[Federal Register Volume 65, Number 235 (Wednesday, December 6, 2000)]
[Rules and Regulations]
[Pages 76152-76153]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-30791]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 31

[TD 8909]
RIN 1545-AY46


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 December 6, 
2000.
    Applicability date: For dates of applicability, see Sec. 31.6302-
1T(f)(4).

FOR FURTHER INFORMATION CONTACT: Brinton T. Warren, (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 the Source. Section 31.6302-
1(f)(4) provides that if the total amount of accumulated employment 
taxes for a return period is less than $1,000 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 $1,000 threshold to $2,500. 
Thus, a taxpayer that has accumulated employment taxes of less than 
$2,500 for a return period (quarterly or annual, as the case may be) 
does not have to make deposits but may remit its full

[[Page 76153]]

liability with a timely filed return for the return period.
    The de minimis threshold is being raised as part of the IRS and 
Treasury's continued efforts to reduce burden on the small business 
community. On June 16, 1998, temporary regulations (TD 8771) that 
raised the de minimis threshold from $500 to $1,000 were published in 
the Federal Register (63 FR 32735). This increase of the threshold to 
$1,000 was made final on June 17, 1999, (TD 8822) in regulations 
published in the Federal Register (64 FR 32408).
    Having conducted further study, the IRS now seeks additional 
changes in deposit requirements to reduce taxpayer burden. The IRS and 
Treasury have determined that another increase in the de minimis 
threshold is a simple and straightforward step that will reduce burden 
on small businesses.

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, these 
regulations will be submitted to the Chief Counsel for Advocacy of the 
Small Business Administration for comment on their impact on small 
businesses.

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 
adding an entry in numerical order to read in part as follows:

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

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


    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) * * * For guidance regarding de minimis amounts for quarterly 
or annual return periods beginning on or after January 1, 2001, 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 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.
    (f)(5) through (n). [Reserved] For further guidance, see 
Sec. 31.6302-1(f)(5) through (n).

    Approved: November 21, 2000.
Charles O. Rossotti,
Commissioner of Internal Revenue.
 Jonathan Talisman,
Acting Assistant Secretary for Tax Policy.
[FR Doc. 00-30791 Filed 12-5-00; 8:45 am]
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