08-55507. Employment Taxes and Collection of Income Tax at Source

CFR Correction

In Title 26 of the Code of Federal Regulations, Parts 30 to 39, revised as of April 1, 2007, in § 31.3121(s)-1, on page 104, paragraph (b)(2)(iii) is corrected and, on page 107, paragraph (c)(2)(iii) is revised to read as follows:

§ 31.3121(s)-1

Concurrent employment by related corporations with common paymaster.

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(b) * * *

(2) * * *

(iii) Examples. The rules of this subparagraph are illustrated by the following examples:

Example 1.

S, T, U, and V are related corporations with 2,000 employees collectively. Forty of these employees are concurrently employed by two or more of the corporations, during a calendar quarter. The four corporations arrange for S to disburse remuneration to thirty of these forty employees for their services. Under these facts, S is the common paymaster of S, T, U, and V with respect to the thirty employees. S is not a common paymaster with respect to the remaining employees.

Example 2.

(a) W, X, Y, and Z are related corporations. The corporations collectively have 20,000 employees. Two hundred of the employees are top-level executives and managers, sixty of whom are concurrently employed by two or more of the corporations during a calendar quarter. Six thousand of the employees are skilled artisans, all of whom are concurrently employed by two or more of the corporations during the calendar year. The four corporations arrange for Z to disburse remuneration to the sixty executives who are concurrently employed by two or more of the corporations. W and X arrange for X to disburse remuneration to the artisans who are concurrently employed by W and X.

(b) A is an executive who is concurrently employed only by W, Y, and Z during the calendar year. Under these facts, Z is a common paymaster for W, Y, and Z with respect to A. Assuming that the other requirements of this section are met, the amount of the tax liability under sections 3102 and 3111 is determined as if Z were A's only employer for the calendar quarter.

(c) B is a skilled artisan who is concurrently employed only by W and X during the calendar year. Under these facts, X is a common paymaster for S and X with respect to B. Assuming that the other requirements of this section are met, the amount of the tax liability under sections 3102 and 3111 is determined as if X were B's only employer for the calendar quarter.

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(c) * * *

(2) * * *

(iii) [Reserved]. For further guidance, see § 31.3121(s)-1T(c)(2)(iii).

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