Collapse to view only § 3509. Determination of employer’s liability for certain employment taxes
- § 3501. Collection and payment of taxes
- § 3502. Nondeductibility of taxes in computing taxable income
- § 3503. Erroneous payments
- § 3504. Acts to be performed by agents
- § 3505. Liability of third parties paying or providing for wages
- § 3506. Individuals providing companion sitting placement services
- [§ 3507. Repealed.
- § 3508. Treatment of real estate agents and direct sellers
- § 3509. Determination of employer’s liability for certain employment taxes
- § 3510. Coordination of collection of domestic service employment taxes with collection of income taxes
- § 3511. Certified professional employer organizations
- § 3512. Treatment of certain persons as employers with respect to motion picture projects
§ 3501. Collection and payment of taxes
(a) General rule
(b) Taxes with respect to non-cash fringe benefits
(Aug. 16, 1954, ch. 736, 68A Stat. 471; Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub. L. 98–369, div. A, title V, § 531(d)(5), July 18, 1984, 98 Stat. 885.)
§ 3502. Nondeductibility of taxes in computing taxable income
(a) The taxes imposed by section 3101 of chapter 21, and by sections 3201 and 3211 of chapter 22 shall not be allowed as a deduction to the taxpayer in computing taxable income under subtitle A.
(b) The tax deducted and withheld under chapter 24 shall not be allowed as a deduction either to the employer or to the recipient of the income in computing taxable income under subtitle A.
(Aug. 16, 1954, ch. 736, 68A Stat. 471; Pub. L. 97–248, title III, §§ 305(b), 308(a), Sept. 3, 1982, 96 Stat. 588, 591; Pub. L. 98–67, title I, § 102(a), Aug. 5, 1983, 97 Stat. 369.)
§ 3503. Erroneous payments
Any tax paid under chapter 21 or 22 by a taxpayer with respect to any period with respect to which he is not liable to tax under such chapter shall be credited against the tax, if any, imposed by such other chapter upon the taxpayer, and the balance, if any, shall be refunded.
(Aug. 16, 1954, ch. 736, 68A Stat. 471.)
§ 3504. Acts to be performed by agents
In case a fiduciary, agent, or other person has the control, receipt, custody, or disposal of, or pays the wages of an employee or group of employees, employed by one or more employers, the Secretary, under regulations prescribed by him, is authorized to designate such fiduciary, agent, or other person to perform such acts as are required of employers under this title and as the Secretary may specify. Except as may be otherwise prescribed by the Secretary, all provisions of law (including penalties) applicable in respect of an employer shall be applicable to a fiduciary, agent, or other person so designated but, except as so provided, the employer for whom such fiduciary, agent, or other person acts shall remain subject to the provisions of law (including penalties) applicable in respect of employers.
(Aug. 16, 1954, ch. 736, 68A Stat. 471; Pub. L. 85–866, title I, § 71, Sept. 2, 1958, 72 Stat. 1660; Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834.)
§ 3505. Liability of third parties paying or providing for wages
(a) Direct payment by third parties
(b) Personal liability where funds are supplied
(c) Effect of payment
(Added Pub. L. 89–719, title I, § 105(a), Nov. 2, 1966, 80 Stat. 1138.)
§ 3506. Individuals providing companion sitting placement services
(a) In general
(b) Definition
(c) Regulations
(Added Pub. L. 95–171, § 10(a), Nov. 12, 1977, 91 Stat. 1356.)
[§ 3507. Repealed. Pub. L. 111–226, title II, § 219(a)(1), Aug. 10, 2010, 124 Stat. 2403]
§ 3508. Treatment of real estate agents and direct sellers
(a) General ruleFor purposes of this title, in the case of services performed as a qualified real estate agent or as a direct seller—
(1) the individual performing such services shall not be treated as an employee, and
(2) the person for whom such services are performed shall not be treated as an employer.
(b) DefinitionsFor purposes of this section—
(1) Qualified real estate agentThe term “qualified real estate agent” means any individual who is a sales person if—
(A) such individual is a licensed real estate agent,
(B) substantially all of the remuneration (whether or not paid in cash) for the services performed by such individual as a real estate agent is directly related to sales or other output (including the performance of services) rather than to the number of hours worked, and
(C) the services performed by the individual are performed pursuant to a written contract between such individual and the person for whom the services are performed and such contract provides that the individual will not be treated as an employee with respect to such services for Federal tax purposes.
(2) Direct sellerThe term “direct seller” means any person if—
(A) such person—
(i) is engaged in the trade or business of selling (or soliciting the sale of) consumer products to any buyer on a buy-sell basis, a deposit-commission basis, or any similar basis which the Secretary prescribes by regulations, for resale (by the buyer or any other person) in the home or otherwise than in a permanent retail establishment,
(ii) is engaged in the trade or business of selling (or soliciting the sale of) consumer products in the home or otherwise than in a permanent retail establishment, or
(iii) is engaged in the trade or business of the delivering or distribution of newspapers or shopping news (including any services directly related to such trade or business),
(B) substantially all the remuneration (whether or not paid in cash) for the performance of the services described in subparagraph (A) is directly related to sales or other output (including the performance of services) rather than to the number of hours worked, and
(C) the services performed by the person are performed pursuant to a written contract between such person and the person for whom the services are performed and such contract provides that the person will not be treated as an employee with respect to such services for Federal tax purposes.
