Form 2678: Complete Employer/Payer Appointment of Agent Guide
What is Form 2678?
Form 2678, Employer/Payer Appointment of Agent, is an IRS document used to request approval for an agent to file returns and make deposits or payments of employment or other withholding taxes on behalf of an employer or payer. The form also serves to revoke existing agent appointments when necessary. This authorization enables businesses to delegate tax reporting responsibilities to qualified third parties while ensuring compliance with federal tax obligations.
Purpose and Benefits
Form 2678 establishes a formal agency relationship under Internal Revenue Code Section 3504, allowing authorized agents to handle employment tax matters, including Federal Insurance Contributions Act taxes, Railroad Retirement Tax Act taxes, income tax withholding, and backup withholding. The form streamlines tax administration by enabling proper delegation of authority, facilitating authorized representation, and maintaining accurate agency records with the IRS. This process reduces administrative burden for employers while ensuring that tax obligations are met through qualified agents.
When to Use Form 2678
Use Form 2678 when you want to appoint an agent to file employment tax returns and make tax deposits or payments on your behalf. Common situations include engaging payroll service providers, designating professional employer organizations as agents, authorizing third-party payers to handle tax responsibilities, establishing Section 3504 agent relationships, or delegating employment tax duties to accounting firms or tax professionals. You also use this form to revoke an existing agent appointment when terminating an agency relationship or changing service providers.
Types of Forms Covered
Form 2678 applies to several employment and withholding tax forms including Form 940 for Employer’s Annual Federal Unemployment Tax Return, Form 941 for Employer’s Quarterly Federal Tax Return, Form 943 for Employer’s Annual Federal Tax Return for Agricultural Employees, Form 944 for Employer’s Annual Federal Tax Return, Form 945 for Annual Return of Withheld Federal Income Tax, Form CT-1 for Employer’s Annual Railroad Retirement Tax Return, and Form CT-2 for Employee Representative’s Quarterly Railroad Tax Return.
Generally, you cannot appoint an agent to report, deposit, and pay tax on Form 940 unless you are a home care service recipient.
Completing Part 1
Part 1 identifies why you are filing Form 2678. Select the appropriate box to indicate whether you want to appoint an agent for tax reporting, depositing, and paying, or you want to revoke an existing appointment. Only one box should be checked based on your specific purpose.
Completing Part 2 Employer or Payer Information
Identification Details
Enter your Employer Identification Number in the format required. Provide your legal name as registered with the IRS, not your trade name. If you operate under a trade name, enter it in the designated field. Include your complete current mailing address, including street number, suite or room number (if applicable), city, state, and ZIP code. For foreign addresses, provide the country name, province or county, and foreign postal code.
Forms and Scope Selection
Check all boxes that apply for the forms you want the agent to handle. For each form type, indicate whether the appointment covers all employees, payees, or payments, or only some employees, payees, or payments.
If you receive home care services and want to appoint an agent for Form 940, check the specific box acknowledging this status. This designation is important because special rules apply to FUTA tax agent appointments for home care service recipients.
Authorization Statement
By signing Part 2, you authorize the IRS to disclose otherwise confidential tax information to the agent relating to the authority granted under this appointment. You also acknowledge that the agent may contract with third parties such as reporting brokers or certified public accountants to prepare or file returns, make deposits, and process payments.
If a third party fails to file returns or make deposits and payments, both the agent and the employer or payer remain liable. This authorization includes disclosures required to process Form 2678.
Signature Requirements
The employer or payer must sign and date Part 2. Print your name and title clearly. An authorized representative of the employer or payer must provide their signature, ensuring they have proper authority to bind the organization. Include your best daytime phone number for IRS contact purposes. After you complete Part 2, please submit the form to the agent so they can proceed with Part 3.
Completing Part 3 Agent Information
Agent Identification
The agent completes Part 3 with their Employer Identification Number, their legal name as registered with the IRS, and their trade name, if applicable. Provide the agent’s complete mailing address, including street number, suite or room number, city, state, and ZIP code. Foreign agents should include the country name, province or county, and foreign postal code.
Home Care Service Recipient Designation
If the employer is a recipient of home care services through a program administered by a federal, state, or local government agency, check the designated box. This designation affects the scope of tax responsibilities the agent can assume.
Agent Signature and Certification
The agent signs under penalty of perjury, declaring that they have examined the form and any attachments and that, to the best of their knowledge and belief, the information is true, correct, and complete. The agent prints their name and title, provides the date, and includes their best daytime phone number. This signature confirms receipt and acknowledgment of responsibilities or, in the case of revocation, confirms acknowledgment of the termination of authority.
Submission Process
Mailing the Form
Form 2678 must be submitted by mail to the appropriate IRS Submission Processing Center based on the employer’s or payer’s location. Electronic submission is not available for this form. Refer to the Where To File section in the Form 2678 instructions or visit the IRS website to find the correct mailing address for your location.
