Third Party Sick Pay

Third party sick pay payments are generally shown on IRPTR by the literal "3RD PARTY SICK PAY IND: YES" . Check IRPTR for the indicator. If present, take the actions shown below.

If lock-in Letter 2800C and Letter 2801C have not been issued, document the history and close the case.

If lock-in letters have already been issued then Issue Letter 2809C to payer and Letter 2813C to the taxpayer to release the lock-in, input TC 972 AC 146 with Disposition Code NSW, document the history and close the case.

If there is no 3RD PARTY SICK PAY IND on IRPTR , follow general case processing procedures.

If there are other wages, subtract the 3rd Party Sick Pay amount from the total Form W-2 wages and take the following actions:

Follow procedures in (1) above to release lock-in on the 3rd Party Sick Pay Form W-2

Compute the withholding rate based on the lesser amount of wages

Issue either Letter 2800C and Letter 2801C, or Letter 2808C and Letter 2812C, as appropriate

Input the appropriate TC 97X AC 14X

Document the history and close the case