(3) Coordination with retirement plans for self-employed
(Added Pub. L. 97–248, title II, § 269(a), Sept. 3, 1982, 96 Stat. 551; amended Pub. L. 104–188, title I, § 1118(a), Aug. 20, 1996, 110 Stat. 1764.)
§ 3509. Determination of employer’s liability for certain employment taxes
(a) In general
If any employer fails to deduct and withhold any tax under chapter 24 or subchapter A of chapter 21 with respect to any employee by reason of treating such employee as not being an employee for purposes of such chapter or subchapter, the amount of the employer’s liability for—
(1) Withholding taxes
(2) Employee social security tax
(b) Employer’s liability increased where employer disregards reporting requirements
(1) In general
In the case of an employer who fails to meet the applicable requirements of section 6041(a), 6041A, or 6051 with respect to any employee, unless such failure is due to reasonable cause and not willful neglect, subsection (a) shall be applied with respect to such employee—
(A) by substituting “3 percent” for “1.5 percent” in paragraph (1); and
(B) by substituting “40 percent” for “20 percent” in paragraph (2).
(2) Applicable requirements
(c) Section not to apply in cases of intentional disregard
(d) Special rules
For purposes of this section—
(1) Determination of liability
If the amount of any liability for tax is determined under this section—
(A) the employee’s liability for tax shall not be affected by the assessment or collection of the tax so determined,
(B) the employer shall not be entitled to recover from the employee any tax so determined, and
(C) section 3402(d) and section 6521 shall not apply.
(2) Section not to apply where employer deducts wage but not social security taxes
This section shall not apply to any employer with respect to any wages if—
(A) the employer deducted and withheld any amount of the tax imposed by chapter 24 on such wages, but
(B) failed to deduct and withhold the amount of the tax imposed by subchapter A of chapter 21 with respect to such wages.
(3) Section not to apply to certain statutory employees
(Added Pub. L. 97–248, title II, § 270(a), Sept. 3, 1982, 96 Stat. 553; amended Pub. L. 100–647, title II, § 2003(d), Nov. 10, 1988, 102 Stat. 3598; Pub. L. 101–508, title V, § 5130(a)(4), Nov. 5, 1990, 104 Stat. 1388–289; Pub. L. 115–141, div. U, title IV, § 401(a)(218), Mar. 23, 2018, 132 Stat. 1194.)
§ 3510. Coordination of collection of domestic service employment taxes with collection of income taxes
(a) General rule
Except as otherwise provided in this section—
(1) returns with respect to domestic service employment taxes shall be made on a calendar year basis,
(2) any such return for any calendar year shall be filed on or before the 15th day of the fourth month following the close of the employer’s taxable year which begins in such calendar year, and
(3) no requirement to make deposits (or to pay installments under section 6157) shall apply with respect to such taxes.
(b) Domestic service employment taxes subject to estimated tax provisions
(1) In general
(2) Employers not otherwise required to make estimated payments
Paragraph (1) shall not apply to any employer for any calendar year if—
(A) no credit for wage withholding is allowed under section 31 to such employer for the taxable year of the employer which begins in such calendar year, and
(B) no addition to tax would (but for this section) be imposed under section 6654 for such taxable year by reason of section 6654(e).
(3) Annualization
(c) Domestic service employment taxes
For purposes of this section, the term “domestic service employment taxes” means—
(1) any taxes imposed by chapter 21 or 23 on remuneration paid for domestic service in a private home of the employer, and
(2) any amount withheld from such remuneration pursuant to an agreement under section 3402(p).
For purposes of this subsection, the term “domestic service in a private home of the employer” includes domestic service described in section 3121(g)(5).
(d) Exception where employer liable for other employment taxes
(e) General regulatory authority
(f) Authority to enter into agreements to collect State unemployment taxes
(1) In general
(2) Transfers to State account
(3) Subtitle F made applicable
(4) State
(Added Pub. L. 103–387, § 2(b)(1), Oct. 22, 1994, 108 Stat. 4073; amended Pub. L. 113–295, div. A, title II, § 221(a)(102), Dec. 19, 2014, 128 Stat. 4052.)
§ 3511. Certified professional employer organizations
(a) General rulesFor purposes of the taxes, and other obligations, imposed by this subtitle—
(1) a certified professional employer organization shall be treated as the employer (and no other person shall be treated as the employer) of any work site employee performing services for any customer of such organization, but only with respect to remuneration remitted by such organization to such work site employee, and
(2) the exemptions, exclusions, definitions, and other rules which are based on type of employer and which would (but for paragraph (1)) apply shall apply with respect to such taxes imposed on such remuneration.
