What Is Form 2678: Employer/Payer Appointment of Agent?
Learn how Form 2678 allows an employer to officially authorize an agent for tax duties and what legal responsibilities this creates for both parties.
Form 2678, Employer/Payer Appointment of Agent, is a document filed with the Internal Revenue Service (IRS). This form allows an employer or payer to authorize an agent to handle specific employment tax responsibilities on their behalf. The primary function of this authorization is to permit the designated agent to file tax returns and make deposits and payments for certain federal taxes. These taxes include those related to Social Security and Medicare (FICA) and income tax withholding. The arrangement simplifies tax administration for the employer by outsourcing these duties to a specialized third party.
Understanding the Agent and Employer Roles
An agent authorized by Form 2678 is a payroll service provider or a similar professional entity equipped to manage tax compliance. The agent’s function is to perform the administrative tasks of tax reporting and payment for the employer. This includes filing employment tax returns such as Form 941, Employer’s QUARTERLY Federal Tax Return.
Even with an approved agent in place, the employer retains ultimate legal responsibility for ensuring that all employment taxes are paid correctly and on time. The IRS holds the employer, not the agent, liable for any failures to deposit or pay the required taxes. If the agent fails in their duties, the financial and legal consequences fall back on the employer, as the authorization granted by Form 2678 does not transfer this liability.
The scope of the agent’s authority is defined on the form itself. An employer can authorize an agent to handle taxes for all employees or only for a specific subset of employees or payments. For instance, a company might use an agent for its regular biweekly payroll but handle bonus payments internally. In such cases, the employer would continue to file separate returns using its own Employer Identification Number (EIN) for the payments not managed by the agent.
Information Required to Complete Form 2678
To properly complete Form 2678, both the employer and the designated agent must provide specific identifying information. The current version of the form should be obtained from the IRS website to ensure compliance, as prior versions will not be accepted.
For the employer, or payer, the required information includes their legal name, any trade name used for business, the mailing address, and their Employer Identification Number (EIN).
The employer must also specify which tax forms the agent is authorized to file, such as Form 941, Form 943, or Form 945. The employer must also specify whether the authorization applies to all employees and payments or only a designated portion. After completing their section, the employer signs and dates the form, then gives it to the agent to fill in their name, address, and EIN before signing.
Filing the Form and Post-Approval Process
Once both the employer and agent have completed and signed Form 2678, the form must be mailed to the IRS for approval. The correct mailing address can be found in the form’s instructions. The authorization becomes effective on the date shown in the approval letter from the IRS, which processes the form within 30 days of receipt.
After the IRS processes the application, it will send a written notification of approval to both the employer and the agent. Once the authorization is approved, the agent will begin filing the specified employment tax returns and making payments under the agent’s own EIN.
If the business relationship between the employer and the agent ends, the authorization must be revoked. To do this, the employer completes and signs the revocation section of Form 2678. The agent’s signature is not required for the revocation. An agent can also initiate the revocation by completing the form with their information and signing it.