Opinion ID: 480545
Heading Depth: 1
Heading Rank: 3

Heading: the statutory amendments

Text: 12 In 1983, Congress amended the statutes to codify Revenue Ruling 65-208. See S.Rep. No. 23, 98th Cong., 1st Sess. 41, reprinted in 1983 U.S.Code Cong. & Ad.News 143, 182. Section 3121(a)(2) was amended by deleting the exclusion from FICA wages for retirement plans. Social Security Amendments of 1983, Pub.L. No. 98-21, Sec. 324(a)(3)(A), 97 Stat. 65, 123. A new section was added so that employer payments under or to an annuity contract described in section 403(b), other than a payment for the purchase of such contract which is made by reason of a salary reduction agreement are excluded from FICA wages, making it clear that salary reduction plans are subject to FICA taxes. Social Security Amendments of 1983 Sec. 324(a)(2)(C), 97 Stat. at 122 (codified at I.R.C. Sec. 3121(a)(5)(D) (1986)). Additionally, Congress enacted a general decoupling section that provides: Nothing in the regulations prescribed for purposes of chapter 24 (relating to income tax withholding) which provides an exclusion from 'wages' as used in such chapter shall be construed to require a similar exclusion from 'wages' in the regulations prescribed for purposes of this chapter [ (relating to FICA taxes) ]. Social Security Amendments of 1983 Sec. 327(d)(1), 97 Stat. at 127 (codified at I.R.C. Sec. 3121(a) (1986)). 13 These amendments initially were applicable only to remuneration paid after December 31, 1983. As part of the Deficit Reduction Act of 1984, however, Congress gave retroactive effect to the decoupling provision to remuneration ... paid after March 4, 1983, and to any such remuneration paid on or before such date which the employer treated as wages when paid. Deficit Reduction Act of 1984, Pub.L. No. 98-369, Sec. 2662(g), 98 Stat. 494, 1160. Because this amendment retroactively applied the 1983 provisions to remuneration the employer treated as wages when paid, it could be read as applying only to taxes levied in accordance with the regulations invalidated in Rowan. But as the Second and Third Circuits have held, Congress had the broader purpose of precluding claims for FICA tax refunds based on Rowan. See Canisius College v. United States, 799 F.2d at 23-25; Temple Univ. v. United States, 769 F.2d at 132-33. Congress wanted to prevent the 1983 amendments from being cited as demonstrating Congressional intent that the reasoning of the Rowan decision should generally apply before these dates to types of remuneration other than meals and lodging excluded under section 119, e.g., to contributions under a salary reduction agreement to tax-sheltered annuities (sec. 403(b)). H.R.Rep. No. 432, 98th Cong., 1st Sess. 1658, reprinted in 1984 U.S.Code Cong. & Ad.News 697, 1280. Congress was concerned that [i]f the 1965 revenue ruling were determined to be invalid, then employers and employees would be eligible for refunds for open years because taxable wages would be lower. Id. The 1983 and 1984 amendments, therefore, were intended to foreclose the kind of claim being made by the Hospital. Unless the amendments are invalid, the Hospital is not entitled to a refund.