August 3, 1992
TO: TAX COMMITTEE NO. 29-92
PENSION COMMITTEE NO. 27-92
OPERATIONS COMMITTEE NO. 21-92
TRANSFER AGENT ADVISORY COMMITTEE NO. 42-92
RE: INSTITUTE TESTIFIES ON PROPOSED TAX DEPOSIT REGULATIONS
__________________________________________________________
As we previously informed you, the Institute recently filed
written comments on proposed amendments to the regulations under
section 6302 of the Internal Revenue Code that provide rules for
depositing "employment taxes", including payroll taxes, pension
and annuity withholding amounts and backup withholding amounts.
(See Institute Memoranda to Tax Committee No. 28-92, Pension
Committee No. 26-92, Operations Committee No. 20-92 and Transfer
Agent Advisory Committee No. 39-92, dated July 24, 1992; and to
Tax Committee No. 21-92, Operations Committee No. 17-92 and
Transfer Agent Advisory Committee No. 30-92, dated June 9, 1992.)
Today, at an IRS public hearing on the regulations, the
Institute made two specific comments and reiterated its support
for the regulations. A copy of the Institute’s testimony is
attached. First, the Institute applauded the proposal’s new
semi-weekly deposit rule which, by requiring deposits on Tuesdays
and Fridays rather than every eighth of a month, would greatly
simplify the administration of backup withholding and pension and
annuity withholding.
Second, the Institute supported the distinction made for
deposit purposes between backup withholding and other withheld
tax amounts. The Institute further suggested that it may be
appropriate to provide separate tax deposit rules for pension and
annuity withholding. In this context, the Institute noted that
the only IRS guidance for depositing pension and annuity amounts
is contained in an IRS Announcement (No. 84-40). Under this
Announcement, payors may: (1) aggregate withholding amounts from
all designated pension distributions under its control with its
payroll tax deposits; (2) request a separate Employer
Identification Number ("EIN") solely for purposes of reporting
the aggregated withholding from the designated pension
distributions under its control; or (3) remit the tax under the
EIN of each pension plan separately. The Institute urged that
- 2 -
the options provided by Announcement 84-40 be included in these
payroll tax deposit regulations.
We will keep you informed of developments.
Keith D. Lawson
Associate Counsel - Tax
Attachment