H.R.3223 - To amend the Internal Revenue Code of 1986 to establish procedures relating to the attribution of errors in the case of third party payors of payroll taxes, and for other purposes. (119th Congress)
Summary
H.R. 3223 aims to amend the Internal Revenue Code of 1986 by establishing procedures for attributing errors related to payroll taxes when third-party payors are involved. The bill seeks to clarify the responsibilities and liabilities of employers and third-party payors in cases where errors occur in payroll tax filings. It also includes provisions to protect employers from audits or delays due to errors made by third-party payors on behalf of other employers.
This legislation intends to provide a clearer framework for handling payroll tax errors, particularly when employers rely on third-party services. The bill defines 'constructive knowledge' and outlines record retention requirements for third-party payors.
Ultimately, the goal is to streamline the process, reduce uncertainty, and ensure fair treatment for both employers and third-party payors in the context of payroll tax compliance.
Expected Effects
If enacted, H.R. 3223 would change how payroll tax errors are handled when third-party payors are involved. It would likely lead to more clearly defined responsibilities for employers and third-party payors.
Employers could benefit from reduced liability in cases where they are unaware of errors made by third-party payors. Third-party payors would need to exercise due diligence and maintain accurate records to avoid liability.
The IRS would need to adapt its procedures to accommodate the new rules for attributing errors and handling audits related to third-party payors.
Potential Benefits
- Clarifies liability for payroll tax errors between employers and third-party payors.
- Protects employers from penalties for errors they were unaware of.
- Provides a framework for third-party payors to rely on employer certifications.
- Prevents the IRS from delaying payroll tax credits or initiating audits solely based on another employer's error.
- Streamlines the process of handling payroll tax errors, potentially reducing administrative burdens.
Most Benefited Areas:
Potential Disadvantages
- May increase compliance costs for third-party payors due to enhanced due diligence requirements.
- Could create disputes between employers and third-party payors regarding 'constructive knowledge' of errors.
- The definition of 'constructive knowledge' may be subject to interpretation and litigation.
- The new rules may add complexity to the payroll tax system.
- Potential for increased scrutiny of third-party payors by the IRS.
Constitutional Alignment
The bill appears to align with the US Constitution, particularly Article I, Section 8, which grants Congress the power to lay and collect taxes. By establishing procedures for handling payroll tax errors, the bill aims to ensure the efficient and accurate collection of revenue. The bill does not appear to infringe upon any individual liberties or rights protected by the Bill of Rights.
The bill's focus on clarifying responsibilities and liabilities related to payroll taxes is consistent with the principle of due process, as it seeks to provide fair and predictable rules for both employers and third-party payors. There is no obvious conflict with any specific constitutional provision.
However, the practical application of the 'constructive knowledge' standard could potentially raise due process concerns if it is applied in an arbitrary or unfair manner. This would depend on how the IRS interprets and enforces the new rules.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).