[Federal Register Volume 76, Number 234 (Tuesday, December 6, 2011)]
[Rules and Regulations]
[Page 76037]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-31182]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 301

[TD 9554]
RIN 1545-BJ07


Extending Religious and Family Member FICA and FUTA Exceptions to 
Disregarded Entities; Correction

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Correcting amendment.

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SUMMARY: This document describes a correction to final and temporary 
regulations (TD 9554) extending the exceptions from taxes under the 
Federal Insurance Contributions Act (``FICA'') and the Federal 
Unemployment Tax Act (``FUTA'') under sections 3121(b)(3) (concerning 
individuals who work for certain family members), 3127 (concerning 
members of religious faiths), and 3306(c)(5) (concerning persons 
employed by children and spouses and children under 21 employed by 
their parents) of the Internal Revenue Code (``Code'') to entities that 
are disregarded as separate from their owners for Federal tax purposes. 
The temporary regulations also clarify the existing rule that the 
owners of disregarded entities, except for qualified subchapter S 
subsidiaries, are responsible for backup withholding and related 
information reporting requirements under section 3406. These 
regulations were published in the Federal Register on Tuesday, November 
1, 2011 (76 FR 67363).

DATES: This correction is effective on December 6, 2011, and is 
applicable on November 1, 2011.

FOR FURTHER INFORMATION CONTACT: Joseph Perera, (202) 622-6040 (not a 
toll-free number).

SUPPLEMENTARY INFORMATION:

Background

    The final and temporary regulations that are the subject of this 
document are under section 7701 of the Internal Revenue Code.

Need for Correction

    As published, final and temporary regulations (TD 9554) contain an 
error that may prove to be misleading and is in need of clarification.

List of Subjects in 26 CFR 301

    Employment taxes, Estate taxes, Excise taxes, Gift taxes, Income 
taxes, Penalties, Reporting and recording requirements.

Correction of Publication

    Accordingly, 26 CFR part 301 is corrected by making the following 
correcting amendment:

PART 301--PROCEDURE AND ADMINISTRATION

0
Paragraph 1. The authority citation for part 301 continues to read in 
part as follows:

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

0
Par. 2. Section 301.7701-2T is revised to read as follows:


Sec.  301.7701-2T  Business entities; definitions (temporary).

    (a) through (c)(2)(iv) [Reserved]. For further guidance, see Sec.  
301.7701-2(a) through (c)(2)(iv).
    (A) In general. Section Sec.  301.7701-2(c)(2)(i) (relating to 
certain wholly owned entities) does not apply to taxes imposed under 
Subtitle C--Employment Taxes and Collection of Income Tax (Chapters 21, 
22, 23, 23A, 24 and 25 of the Internal Revenue Code). However, Sec.  
301.7701-2(c)(2)(i) does apply to withholding requirements imposed 
under section 3406 (backup withholding). The owner of a business entity 
that is disregarded under Sec.  301.7701-2 is subject to the 
withholding requirements imposed under section 3406 (backup 
withholding). Section 301.7701-2(c)(2)(i) also applies to taxes imposed 
under Subtitle A, including Chapter 2--Tax on Self Employment Income. 
The owner of an entity that is treated in the same manner as a sole 
proprietorship under Sec.  301.7701-2(a) will be subject to tax on 
self-employment income.
    (B) [Reserved]. For further guidance, see Sec.  301.7701-
2(c)(2)(iv)(B).
    (C) Exceptions. For exceptions to the rule in Sec.  301.7701-
2(c)(2)(iv)(B), see sections 31.3121(b)(3)-1(d), 31.3127-1(c), and 
31.3306(c)(5)-1(d).
    (D) through (e)(4) [Reserved]. For further guidance, see Sec.  
301.7701-2(c)(2)(iv)(D) through (e)(4).
    (5) Paragraphs (c)(2)(iv)(A) and (c)(2)(iv)(C) of this section 
apply to wages paid on or after December 6, 2011. For rules that apply 
to paragraph (c)(2)(iv)(A) of this section before December 6, 2011, see 
26 CFR part 301 revised as of April 1, 2009. However, taxpayers may 
apply paragraphs (c)(2)(iv)(A) and (c)(2)(iv)(C) of this section to 
wages paid on or after January 1, 2009.
    (e)(6) through (e)(7) [Reserved]. For further guidance, see Sec.  
301.7701-2(e)(6) through (e)(7).
    (8) Expiration Date. The applicability of paragraphs (c)(2)(iv)(A) 
and (c)(2)(iv)(C) of this section expires on or before December 5, 
2014.

LaNita Van Dyke,
Chief, Publications and Regulations Branch, Legal Processing Division, 
Associate Chief Counsel, (Procedure and Administration).
[FR Doc. 2011-31182 Filed 12-5-11; 8:45 am]
BILLING CODE 4830-01-P