[Federal Register Volume 71, Number 248 (Wednesday, December 27, 2006)]
[Rules and Regulations]
[Page 77612]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-22022]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 31

[TD 9276]
RIN 1545-BD96


Flat Rate Supplemental Wage Withholding; Correction

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Correcting amendment.

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SUMMARY: This document contains corrections to final regulations (TD 
9276) that were published in the Federal Register on Tuesday, July 25, 
2006 (71 FR 42049), amending the regulations that provide for 
determining the amount of income tax withholding on supplemental wages. 
These regulations apply to all employers and others making supplemental 
wage payments to employees.

DATES: The correction will be effective January 1, 2007.

FOR FURTHER INFORMATION CONTACT: A.G. Kelley, (202) 622-6040 (not a 
toll-free number).

SUPPLEMENTARY INFORMATION:

Background

    The final regulations that are the subject of these corrections are 
under sections 3401 and 3402 of the Internal Revenue Code.

Need for Corrections

    As published, final regulations (TD 9276) contain errors that may 
prove to be misleading and are in need of clarification.

List of Subjects in 26 CFR Part 31

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

Correction of Publication

0
Accordingly, 26 CFR part 31 is corrected by making the following 
correcting amendments:

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

0
Paragraph 1. The authority citation for part 31 continues to read, in 
part, as follows:

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


0
Par. 2. Section 31.3402(g)-1(a)(8) is amended by revising the fifth 
sentence of Example 1 paragraph (iii), the fifth sentence of Example 3 
paragraph (i), the last sentence of Example 3 paragraph (iv) and the 
third sentence of Example 3 paragraph (vi).
    The revisions read as follows:


Sec.  31.3402(g)-1  Supplemental wage payments.

    (a) * * *
    (8) * * *
    Example 1. * * *
    (iii) * * * If Y elected to withhold income tax using paragraph 
(a)(7) of this section, Y would withhold on the $400,000 component 
at 25 percent (pursuant to paragraph (a)(7)(iii)(F) of this 
section), which would result in $100,000 tax withheld. * * *
* * * * *
    Example 3. (i) * * * Unrelated company U pays D sick pay as an 
agent of the employer R and such sick pay is supplemental wages 
pursuant to Sec.  31.3401(a)-1(b)(8)(i)(b)(2). * * *
* * * * *
    (iv) * * * If R elects to use optional flat rate withholding 
provided under paragraph (a)(7)(iii)(f) of this section, withholding 
would be calculated at 25 percent of the $1,000,000 portion of the 
payment and would be $250,000.
* * * * *
    (vi) * * * If U elects to withhold income tax at the flat rate 
provided under paragraph (a)(7)(iii)(F) of this section, withholding 
on the $50,000 of sick pay would be calculated at 25 percent of the 
$50,000 payment and would be $12,500. * * *
* * * * *

LaNita Van Dyke,
Chief, Publications and Regulations Branch, Legal Processing Division, 
Associate Chief Counsel (Procedure and Administration).
 [FR Doc. E6-22022 Filed 12-26-06; 8:45 am]
BILLING CODE 4830-01-P