[Federal Register Volume 63, Number 115 (Tuesday, June 16, 1998)]
[Rules and Regulations]
[Pages 32735-32736]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-15984]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 31

[TD 8771]
RIN 1545-AW29


Federal Employment Tax Deposits--De Minimis Rule

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Temporary and final regulations.

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SUMMARY: This document contains temporary and final regulations 
relating to the deposit of Federal employment taxes. The regulations 
change the de minimis deposit rule for quarterly and annual return 
periods. The regulations affect taxpayers required to make deposits of 
Federal employment taxes. The text of the 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.

DATES: Effective date: These regulations are effective June 16, 1998.
    Applicability date: For dates of applicability, see Sec. 31.6302-
1T(f)(4).

FOR FURTHER INFORMATION CONTACT: Vincent Surabian (202) 622-4940 (not a 
toll-free call).

SUPPLEMENTARY INFORMATION:

Background and Explanation of Provisions

    This document contains amendments to 26 CFR part 31, Employment 
Taxes and Collection of Income Tax at Source. Section 31.6302-1(f)(4) 
provides that if the total amount of accumulated employment taxes for 
the quarter is less than $500 and the amount is fully deposited or 
remitted with a timely filed return for the quarter, the amount 
deposited or remitted will be deemed to be timely deposited.
    The temporary regulations change the $500 threshold to $1,000. In 
addition, the regulations replace the term ``quarter'' with the term 
``return period'' since some employment taxes are reported on an annual 
basis (Forms 943, 945, and CT-1) rather than quarterly (Form 941). 
Thus, a taxpayer that has accumulated employment taxes of less than 
$1,000 for a return period (quarterly or annual, as the case may be) 
does not have to make deposits but may remit its full liability with a 
timely filed return for the return period.

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 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 a collection of information on small entities, the 
Regulatory Flexibility Act (5 U.S.C. chapter 6) does not apply. 
Pursuant to section 7805(f) of the Internal Revenue Code, these 
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 Surabian, Office of Assistant Chief Counsel (Income Tax & 
Accounting). 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.

Adoption of Amendments to the Regulations

    Accordingly, 26 CFR part 31 is 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. * * *

    Sec. 31.6302-1T also issued under 26 U.S.C. 6302 (a) and (c). * * *

[[Page 32736]]

    Par. 2. In Sec. 31.6302-1, a new sentence is added at the end of 
paragraph (f)(4) to read as follows:


Sec. 31.6302-1  Federal tax deposit rules for withheld income taxes and 
taxes under the Federal Insurance Contributions Act (FICA) attributable 
to payments made after December 31, 1992.

* * * * *
    (f) * * *
    (4) De Minimis rule. * * * For guidance regarding de minimis 
amounts for quarterly return periods beginning on or after July 1, 
1998, and annual return periods beginning on or after January 1, 1999, 
see Sec. 31.6302-1T(f)(4).
* * * * *
    Par. 3. Section 31.6302-1T is added to read as follows:


Sec. 31.6302-1T  Federal tax deposit rules for withheld income taxes 
and taxes under the Federal Insurance Contributions Act (FICA) 
attributable to payments made after December 31, 1992 (temporary).

    (a) through (f)(3). [Reserved] For further guidance, see 
Sec. 31.6302-1(a) through (f)(3).
    (f)(4) De Minimis rule. For quarterly return periods beginning on 
or after July 1, 1998, and annual return periods beginning on or after 
January 1, 1999, if the total amount of accumulated employment taxes 
for the return period is less than $1,000 and the amount is fully 
deposited or remitted with a timely filed return for the return period, 
the amount deposited or remitted will be deemed to have been timely 
deposited.
    (f)(5) through (m). [Reserved] For further guidance, see 
Sec. 31.6302-1(g) through (m).
Michael P. Dolan,
Deputy Commissioner of Internal Revenue.

    Approved: June 1, 1998.
Donald C. Lubick,
Assistant Secretary of the Treasury.
[FR Doc. 98-15984 Filed 6-15-98; 8:45 am]
BILLING CODE 4830-01-U