Rev. Proc. 84-33

SECTION 1. PURPOSE

The purpose of this revenue procedure is to provide an optional method for an authorized transfer/paying agent to report and deposit amounts withheld for payers under the statutory provisions of backup withholding.

SEC. 2. BACKGROUND

.01 Section 31.3504-1(a) of the Employment Tax Regulations provides that applications for authorization to act as agent with respect to wages under Chapter 24 of the Code shall be filed with the district director or director of a service center with whom the agent, on approval of the application, will file returns.

.02 Rev. Proc. 70-6, 1970-1 C.B. 420, describes the procedure to be followed in applying for authorization to act as agent for employers under section 3504 of the Code for purposes of chapters 21, 22, 24 and 25 with respect to acts required of employers under the federal employment tax statutes.

.03 Section 3406 of the Internal Revenue Code provides that under certain circumstances, payers of payments reportable under sections 6041, 6041A, 6042, 6044, 6045, 6049, and 6050A shall deduct and withhold tax of 20 percent of the payments. Section 3406(a) defines the four conditions that trigger the backup withholding requirements.

.04 Section 3406(h)(10) of the Code provides that for purposes of Chapter 24, payments which are subject to backup withholding under section 3406 shall be treated as if they were wages paid by an employer to an employee and any amounts withheld shall be treated as if they were income tax withholding under section 3402.

SEC. 3. SCOPE AND OBJECTIVE

.01 Current rules provide, in sections 35a.9999-1, 2 and 3 of the Temporary Employment Tax Regulations under the Interest and Dividend Tax Compliance Act of 1983, that the person who is required by the applicable Code sections to file the information returns is the person (payer) required to do the backup withholding. Thus, a transfer/paying agent who actually makes the reportable payments and withholds on behalf of such payers must deposit the withheld amounts separately for each payer using that payer's taxpayer identification number (TIN) and must notify each payer of the withholding and deposits made on the payer's behalf. The payer, in turn, is required to report the backup withholding on the same Form 941, Employer's Quarterly Federal Tax Return, or Form 941 E, Quarterly Return of Withheld Federal Income Tax, filed by the payer with respect to its own employees.

.02 However, in lieu of the provision in 3.01 above, a transfer/paying agent may report and deposit backup withholding amounts for payers under the agent's TIN if the agent complies with the procedures listed below.

SEC. 4. APPLICATION

.01 A transfer/paying agent making the election under 3.02 above must take the actions specified below:

.02 The agent must apply for authorization, in writing, to the Director of the Internal Revenue Service Center with whom the agent intends to file the returns involved.

(a) The application must be accompanied by a Form 2678, Employer Appointment of Agent under Section 3504, completed by each payer for whom the agent is to act. (Form 2678 is available at any Internal Revenue Service district or local office.) Even if the agent has already filed a Form 2678 for another purpose, a new Form 2678 from each payer is required under this optional procedure.

(b) The agent must enter "BACKUP WITHHOLDING" in red above the service center address area of Form 2678. The name and TIN of both the payer and the agent must be entered on the form. See Exhibit 1 for an example of a properly completed Form 2678. If the agent does not have a TIN, a properly completed Form SS 4, Application for Employer Identification Number must accompany the application for authorization.

(c) One application for authorization may be filed to cover more than one payer as long as a properly completed Form 2678 from each payer is attached.

(d) The application will be approved by letter to the agent from the service center director. Approval is effective as of the date of the letter.

(3) If the agreement to act as an agent is terminated for any payer(s) for whom a Form 2678 was filed, the agent must revoke the Form 2678 by notifying the Director of the Internal Revenue Service Center, by sending a letter with the name(s) of the payer(s) to be revoked and a statement that the originally filed Form 2678 is no longer in effect.

.03 Filing of Tax Returns

(a) The agent must file a single tax return (Form 941) for each tax period, regardless of the number of payers for whom the agent is acting.

(b) The return must include the backup withholding amounts for all liable payers as well as for the agent, if the agent is liable for any on its own account.

(c) The agent's name and TIN must be used on the tax return as well as on any Federal Tax Deposit (FTD) coupons.

(d) See Rev. Proc. 84-11, 1984-8 I.R.B. 23 for instructions on filing Form 941 on magnetic media.

.04 Filing of Information Returns and Transmittals-If the agent submits a Form 2678 electing this option, all information returns and transmittals must be completed as specified below, whether or not backup withholding is required to be reported.

(a) If the information returns are filed on magnetic media:

(1) A separate transmittal, Form 4804, Transmittal of Information Returns Reported on Magnetic Media, must be filed for each payer.

(2) Enter the agent's name, address and TIN in box 5 of Form 4804.

(3) See Rev. Proc. 83-48, 1983-27 I.R.B. 7 for instructions on magnetic media filing of information returns.

(b) If the information returns are filed on paper:

(1) A separate transmittal document, Form 1096, Annual Summary and Transmittal of U.S. Information Returns, or Form W 3G (if appropriate), Transmittal of Certain Information Returns must be filed for each payer. See Exhibits 2 and 3 for examples of properly completed forms.

(2) The transmittal document must have the payer's name and the agent's name (in care of-c/o) and the agent's address in the address area of the form.

(3) For both forms, enter three slashes (/ / /) before the payer's name to identify the document as being filed by an agent.

(4) Enter the agent's TIN in the lower right hand portion of the title area on Form 1096. Enter the agent's TIN in the blank box on Form W 3G.

(5) Enter the payer's TIN in the block for Employer Identification Number (EIN) on Form 1096. Enter the payer's TIN in the identifying number block on Form W 3G.

(6) For the Forms 1099 attached to the transmittal, enter the payer's name followed by the agent's name (in care of-c/o) and the agent's address in the name and address area of the form. See Exhibit 4 for an example of a properly completed form. The only exception is on Form 1099 R, Statement for Recipients of Total Distributions from Profit-sharing, Retirement Plans, Individual Retirement Arrangements, etc. For this form, enter the agent's name directly to the right of the printed words "Street Address". See Exhibit 5 for an example of a properly completed form.

(7) For all Forms 1099, enter the payer's TIN in the space for Federal identifying number.

SEC. 5. GENERAL

.01 The agent must maintain records that will disclose the full amount of interest, dividends, patronage dividends and other reportable payments reported and tax withheld for each payer and each recipient.

.02 In accordance with section 3504 of the Code, all provisions of the law and regulations (including penalties) applicable with respect to a payer will be applicable to the agent, and despite the acts performed by the agent pursuant to authority granted under Section 3504, the payer will remain subject to all provisions of the law and regulations (including penalties).

SEC. 6. INQUIRIES

Inquiries concerning this revenue procedure should refer to its number and should be addressed to the Director, Internal Revenue Service Center, serving the district in which the agent is located.

SEC. 7. EFFECT ON OTHER DOCUMENTS

This revenue procedure amplifies Revenue Procedures 70-6, 83-48, and 84-24.

SEC. 8. EFFECTIVE DATE

This revenue procedure is effective for returns for taxable periods beginning after December 31, 1983.

¹ Also released in News Release IR 84-43 dated March 28, 1984.

Exhibit 1

                    Department of the Treasury --