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We have a client that wants us to handle their third party sick pay

Penny Morrow's Profile

We have a client that wants us to handle their S&A payments. In the contract, we pay their employee, withhold and remit the taxes, supply W-2 etc under our FEIN. HR doesn't like this setup, they feel it will make us non-compliant with our benefit providers and reporting. If its under our FEIN, wouldn't it also have to be reported with our normal payroll tax reporting? The client is self insured and supplies us with the name and amounts to payout, the prior TPA was set up this way as well. But they wont share info. Any suggestions?

Answers

Topic Expert
Christie Jahn
Title: CFO
Company: Prime Investments & Development
(CFO, Prime Investments & Development) |

We use a TPA for our disability payments and they pay the employee portion of taxes and we are responsible for the employer portion to the appropriate agencies. They file the W2 on their end, using their own FEIN and we have to report the income on our the 941, the taxes we paid for the employer portion and then show a deduction in the Third Party section. This sounds like the way they want to handle it.

Penny Morrow
Title: Accounting Manager
Company: Brentwood Services
(Accounting Manager, Brentwood Services) |

Do you know if them being reported on the TPA W2 make them their 'employees' for benefit considerations or reporting purposes? In the process you described, would form 8922 be the reconciling piece at the end of the year?

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