What is payer verification, and why is it required?

 Payer verification is the process of confirming your authorization to file tax forms on behalf of a payer. Without this verification, filings for a payer cannot proceed, as it ensures compliance with tax reporting regulations.

 

Why is it required?

The IRS/SSA requires supporting documentation to verify that the person or entity filing tax forms on behalf of a payer has the proper authorization. This is part of the compliance process to prevent unauthorized filings and ensure that individuals or organizations make all tax filings with the legal right to do so. 

The documents you upload will be used to confirm the authenticity of your authorization.

 

Acceptable documents

• IRS CP575 Notice: The IRS CP575 Notice is an official IRS letter issued when your business is assigned an Employer Identification Number (EIN). This notice not only confirms your EIN but also validates your authorization to file tax returns on behalf of your business or payer.
   

• Form 941/940 (Accepted Copy): Form 941 (Employer's Quarterly Federal Tax Return) or Form 940 (Employer’s Annual Federal Unemployment (FUTA) Tax Return) serves as a key piece of documentation that proves you have filed the necessary federal tax returns for your business. An Accepted Copy of these forms shows that you have complied with IRS tax filing requirements by reporting the required wage and tax information.
   

• State Business Registration: A State Business Registration Certificate or State License proves that your business is legally registered within the state. This documentation confirms your legitimacy as a business entity authorized to engage in tax-related activities, such as payroll tax filings or state-specific tax returns.
   

• Tax Deposit Proof (EFTPS or State Portal): This is a confirmation that payroll tax deposits have been made to the IRS or state tax agencies. Examples of this include EFTPS (Electronic Federal Tax Payment System) receipts or confirmations from a state portal. These receipts serve as evidence that you are meeting your tax obligations by making timely deposits of the payroll taxes withheld from employees or contractors. 

 

• Other Supporting Documents: This may include any additional documents that further support your legal authorization to file tax forms on behalf of the payer. These could range from partnership agreements, power of attorney forms, or any specific documents that explicitly state your role as a tax filer for the payer. 

 

Key points to remember

• Ensure Document Validity: The uploaded file must be valid and legitimate. Invalid uploads may delay the processing of your forms.

• Upload Accurate Information: Double-check that the information in your supporting documents matches the reported data on the form.

• Use Legible Copies: Ensure all documents are clear and readable, with no missing information or blurred sections.