Federal Employment Tax Deposits--De Minimis Rule

DEPARTMENT OF THE TREASURY 
Internal Revenue Service 26 CFR Part 31 [TD 8946] RIN 1545-AY47

TITLE: Federal Employment Tax Deposits--De Minimis Rule

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final regulations.

SUMMARY: This document contains final regulations relating to the
deposit of Federal employment taxes. The final regulations adopt the
rules of the temporary regulations that change the de minimis
deposit rule for quarterly and annual periods from $1,000 to $2,500.
The regulations affect taxpayers required to make deposits of
Federal employment taxes.

DATES: Effective Date: These regulations are effective May 23, 2001.
Applicability Date: For dates of applicability, see
§31.6302-1(f)(4).

FOR FURTHER INFORMATION CONTACT: Brinton T. Warren, (202) 622- 4940
(not a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

This document contains amendments to 26 CFR part 31, Employment
Taxes and Collection of Income Tax at the Source. On December 6,
2000, temporary and final regulations (TD 8909) relating to the
deposit of Federal employment taxes under section 6302 of the
Internal Revenue Code were published in the Federal Register (65 FR
76152). A notice of proposed rulemaking (REG-114423- 00) cross-
referencing the temporary regulations was.2 published in the Federal
Register for the same day (65 FR 76194). No comments were received
from the public in response to the notice of proposed rulemaking.

Explanation of Provisions

These final regulations adopt the rules of the temporary
regulations. Under these rules, a taxpayer does not have to make
deposits of Federal employment taxes for a quarterly or annual
return period if the tax for the period is less than $2,500 and the
taxpayer remits its full liability with a timely filed return for
the period. The regulations are applicable with respect to quarterly
and annual periods beginning on or after January 1, 2001.

Special Analyses

It has been determined that this Treasury decision is not a
significant regulatory action as defined in Executive Order 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, the notice of proposed rulemaking preceding these
regulations was submitted to the Chief Counsel for Advocacy of the
Small Business Administration for comment on its impact on small
business.

Drafting Information

The principal author of the regulations is Brinton T. Warren of the
Office of Associate Chief Counsel, Procedure and Administration
(Administrative Provisions and Judicial Practice Division). 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
removing the entry for Section 31.6302-1T to read in part as
follows:

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

Par. 2. In §31.6302-1, paragraph (f)(4) is revised to read as
follows:

§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 quarterly and annual return periods
beginning on or after January 1, 2001, if the total amount of
accumulated employment taxes for the return period is less than
$2,500 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.

* * * * *

§31.6302-1T [Removed]
Par. 3. Section 31.6302-1T is removed.

Robert E. Wenzel
Deputy Commissioner of Internal Revenue

Approved: May 10, 2001

Mark A. Weinberger
Assistant Secretary for Tax Policy

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