[Federal Register Volume 60, Number 199 (Monday, October 16, 1995)]
[Rules and Regulations]
[Pages 53509-53511]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-25314]



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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Parts 31 and 602

[TD 8624]
RIN 1545-AT87


Reporting of Nonpayroll Withheld Tax Liabilities

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final and temporary regulations.

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SUMMARY: This document contains final and temporary regulations 
relating to 

[[Page 53510]]
the reporting of nonpayroll withheld income taxes under section 6011 of 
the Internal Revenue Code. The temporary regulations remove the 
requirement that a person file Form 945, Annual Return of Withheld 
Federal Income Tax, for each calendar year, whether or not the person 
is required to withhold the taxes reported on Form 945 in a particular 
calendar year. The temporary regulations require that a person file 
Form 945 only for a calendar year in which the person is required to 
withhold taxes required to be reported on Form 945. The text of these 
temporary regulations also serves as the text of the proposed 
regulations set forth in the notice of proposed rulemaking on this 
subject in the Proposed Rules section of this issue of the Federal 
Register.

EFFECTIVE DATE: These regulations are effective October 16, 1995.

FOR FURTHER INFORMATION CONTACT: Vincent G. Surabian, 202-622-6232 (not 
a toll-free number).

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

    These regulations are being issued without prior notice and public 
procedure pursuant to the Administrative Procedure Act (5 U.S.C. 553). 
For this reason, the collection of information contained in these 
regulations has been reviewed and, pending receipt and evaluation of 
public comments, approved by the Office of Management and Budget under 
control number 1545-1413. Responses to this collection of information 
are required to monitor compliance with the federal tax laws related to 
the reporting and deposit of nonpayroll withheld taxes.
    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information unless the collection of 
information displays a valid control number.
    For further information concerning this collection of information, 
and where to submit comments on the collection of information and the 
accuracy of the estimated burden, and suggestions for reducing this 
burden, please refer to the preamble to the cross-referencing notice of 
proposed rulemaking published in the Proposed Rules section of this 
issue of the Federal Register.
    Books or records relating to a collection of information must be 
retained as long as their contents may become material in the 
administration of any internal revenue law. Generally, tax returns and 
tax return information are confidential, as required by 26 U.S.C. 6103.

Background

    On December 23, 1993, the IRS published final regulations (TD 8504) 
in the Federal Register (58 FR 68033) relating to both the reporting 
and depositing of Federal employment taxes. Those regulations simplify 
reporting requirements by removing all ``nonpayroll'' withheld taxes 
from reporting on Form 941, Employer's Quarterly Federal Tax Return (or 
Form 941E, Quarterly Return of Withheld Federal Income Tax and Medicare 
Tax) and requiring those taxes to be reported on Form 945. Those final 
regulations were effective December 23, 1993.
    Section 31.6011(a)-4(b) of those regulations provides that every 
person required to make a return of income tax withheld from nonpayroll 
payments for calendar year 1994 must make a return for calendar year 
1994 and for each subsequent calendar year (whether or not any such tax 
is required to be withheld that year) until a final return is made in 
accordance with Sec. 31.6011(a)-6. In addition, every person not 
required to make a return of income tax withheld from nonpayroll 
payments for calendar year 1994 must make a return for the first 
calendar year after 1994 in which the person is required to withhold 
the tax and for each subsequent calendar year until a final return is 
made in accordance with Sec. 31.6011(a)-6.
    In the preamble to TD 8504, the IRS stated that it welcomed and 
would consider comments from the public regarding the requirement to 
continue filing Form 945 annually, regardless of liability, until a 
final return is filed in accordance with Sec. 31.6011(a)-6. Several 
commentators responded to that invitation, all opposing the requirement 
to file a return for a calendar year for which there is no liability. 
As a result, the IRS has reconsidered the specific requirement.

