IRS Releases Guidance on Refunds of Overcollected Social Security and Medicare Taxes

The Internal Revenue Service has released a notice that provides guidance to employers on the requirements for employee consents used by an employer to support a claim for refund of over-collected Social Security tax and Medicare tax.

Notice 2015-15, which contains a proposed revenue procedure, aims to clarify the basic requirements for a request for a consent, and for the employee consent itself. It permits a consent to be requested, furnished and retained in an electronic format as an alternative to a paper format. The notice also contains guidance concerning what constitutes “reasonable efforts” if a consent is not secured to permit the employer to claim a refund of the employer share of over-collected Social Security tax and Medicare tax. 

The IRS noted that questions have arisen concerning what information must be provided in an employee consent and whether an employee consent may be requested, furnished, and retained in an electronic format. The proposed revenue procedure clarifies that, in addition to providing the relevant 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 revenue procedure is not intended to require employers to solicit new employee consents for those requested prior to the date of publication of the final revenue procedure in the Internal Revenue Bulletin. However, an employer may rely on the proposed revenue procedure for employee consents requested before the date that the final revenue procedure is published, the IRS noted.

The IRS is asking for comments to be sent by May 31 about the specific requirements for a request for a consent and for the employee consent itself, the requirements for electronic employee consents, and the steps that would constitute “reasonable efforts” to obtain an employee consent.