For Tax Professionals  
T.D. 8771 June 24, 1998

Federal Employment Tax Deposits--De Minimis Rule

DEPARTMENT OF THE TREASURY
Internal Revenue Service 26 CFR Part 31 [TD 8771] RIN 1545-AW29

TITLE: Federal Employment Tax Deposits--De Minimis Rule

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Temporary and final regulations.

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 June 16,
1998.

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

FOR FURTHER INFORMATION CONTACT: Vincent Surabian (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 Source. Section 31.6302-1(f)(4) provides that if the
total amount of accumulated employment taxes for the quarter is less
than $500 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 $500 threshold to $1,000. In
addition, the regulations replace the term "quarter" with the term
"return period" since some employment taxes are reported on an
annual basis (Forms 943, 945, and CT-1) rather than quarterly (Form
941). Thus, a taxpayer that has accumulated employment taxes of less
than $1,000 for a return period (quarterly or annual, as the case
may be) does not have to make deposits but may remit its full
liability with a timely filed return for the return period.

Special Analyses

It has been determined that this Treasury decision is not a
significant regulatory action as defined in EO 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 business.

Drafting Information

The principal author of these regulations is Vincent Surabian,
Office of Assistant Chief Counsel (Income Tax & Accounting).
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 as follows:

Authority: 26 U.S.C. 7805. * * * 31.6302-1T also issued under 26
U.S.C. 6302(a) and (c).

* * *

Par. 2. In 31.6302-1, a new sentence is added at the end of
paragraph (f)(4) 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.

* * * *

(4) De Minimis rule. * * * For guidance regarding de minimis amounts
for quarterly return periods beginning on or after July 1, 1998, and
annual return periods beginning on or after January 1, 1999, see
31.6302-1T(f)(4).

* * * * *

Par. 3. Section 31.6302-1T is added to read as follows:

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
31.6302-1(a) through (f)(3).

(f)(4) De Minimis rule. For quarterly return periods beginning on or
after July 1, 1998, and annual return periods beginning on or after
January 1, 1999, if the total amount of accumulated employment taxes
for the return period is less than $1,000 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 (m). [Reserved] For further
guidance, see 31.6302-1(f)(5) through (m).

Deputy Commissioner of Internal Revenue
Approved:
Assistant Secretary of the Treasury


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