[Federal Register Volume 62, Number 247 (Wednesday, December 24, 1997)]
[Proposed Rules]
[Pages 67304-67305]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-33247]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 31

[REG-209484-87 and REG-209807-95]
RIN 1545-AF97; 1545-AT99


FICA and FUTA Taxation of Amounts Under Employee Benefit Plans

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rulemaking.

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SUMMARY: This document contains a revision to the proposed regulations 
under section 3121(v)(2) of the Internal Revenue Code of 1986, relating 
to when amounts deferred under or paid from certain nonqualified 
deferred compensation plans are taken into account as ``wages'' for 
purposes of the taxes imposed by the Federal Insurance Contributions 
Act (FICA). This document extends the proposed general effective date 
of the regulations to January 1, 1998. The extension also applies to 
the proposed regulations under section 3306(r)(2), relating to when 
amounts deferred under or paid from certain nonqualified deferred 
compensation plans are taken into account as ``wages'' for purposes of 
the taxes imposed by the Federal Unemployment Tax Act (FUTA), due to 
the cross-reference therein to the provisions of the proposed 
regulations under section 3121(v)(2).

DATES: Written comments and requests for a public hearing must be 
received by March 24, 1998.

ADDRESSES: Send submissions to: CC:DOM:CORP:R (EE-142-87), 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 
(REG-209484-87), Courier's Desk, Internal Revenue Service, 1111 
Constitution Avenue, NW. Washington, DC. Alternatively, taxpayers may 
submit comments electronically via the Internet by selecting the ``Tax 
Regs'' option of the IRS Home Page, or by submitting comments directly 
to the IRS Internet site at: http://www.irs.ustreas.gov/prod/tax_regs/
comments.html.

FOR FURTHER INFORMATION CONTACT: Janine Cook, (202) 622-6040 (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 a revision to the proposed amendments to the 
Employment Tax Regulations (26 CFR part 31) under section 3121(v)(2) of 
the Internal Revenue Code of 1986 (Code), relating to the Federal 
Insurance Contributions Act (FICA) tax treatment of amounts deferred 
under or paid from certain nonqualified deferred compensation plans. 
The proposed regulations were published in the Federal Register on 
January 25, 1996 (61 FR 2194), with a proposed general effective date 
of January 1, 1997. This document extends the proposed general 
effective date to January 1, 1998. The same issue of the Federal 
Register contained proposed amendments to the Employment Tax 
Regulations under

[[Page 67305]]

section 3306(r)(2) of the Code, relating to the Federal Unemployment 
Tax Act (FUTA) tax treatment of amounts deferred under or paid from 
certain nonqualified deferred compensation plans (61 FR 2214). The 
proposed regulations under section 3306(r)(2) cross-reference the 
provisions of the proposed regulations under section 3121(v)(2), 
including the proposed general effective date. Consequently, the 
extension of the effective date under the proposed regulations under 
section 3121(v)(2) automatically applies to the proposed regulations 
under section 3306(r)(2).
    The project numbers assigned to the notices of proposed rulemaking 
setting forth the proposed regulations under section 3121(v)(2) and 
section 3306(r)(2) were EE-142-87 and EE-55-95, respectively. Due to 
changes in the Internal Revenue Service's regulations numbering system, 
the project numbers for this notice of proposed rulemaking have been 
changed to REG-209484-87 and REG-209807-95, respectively, as reflected 
at the beginning of this document.

Explanation of Provisions

    Section 31.3121(v)(2)-1(g)(1)(i) of the proposed regulations 
provides that the proposed general effective date of the regulations is 
January 1, 1997. Because the final regulations have not been issued, 
this document contains an amendment to the proposed regulations to 
extend the proposed general effective date to January 1, 1998. This 
extension of the proposed general effective date also applies to 
Sec. 31.3306(r)(2)-1 of the proposed regulations due to the cross-
reference therein to the provisions in 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) does not apply to 
these regulations, and because these regulations do not impose on small 
entities a collection of information requirement, the Regulatory 
Flexibility Act (5 U.S.C. chapter 6) does not apply. Therefore, a 
Regulatory Flexibility Analysis is not required. Pursuant to section 
7805(f) of the Code, this notice of proposed rulemaking will be 
submitted to the Chief Counsel for Advocacy of the Small Business 
Administration for comment on its impact on small business.

Comments and Requests for a Public Hearing

    Before this revision to the proposed regulations is adopted as part 
of the final regulations, consideration will be given to any written 
comments (preferably 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 a 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 this revision to the proposed regulations 
is Janine Cook, Office of the Associate Chief Counsel (Employee 
Benefits and Exempt Organizations), IRS. However, other personnel from 
the IRS and Treasury Department participated in its development.

List of Subjects in 26 CFR Part 31

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

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 31.3121(v)(2)-1 as proposed to be added at 61 FR 
2199, January 25, 1996, is amended by revising paragraph (g)(1)(i) to 
read as follows:


Sec. 31.3121(v)(2)-1  Treatment of amounts deferred under certain 
nonqualified deferred compensation plans.

* * * * *
    (g) Effective date and transition rules--(1) General effective 
date--(i) Effective date. Except as otherwise provided in this 
paragraph (g) or in Sec. 31.3121(v)-2, this section is effective for 
amounts deferred and benefits paid on or after January 1, 1998.
* * * * *
Michael P. Dolan,
Deputy Commissioner of Internal Revenue.
[FR Doc. 97-33247 Filed 12-23-97; 8:45 am]
BILLING CODE 4830-01-U