Different addresses apply depending on whether you are filing for a business, an exempt organization, or a government entity.
Timing and Processing
Submit Form 2678 at least sixty days before the date you want the agent authorization to begin. The IRS generally processes the form within thirty days upon receipt. However, processing times may vary depending on workload and completeness of the submission. Early submission ensures the authorization is in place when needed and avoids gaps in tax filing and payment responsibilities.
IRS Notification
After processing your Form 2678, the IRS will send a letter to both the employer or payer and the agent. The authorization to act as an agent is effective on the date indicated in the letter of approval. You should retain this letter for records, as it serves as an official confirmation of the agency relationship. The appointment is not effective until the IRS approves the request and issues this confirmation letter.
Record Keeping Requirements
Keep copies of the completed and signed Form 2678, the IRS approval letter, and any supporting documentation for your permanent records. Maintain these documents for at least four years after the latest tax period for which the agent acted on your behalf. Both the employer or payer and the agent should retain copies. These records provide proof of authorization, protect against unauthorized actions, and support audit defense if questions arise about who had authority to file returns or make payments.
Revoking an Appointment
When to Revoke
Revoke an agent appointment when terminating a business relationship with the agent, changing to a different payroll service provider or agent, assuming tax filing and payment responsibilities in-house, or when the agent ceases operations. Timely revocation prevents unauthorized filings and ensures clear lines of responsibility.
Revocation Procedure
To revoke an existing appointment, complete all three parts of Form 2678. Check the box in Part 1 to indicate that you want to revoke an existing appointment. The employer or payer completes Part 2 with current information, and the agent completes Part 3. Only one signature is required for revocation, which can be provided by the employee, payer, or agent. Mail the completed form to the appropriate IRS address. The IRS will notify both parties when the revocation is processed, along with the effective date of the revocation.
Important Considerations
Authorization Scope
The agent’s authority is limited to the specific forms and scope indicated on Form 2678. The agent cannot perform functions beyond those explicitly authorized by the client. If you need to expand or modify the agent’s authority, submit a new Form 2678 with the updated information. The authorization does not grant general power of attorney for all tax matters; it applies only to the employment and withholding taxes specified in the document.
Liability
Appointing an agent does not relieve the employer or payer of ultimate responsibility for filing accurate returns and making timely deposits and payments. Both the employer or payer and the agent are jointly and severally liable for employment tax obligations. If the agent fails to file returns or make payments, the IRS can pursue collection from either the agent or the taxpayer. This shared liability highlights the importance of selecting reliable and competent agents.
Third-Party Contractors
The authorization allows the agent to contract with third parties to perform the authorized functions. However, the employer or payer should understand that adding layers of responsibility increases complexity. Ensure contracts with agents clearly define responsibilities, reporting requirements, and liability allocation. Regular monitoring of agent performance helps identify issues before they become serious problems.
Ongoing Monitoring
Even with an appointed agent, employers and payers should regularly review tax filings and payment records to ensure accuracy and timeliness. Request periodic reports from the agent showing deposits made, returns filed, and balances. Verify that information reported on employment tax returns matches your payroll records. Prompt detection of errors or omissions allows for timely corrections and reduces penalties.
Special Considerations for Home Care Service Recipients
Recipients of home care services through government programs are eligible for special provisions that allow for agent appointments for FUTA tax purposes. Generally, agents cannot be appointed for Form 940 reporting and payment, but an exception exists for qualified recipients of home care services. When completing Form 2678, check the specific box in Part 2 to confirm the home care service recipient status. The agent should also check the corresponding box in Part 3 to acknowledge this designation.
Updating Information
If your business name, address, or EIN changes, or if the agent’s information changes, submit a new Form 2678 reflecting the current information. The IRS needs accurate contact information to send notices and correspondence. Outdated information can result in missed communications and potential compliance issues. When submitting updated information, clearly indicate whether your request is a modification of an existing appointment or a new appointment.
Key Reminders
Form 2678 requires original signatures from authorized individuals representing the employer or payer, as well as the agent. The form must contain complete and accurate identification information for proper processing. Agent appointments are not effective until the IRS grants approval and issues a confirmation letter, which typically occurs within thirty days of receipt. Submit the form at least sixty days before the date you need the authorization to begin.
Only authorized signers can revoke or modify existing appointments by submitting a properly completed form. Electronic submission is not available; Form 2678 must be mailed to the appropriate IRS address. Retain copies of all submitted forms and IRS approval letters for record-keeping purposes. Regularly review appointment status and update or revoke authorization as circumstances change to ensure records remain current and accurate.
Understanding Form 2678 helps you properly delegate employment tax responsibilities while maintaining compliance and protecting your business from unauthorized actions.
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This checklist is for educational purposes only and does not constitute tax or legal advice. Always review official IRS instructions and consult a qualified professional for guidance.
