CMS says that representatives cannot also be paid employees

  11. Is it tr ue the IRS will only issue one E IN pe r r e sponsible par ty pe r day?  Generally, yes, but the IRS has a special exception in place for F/EAs obtaining EINs on behalf of HCSRs  If you apply for EINs over the phone and encounter difficulties with IRS agents erroneously enforcing the one-EIN-per-day policy, advise the IRS agent that you have received guidance from IRS HCSR experts and IRS Counsel on this issue and that the limit applies per EIN holder or responsible party rather than per Third Party Designee  A Third Party Designee is not a responsible party

  12. A pa rtic ipa nt owe s de linque nt ta xe s a nd the IRS won’t issue a n E IN. Wha t do I do?  The IRS is within its authority to refuse issuing EINs for this reason  As of February 2015, the participant should pursue other options outside using an F/EA  Or, the participant should clear up his/her delinquent tax so the EIN can be obtained

  13. A pa rtic ipa nt ha d a na me c ha ng e tha t isn’t showing up in the IRS syste m ye t a nd now the y won’t issue a n E IN. Wha t do I do?  The IRS will want a letter from the Social Security Administration as proof of name change  A copy of a Social Security card will not be considered sufficient evidence of a name change  The participant will either need to get a letter of confirmation from the SSA or complete the paperwork under their old name and then change the name later with the IRS

  14. Can we pay wage s for hour s wor ke d be for e the par tic ipant had an E IN?  It’s fine to pay for time worked from before you had the EIN  The check date will be after you had the EIN  Taxes are associated with when you pay the employee, not when the hours were worked  The key thing is to have the EIN in place at the time you are cutting the check

  15. How should you handle F or m 941 if you ar e paying e mploye e s on a par tic ipant’s be half but c an’t obtain an E IN for the par tic ipant?  Two approaches can be used:  You can file with “applied for” on the Schedule R, OR:  You can use a dummy EIN consisting of eight zeros and a digit, e.g. 00-000001  When you get the EIN, use that EIN going forward  If the IRS inquires about wages & taxes associated with that account, include in your explanation that at one point there was a 941 filed without the real EIN when the EIN was applied for  Include that quarter’s taxes & wages in your explanation

  16. Can an undoc ume nte d pe r son obtain an E IN?  Any person with an SSN or ITIN (Individual Taxpayer Identification Number, a tax processing number available for certain nonresidents and resident aliens) who meets IRS criteria can obtain an EIN  Having an ITIN does not give a person immigrant status  If a person has no SSN and no ITIN, they will not be eligible to receive an EIN

  17. Par tic ipants with Pr e - E xisting E INs

  18. What happe ns if the par tic ipant alr e ady has an E IN?  If the participant’s EIN has been closed, you can start using it again  If you file Form SS-4, the IRS will give you the old EIN number and won’t issue a new one  This SS-4 should be sufficient to “reboot” the participant’s EIN  Then, simply file Forms 2678 and 8821 using participant’s old EIN  Filing Form 2678 is sufficient to inform the IRS of the participant’s HCSR status

  19. What if the par tic ipant was not de signate d as “HCSR” whe n the y r e c e ive d an E IN?  The EIN is still usable as is, even if the participant received an EIN for purposes other than being an HCSR  No need to file any special paperwork for such participants  Executing Form 2678, which grants the agent authority to act on behalf of the participant for federal tax purposes, is sufficient to signify HCSR status

  20. What if the par tic ipant was not de signate d as “HCSR” whe n the y r e c e ive d an E IN?  Even if the EIN is still in use as part of an active business, using the EIN for HCSR purposes will not cause the agent to take on liability  The agent will only be liable for wages and taxes that are reported using a combination of the agent’s EIN and the participant’s EIN  The IRS knows and expects that EINs will be reused, and there is nothing wrong with doing so

  21. A par tic ipant got an E IN awhile ago but no longe r knows the numbe r . What do I do?  The IRS only gives out one EIN per person per lifetime  It is acceptable to reuse an EIN, even if it was acquired for purposes other than being an HCSR  Have the consumer complete Form SS-4 that lists you and two other people as the Third Party Designees  Do not list your organization; it has to be actual people  They should also complete Form 8821

  22. A par tic ipant got an E IN awhile ago but no longe r knows the numbe r . What do I do? (c ont.)  Then, apply for an EIN with the SS-4 like you always would  If obtaining the EIN online, the online system will tell you you have to call the IRS  When you call, they will probably tell you an EIN has already been issued  Indicate to the agent that the EIN holder didn't know the number  At this point the IRS should give you the old number

  23. Is the r e any way to c he c k whe the r the par tic ipant has an E IN be for e applying for one if the par tic ipant doe sn’t know?  No, unless either the original IRS CP 575 letter (Confirmation of EIN) or 147C letter (Taxpayer Identification Number Verification) is available for reference  If no letter from the IRS is available, you will need to apply for an EIN for that participant

  24. A par tic ipant alr e ady has an E IN be ing use d for a se par ate busine ss. What do I do?  The IRS recently confirmed it will NOT issue a second EIN  Use the sole proprietor’s existing EIN associated with the agent’s EIN for filing  The IRS processes HCSR wages and taxes via the combination of participant EIN + agent EIN  The agent will not take on liability for the participant’s business  If the participant is using an existing state unemployment account number, you may have to get an additional unemployment account number or coordinate deposits/filings with the participant

  25. Can the par tic ipant just handle the ir ac tive busine ss and Me dic aid wage s unde r one E IN?  Yes—the IRS recently confirmed that this is possible  No need to “set up” the participant as an HCSR if they already obtained an EIN  The IRS knows the participant is an HCSR when Form 2678 is filed and a Section 3504 agent is authorized  All wages and taxes related to an HCSR are viewed as a combination of the participant’s EIN and the agent’s EIN

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