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Changes to payroll tax error liability for third-party payors

New rules clarify who is responsible for errors in payroll tax filings when using external companies. This aims to simplify processes for employers and tax-filing companies, and speed up tax refunds.
Key points
Third-party payroll tax payors can rely on employer information unless they know about an error.
Liability for tax filing errors is shared between the employer and the third-party payor, depending on who had knowledge of the error.
The IRS cannot delay tax credit processing or initiate audits solely because another third-party payor made an error.
Third-party payors must retain information that the IRS could require from the employer.
article Official text account_balance Process page
Introduced
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Additional Information
Print number: 119_HR_3223
Sponsor: Rep. Thompson, Mike [D-CA-4]
Process start date: 2025-05-06
Lustra uses Artificial Intelligence. Verify details in source documents.
Summarized by: gemini-2.5-flash-preview-05-20
Source data: api.congress.gov
AI work logs for this document launch

OFFICIAL LEGAL TITLE

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.

FREQUENTLY ASKED QUESTIONS

What is the official ID of this bill?

The official print number for this legislation is 119_HR_3223.

Which chamber initiated this legislation?

This legislation was initiated in the House of Representatives.

When did the legislative process begin?

The process officially started on 2025-05-06.

What are the main provisions?

Key points include:

  • Third-party payroll tax payors can rely on employer information unless they know about an error.
  • Liability for tax filing errors is shared between the employer and the third-party payor, depending on who had knowledge of the error.
  • The IRS cannot delay tax credit processing or initiate audits solely because another third-party payor made an error.
  • Third-party payors must retain information that the IRS could require from the employer.
What is the specific legal status?

The current status is Introduced.

Where can I read the full text of this legislation?

The full official text is available at: View full text

Who is the primary sponsor?

The primary sponsor is Rep. Thompson, Mike [D-CA-4].

What is the latest detailed status?

The latest detailed status is: Referred to the House Committee on Ways and Means.

Is this summary verified?

Yes. This content was analyzed by AI and verified by the Lustra Judge System on 2025-12-22.

CATEGORIES

Taxes Labor