Expert: Shirley McAllister, CPP, PHR - 7/29/2009

Question
Shirley, even as follow APA member I am not finding any nice 10 step comparison of master vs agent.  Qualifications seem easy enough but what about forms to be granted either status.  What forms are completed and how long does it take?  What advantages are there such as file one W-2 or multiple, save excess Soc Sec tax under both, file one vs multiple 941s.  Do you know of a quick side by side summary comparison?   Thanks in advance.

Answer
I do not find an easy 10 step comparison anywhere

Common paymaster is a member of a group of related corporations that pays wagesto employees working for two or more of the corporations.

Must be related corporations:

Must be part of a controlled group of corporations under IRC 1563 which means one corporation must own at least 50% of the other's stock or the same five or fewer persons own at least 50% of the stock of each corporation

At least 50% of a corporation's officers are concurrently officers of the other corporation, or
At least 30% of one corporation's employees are concurrently employed by the other corporation.

Pay Agent is an agent that is selected by several corporations to act as an agent in paying their taxes.

An agent must submit a application for authorization to act as an agent to the IRS Service Center where forms will be filed. Form 2678, Employer/Payer Appointment of Agent must be properly completed by each employer or payer and must be submitted with this application.

Companies are not related companies as they are in the common paymaster.

Shirley