(b) Successor employer statusFor purposes of sections 3121(a)(1), 3231(e)(2)(C), and 3306(b)(1)—
(1) a certified professional employer organization entering into a service contract with a customer with respect to a work site employee shall be treated as a successor employer and the customer shall be treated as a predecessor employer during the term of such service contract, and
(2) a customer whose service contract with a certified professional employer organization is terminated with respect to a work site employee shall be treated as a successor employer and the certified professional employer organization shall be treated as a predecessor employer.
(c) Liability of certified professional employer organizationSolely for purposes of its liability for the taxes and other obligations imposed by this subtitle—
(1) a certified professional employer organization shall be treated as the employer of any individual (other than a work site employee or a person described in subsection (f)) who is performing services covered by a contract meeting the requirements of section 7705(e)(2), but only with respect to remuneration remitted by such organization to such individual, and
(2) the exemptions, exclusions, definitions, and other rules which are based on type of employer and which would (but for paragraph (1)) apply shall apply with respect to such taxes imposed on such remuneration.
(d) Treatment of credits
(1) In generalFor purposes of any credit specified in paragraph (2)—
(A) such credit with respect to a work site employee performing services for the customer applies to the customer, not the certified professional employer organization,
(B) the customer, and not the certified professional employer organization, shall take into account wages and employment taxes—
(i) paid by the certified professional employer organization with respect to the work site employee, and
(ii) for which the certified professional employer organization receives payment from the customer, and
(C) the certified professional employer organization shall furnish the customer and the Secretary with any information necessary for the customer to claim such credit.
(2) Credits specifiedA credit is specified in this paragraph if such credit is allowed under—
(A) section 41 (credit for increasing research activity),
(B) section 45A (Indian employment credit),
(C) section 45B (credit for portion of employer social security taxes paid with respect to employee cash tips),
(D) section 45C (clinical testing expenses for certain drugs for rare diseases or conditions),
(E) section 45R (employee health insurance expenses of small employers),
(F) section 45AA (military spouse retirement plan eligibility credit),
(G) section 51 (work opportunity credit),
(H) section 1396 (empowerment zone employment credit), and
(I) any other section as provided by the Secretary.
(e) Special rule for related party
(f) Special rule for certain individuals
(g) Reporting requirements and obligationsThe Secretary shall develop such reporting and recordkeeping rules, regulations, and procedures as the Secretary determines necessary or appropriate to ensure compliance with this title by certified professional employer organizations or persons that have been so certified. Such rules shall include—
(1) notification of the Secretary in such manner as the Secretary shall prescribe in the case of the commencement or termination of a service contract described in section 7705(e)(2) between such a person and a customer, and the employer identification number of such customer,
(2) such information as the Secretary determines necessary for the customer to claim the credits identified in subsection (d) and the manner in which such information is to be provided, as prescribed by the Secretary, and
(3) such other information as the Secretary determines is essential to promote compliance with respect to the credits identified in subsection (d) and section 3302, and
shall be designed in a manner which streamlines, to the extent possible, the application of requirements of this section and section 7705, the exchange of information between a certified professional employer organization and its customers, and the reporting and recordkeeping obligations of the certified professional employer organization.
(h) Regulations
(Added Pub. L. 113–295, div. B, title II, § 206(a), Dec. 19, 2014, 128 Stat. 4065; amended Pub. L. 117–328, div. T, title I, § 112(c), Dec. 29, 2022, 136 Stat. 5295.)
§ 3512. Treatment of certain persons as employers with respect to motion picture projects
(a) In general
(b) DefinitionsFor purposes of this section—
(1) Motion picture project employerThe term “motion picture project employer” means any person if—
(A) such person (directly or through affiliates)—
(i) is a party to a written contract covering the services of motion picture project workers with respect to motion picture projects in the course of a client’s trade or business,
(ii) is contractually obligated to pay remuneration to the motion picture project workers without regard to payment or reimbursement by any other person,
(iii) controls the payment (within the meaning of section 3401(d)(1)) of remuneration to the motion picture project workers and pays such remuneration from its own account or accounts,
(iv) is a signatory to one or more collective bargaining agreements with a labor organization (as defined in 29 U.S.C. 152(5)) that represents motion picture project workers, and
(v) has treated substantially all motion picture project workers that such person pays as employees and not as independent contractors during such calendar year for purposes of determining employment taxes under this subtitle, and
(B) at least 80 percent of all remuneration (to which section 3121 applies) paid by such person in such calendar year is paid to motion picture project workers.
(2) Motion picture project worker
(3) Motion picture project
(4) Affiliate; affiliated
(Added Pub. L. 114–113, div. Q, title III, § 346(a), Dec. 18, 2015, 129 Stat. 3115.)