[Federal Register Volume 61, Number 17 (Thursday, January 25, 1996)]
[Proposed Rules]
[Pages 2214-2215]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-716]
-----------------------------------------------------------------------
DEPARTMENT OF THE TREASURY
26 CFR Part 31
[EE-55-95]
RIN 1545-AT99
FUTA Taxation of Amounts Under Employee Benefit Plans
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Notice of proposed rulemaking.
-----------------------------------------------------------------------
SUMMARY: This document contains proposed regulations under section
3306(r)(2) of the Internal Revenue Code, relating to when amounts
deferred under or paid from certain nonqualified deferred compensation
plans are taken into account as ``wages'' for purposes of the
employment taxes imposed by the Federal Unemployment Tax Act (FUTA).
The regulations provide guidance to taxpayers who must comply with
section 3306(r)(2), which was added to the Code by section 324 of the
Social Security Amendments of 1983.
DATES: Written comments and requests for a public hearing must be
received by April 24, 1996.
ADDRESSES: Send submissions to: CC:DOM:CORP:R (EE-55-95), room 5228,
Internal Revenue Service, P.O. Box 7604, Ben Franklin Station,
Washington, DC 20044. In the alternative, submissions may be hand
delivered between the hours of 8 a.m. and 5 p.m. to CC:DOM:CORP:R (EE-
55-95), Courier's Desk, Internal Revenue Service, 1111 Constitution
Avenue NW, Washington, DC.
FOR FURTHER INFORMATION CONTACT: David N. Pardys, (202) 622-4606 (not a
toll-free number), concerning the regulations, and Michael Slaughter,
(202) 622-7190 (not a toll-free number), concerning submissions.
SUPPLEMENTARY INFORMATION:
Background
This document contains proposed amendments to the Employment Tax
Regulations (26 CFR part 31) under section 3306(r)(2) of the Internal
Revenue Code of 1986 (the ``Code'') relating to the employment tax
treatment of amounts deferred under or paid from certain nonqualified
compensation plans. These amendments are proposed to reflect the
statutory changes made by section 324 of the Social Security Amendments
of 1983 (the ``1983 Amendments''), which added section 3306(r)(2) to
the Code, and section 2662(f)(2) of the Deficit Reduction Act of 1984
(DEFRA), which amended section 324 of the 1983 Amendments.
Explanation of Provisions
These proposed regulations provide guidance under section
3306(r)(2) of the Internal Revenue Code, relating to when amounts
deferred under or paid from certain nonqualified deferred compensation
plans are taken into account as wages for FUTA purposes. These rules
are substantially similar to the rules applicable to the FICA (Federal
Insurance Contributions Act) tax treatment of such amounts deferred
under section 3121(v)(2) of the Internal Revenue Code. Thus, these
regulations cross-reference the proposed regulations under section
3121(v)(2).
Special Analyses
It has been determined that this notice of proposed rulemaking is
not a significant regulatory action as defined in EO 12866. Therefore,
a regulatory assessment is not required. It also has been determined
that section 553(b) of the Administrative Procedure Act (5 U.S.C.
chapter 5) and the Regulatory Flexibility Act (5 U.S.C. chapter 6) do
not apply to these regulations, and, therefore, a Regulatory
Flexibility Analysis is not required. Pursuant to section 7805(f) of
the Internal Revenue Code, the notice of proposed rulemaking will be
submitted to the Chief Counsel for Advocacy of the Small Business
Administration for comment on their impact on small business.
Comments and Requests for a Public Hearing
Before these proposed regulations are adopted as final regulations,
consideration will be given to any written comments (a signed original
and eight (8) copies) that are submitted timely to the IRS. All
comments will be available for public inspection and copying. A public
hearing may be scheduled if requested in writing by any person that
timely submits written comments. If a public hearing is scheduled,
notice of the date, time, and place for the hearing will be published
in the Federal Register.
Drafting Information
The principal author of these regulations is David N. Pardys,
Office of the Associate Chief Counsel (Employee Benefits and Exempt
Organizations), IRS. However, other personnel from the IRS and Treasury
Department participated in their development.
List of Subjects in 26 CFR Part 31
Employment taxes, Income taxes, Penalties, Pensions, Railroad
retirement, Reporting and recordkeeping requirements, Social security,
Unemployment compensation.
Proposed Amendments to the Regulations
Accordingly, 26 CFR part 31 is proposed to be amended as follows:
PART 31--EMPLOYMENT TAXES AND COLLECTION OF INCOME TAX AT SOURCE
Paragraph 1. The authority citation for part 31 continues to read
in part as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. Section 31.3306(r)(2)-1 is added to read as follows:
Sec. 31.3306(r)(2)-1 Treatment of amounts deferred under certain
nonqualified deferred compensation plans.
(a) In general. Section 3306(r)(2) provides a special timing rule
for the tax imposed by section 3301 with respect to any amount deferred
under a nonqualified deferred compensation plan. Section 31.3121(v)(2)-
1 \1\ contains rules relating to when amounts deferred under certain
nonqualified deferred compensation plans are wages for purposes of
sections 3121(v)(2), 3101, and 3111. Those rules also apply to the
special timing rule of section 3306(r)(2). For purposes of applying
those rules to section 3306(r)(2) and this paragraph (a), references in
those rules to the Federal Insurance Contributions Act are considered
references to the Federal Unemployment Tax Act (26 U.S.C. 3301 et
seq.), references to FICA are considered references to FUTA, references
to section 3101 or 3111 are considered references to section 3301,
references to section 3121(v)(2) are considered references to section
[[Page 2215]]
3306(r)(2), references to section 3121(a), 3121(a)(5), and 3121(a)(13)
are considered references to sections 3306(b), 3306(b)(5), and
3306(b)(10), respectively, and references to Sec. 31.3121(a)-2(a) are
considered references to Sec. 31.3301-4.
\1\ This section appears as a notice of proposed rulemaking
published elsewhere in this issue of the Federal Register.
---------------------------------------------------------------------------
(b) Effective dates and transition rules. Except as otherwise
provided, section 3306(r)(2) applies to remuneration paid after
December 31, 1984. Section 31.3121(v)(2)-2 \2\ contains effective date
rules for certain remuneration paid after December 31, 1983, for
purposes of section 3121(v)(2). Those rules also apply to section
3306(r)(2). For purposes of applying those rules to section 3306(r)(2)
and this paragraph (b), references to section 3121(v)(2) are considered
references to section 3306(r)(2), and references to section 3121(a)(2),
3121(a)(3), or 3121(a)(13) are considered references to section
3306(b)(2), 3306(b)(3), or 3306(b)(10), respectively. In addition,
references to section 324(d)(1) of the Social Security Amendments of
1983 are considered references to section 324(d)(2) of the Social
Security Amendments of 1983, and references to Sec. 31.3121(v)(2)-1 are
considered references to paragraph (a) of this section. In addition,
the rules of Sec. 31.3121(v)(2)-2 shall apply to this paragraph by--
\2\ This section appears as a notice of proposed rulemaking
published elsewhere in this issue of the Federal Register.
---------------------------------------------------------------------------
(1) References to ``December 31, 1983'' are considered references
to ``December 31, 1984'';
(2) References to ``before 1984'' are considered references to
``before 1985'';
(3) References to ``Federal Insurance Contributions Act'' are
considered references to ``Federal Unemployment Tax Act''; and
(4) References to ``FICA'' are considered references to ``FUTA''.
Margaret Milner Richardson,
Commissioner of Internal Revenue.
[FR Doc. 96-716 Filed 1-19-96; 12:52 pm]
BILLING CODE 4830-01-U
