An IRS-Approved Solution for
Section 3504 Agents

As a section 3504 agent, you must use Form 2678 and get authorization from your clients to file 94x forms. The IRS must also authorize you to file taxes on behalf of your clients.

As a section 3504 agent, you must file aggregate returns for all clients using your EIN. You can file the returns as listed on the
Form 2678.

• Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return* (all
  940 series)
• Form 941, Employer’s QUARTERLY Federal Tax Return (all 941 series)
• Form 943, Employer’s Annual Federal Tax Return for Agricultural Employees (all
  943 series)
• Form 944, Employer’s ANNUAL Federal Tax Return (all
  944 series)
• Form 945, Annual Return of Withheld Federal
  Income Tax
• Form CT-1, Employer’s Annual Railroad Retirement Tax Return
• Form CT-2, Employee Representative's Quarterly Railroad
  Tax Return

Deposits and pays for aggregated tax liabilities using your EIN according to the agent’s deposit requirements.

Generally, Section 3504 agents are not permitted to file Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return, on an aggregate basis. However, there is an exception for agents representing employers who provide home care service recipients funded through federal, state, or local programs. This exception allows you to file aggregate Form 940. This exception is explained in detail in
Treasury Regulation 31.3504-1(b) and
Revenue Procedure 2013-39.

Both section 3504 agents and employers/clients are liable for paying clients' employment taxes, filing returns, and making deposits and payments for the reported taxes.

• The agent files a single return for each tax period on behalf of all the employers it represents, known as an "aggregate return."
• You use your Employer Identification Number (EIN) and address on these returns.
• For Form 941 filings, the agent must include
  Schedule R (Allocation Schedule for Aggregate Form 941 Filers) to allocate the tax responsibilities among the employers it represents.

Suppose you pay wages in excess of the Social Security wage base to an employee who works for multiple employers. In that case, you must file separate Forms W-2 for each employer, reflecting the wages paid by each. Your EIN is used to file Form W-2 with the Social Security Administration(SSA) and furnished to employees.