To amend the Internal Revenue Code of 1986 to establish procedures relating to the attribution of errors in the case of third party payors of payroll taxes, and for other purposes.

This bill amends the Internal Revenue Code to establish procedures for attributing errors when third party payors handle payroll taxes for employers. It defines when a third party payor can rely on employer certifications and allocates liability for errors based on the payor's knowledge.

Sec. 1, Attribution of errors in the case of third party payors of payroll taxes: This section adds a new section 3513 to the Internal Revenue Code. It allows a third party payor to rely on an employer's certification unless the payor has constructive knowledge of an error. Liability for errors is split: if the payor has constructive knowledge, both the employer and payor are liable (the payor only for the part they knew was wrong); if the payor lacks constructive knowledge, the employer is solely liable. The term 'liability' includes amounts, interest, and penalties. The Secretary cannot delay processing a payroll tax credit claimed by a third party payor on behalf of an employer or audit that employer solely because the payor filed an erroneous return based on another employer's certification. The Secretary can require the payor to provide information about an employer that the Secretary could require from the employer. 'Constructive knowledge' means the payor knew or should have known of an error, but for payroll tax credits, the payor is deemed not to have constructive knowledge if the employer certified entitlement, the payor accurately reported based on that certification, and the payor verified the aggregate wages used. 'Third party payor' includes fiduciaries, agents, professional employer organizations, and certified professional employer organizations. This section applies to audits, examinations, and assessments initiated after the date of enactment.