Explanation of Provisions

    These temporary regulations remove the requirement that, once a 
person files an annual Form 945, the person must file a Form 945 every 
subsequent year until the person files a final return. Under these 
temporary regulations, a person must file a Form 945 only for a 
calendar year in which the person is required to withhold Federal 
income tax from nonpayroll payments.

Special Analyses

    It has been determined that this Treasury decision is not a 
significant regulatory action as defined in EO 12866. Therefore, a 
regulatory assessment is not required. It has also 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, 
a copy of these temporary regulations will be submitted to the Chief 
Counsel for Advocacy of the Small Business Administration for comment 
on their impact on small business.

Drafting Information

    The principal author of these regulations is Vincent G. Surabian, 
Office of the Assistant Chief Counsel (Income Tax and Accounting). 
However, other personnel from the IRS and Treasury Department 
participated in their development.

List of Subjects

26 CFR Part 31

    Employment taxes, Income taxes, Penalties, Pensions, Railroad 
retirement, Reporting and recordkeeping requirements, Social security, 
Unemployment compensation.

26 CFR Part 602

    Reporting and recordkeeping requirements.

Adoption of Amendments to the Regulations

    Accordingly, 26 CFR parts 31 and 602 are amended as follows:

PART 31--EMPLOYMENT TAXES AND COLLECTION OF INCOME TAX AT SOURCE

    Paragraph 1. The authority citation for part 31 is amended by 
adding an entry in numerical order to read as follows:

    Authority: 26 U.S.C. 7805 * * *

    Section 31.6011(a)-4T also issued under 26 U.S.C. 6011. * * *
    Par 2. Section 31.6011(a)-4 is amended by revising paragraph (b) to 
read as follows:


Sec. 31.6011(a)-4   Returns of income tax withheld.

* * * * *
    (b) [Reserved] For further guidance see Sec. 31.6011(a)-4T(b).
* * * * *
    Par. 3. Section 31.6011(a)-4T is added to read as follows:

[[Page 53511]]



Sec. 31.6011(a)-4T   Returns of income tax withheld (temporary).

    (a) [Reserved] For further guidance see Sec. 31.6011(a)-4(a).
    (b) Withheld from nonpayroll payments. Every person required to 
withhold tax from nonpayroll payments for calendar year 1994 must make 
a return for calendar year 1994 and for any subsequent calendar year in 
which any such tax is required to be withheld until the person makes a 
final return in accordance with Sec. 31.6011(a)-6. Every person not 
required to withhold tax from nonpayroll payments for calendar year 
1994 must make a return for the first calendar year after 1994 in which 
the person is required to withhold such tax and for any subsequent 
calendar year in which the person is required to withhold such tax 
until the person makes a final return in accordance with 
Sec. 31.6011(a)-6. Form 945, Annual Return of Withheld Federal Income 
Tax, is the form prescribed for making the return required under this 
paragraph (b). Nonpayroll payments are--
    (1) Certain gambling winnings subject to withholding under section 
3402(q);
    (2) Retirement pay for services in the Armed Forces of the United 
States subject to withholding under section 3402;
    (3) Certain annuities as described in section 3402(o)(1)(B);
    (4) Pensions, annuities, IRAs, and certain other deferred income 
subject to withholding under section 3405; and
    (5) Reportable payments subject to backup withholding under section 
3406.

PART 602--OMB CONTROL NUMBERS UNDER THE PAPERWORK REDUCTION ACT

    Par. 4. The authority citation for part 602 continues to read as 
follows:

    Authority: 26 U.S.C. 7805.


Sec. 602.101   [Amended]

    Par. 5. Section 602.101, paragraph (c) is amended in the table by 
adding the entry ``31.6011(a)-4T . . . . 1545-1413'' in numerical 
order.
Margaret Milner Richardson,
Commissioner of Internal Revenue.

    Approved: September 22, 1995.
Leslie Samuels,
Assistant Secretary of the Treasury.
[FR Doc. 95-25314 Filed 10-13-95; 8:45 am]
BILLING CODE 4830-01-U