There are two Vendor Fiscal/Employer Agents that operate under section 3504 of the IRS Code:

Both agents work as a "bank" for individuals, allowing funds to follow the individual instead of the provider. Both agents allow individuals and their representatives a high level of choice and control over the use of their funds, managing their support services, and assisting with payroll issues. Both agents are Medicaid waiver services, but are not qualified State Plan services without a Medicaid 1115 waiver. These agencies cannot be both a bank and a direct service provider, which is a conflict of interest.

Government Fiscal/Employer Agent

(In accordance with IRS Revenue Procedures 80- 4 and 2003-70)

A state or local government agency can apply for and receive approval from the IRS to be an employer agent on behalf of individuals for the purposes of withholding, filing and depositing federal employment taxes (e.g., FICA and FUTA) and income tax withholding for workers they hire directly. It also may:

  • Invoice a state for individuals' funds
  • Act as a "bank" for individuals' funds by disbursing and tracking these funds
  • Manage federal advanced earned income credits as necessary
  • Withhold, file and deposit state income and employment taxes (e.g., SUTA and disability)
  • Collect, verify and process workers' time sheets
  • Prepare and distribute payroll checks to support workers hired by individuals
  • Process and pay non-labor related invoices as approved in the individual's budget

A Government F/EA also may assist with worker's compensation and other insurance, conduct criminal background checks on support workers, assist in verifying support workers' citizenship/legal alien status and generate reports for state and county agencies and individuals.

A Vendor Fiscal/Employer Agent

The Vendor Fiscal/Employer Agent (F/EA) is a private or public vendor and can apply for and be approved by the IRS to act as an employer agent on behalf of individuals and perform tasks as listed above.  Public Partnerships, LLC (PPL) and ACES$ choose to operate as Vendor F/EAs.