Bills · HR 3223
IN COMMITTEE· 119TH CONGRESS
House BillHR 3223Taxation
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.
INTRO MAY 6· LAST ACTION MAY 6
READING
4MIN
COSPONSORS
22BIPARTISAN
READER REACTIONS0 TOTAL
NO VOTES YET · BE THE FIRST
- Introduced only
LEGISLATIVE PROGRESS
STEP 2 / 8Introduced
In Committee
Reported
Passed House
Passed Senate
Conference
To President
Became Law
WHAT THE BILL DOES
AI-writtenThis bill matters because it brings much-needed clarity to a complex area of tax law, which currently can lead to significant financial risks and uncertainty for businesses and payroll service providers. Without clear rules, an employer could face substantial penalties for errors made by their payroll service, or vice versa, even if they acted in good faith. This could lead to protracted legal battles with the IRS and significant financial burdens.
If this bill becomes law, it would establish a predictable framework for assigning responsibility, potentially reducing disputes and encouraging more accurate tax filings. It aims to protect innocent businesses from being penalized due to issues with their payroll service's other clients, ensuring that tax credits are processed smoothly and audits are more targeted. If it doesn't pass, the current ambiguities would persist, leaving businesses and payroll companies vulnerable to unclear liability for payroll tax errors.
KEY PROVISIONS
5AI-extractedPROVISION 01
A third-party payroll service can rely on information provided by an employer unless the service knew or should have known (constructive knowledge) the information was wrong.
This sets a clear standard for when payroll services are responsible for verifying employer-provided data.
PROVISION 02
If a third-party payroll service did not have constructive knowledge of an error, the employer is solely responsible for any resulting financial liability.
This clarifies that employers retain full responsibility for errors they cause and that their payroll service was unaware of.
PROVISION 03
If a third-party payroll service did have constructive knowledge of an error, both the employer and the payroll service are responsible, with the payroll service only liable for the portion they knew or should have known about.
This ensures that payroll services are held accountable for errors they were aware of or should have detected.
PROVISION 04
The IRS cannot delay processing an employer's payroll tax credit or audit them solely because their third-party payor made an error for a different employer.
This protects businesses from being penalized due to the mistakes of another client of their payroll service.
PROVISION 05
For payroll tax credits, a third-party payor is not deemed to have constructive knowledge if the employer certified their entitlement, the payor accurately reported it based on that certification, and the payor verified aggregate wages used in the credit calculation.
This provides specific conditions under which payroll services are protected from liability for employer-certified tax credit errors.
SPONSORSHIP
1 + 22
D· California
YRS IN OFFICE
27
BILLS LED
27
COSPONSOR BREAKDOWNBIPARTISAN · 91%
DEM 10 REP 12 IND 0
ACTION TIMELINE
2 EVENTSMAY 6
Introduced in House
MAY 6
Referred to the House Committee on Ways and Means.
BILL INFO
TypeHouse Bill
NumberHR 3223
Congress119th
StatusIn Committee
IntroducedMay 6, 2025
Last actionMay 6, 2025
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IN COMMITTEE· 119TH CONGRESS · WAYS AND MEANS COMMITTEE · INTRODUCED MAY 6, 2025
House BillHR 3223Taxation
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.
INTRODUCED MAY 6, 2025· LAST ACTION MAY 6, 2025
PASSAGE CHANCES
—%
READING
4 min
COSPONSORS
22
COMPLEXITY
Moderate
