[Federal Register Volume 78, Number 230 (Friday, November 29, 2013)]
[Rules and Regulations]
[Pages 71468-71475]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-28411]



[[Page 71468]]

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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Parts 1 and 31

[TD 9645]
RIN 1545-BK54


Rules Relating to Additional Medicare Tax

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final regulations.

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SUMMARY: This document contains final regulations relating to 
Additional Hospital Insurance Tax on income above threshold amounts 
(``Additional Medicare Tax''), as added by the Affordable Care Act. 
Specifically, these final regulations provide guidance for employers 
and individuals relating to the implementation of Additional Medicare 
Tax, including the requirement to withhold Additional Medicare Tax on 
certain wages and compensation, the requirement to file a return 
reporting Additional Medicare Tax, the employer process for adjusting 
underpayments and overpayments of Additional Medicare Tax, and the 
employer and individual processes for filing a claim for refund for an 
overpayment of Additional Medicare Tax.

DATES: Effective date: These regulations are effective on November 29, 
2013.
    Applicability date: For dates of applicability, see Sec. Sec.  
1.1401-1(e), 31.3101-2(d), 31.3102-1(f), 31.3102-4(d), 31.3202-1(h), 
31.6011(a)-1(h), 31.6011(a)-2(e), 31.6205-1(e), 31.6402(a)-2(c), 
31.6413(a)-1(c), and 31.6413(a)-2(e).

FOR FURTHER INFORMATION CONTACT: Andrew K. Holubeck at (202) 317-4774 
(not a toll-free number).

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

    The collection of information contained in these final regulations 
has been reviewed and approved by the Office of Management and Budget 
in accordance with the Paperwork Reduction Act (PRA) of 1995 (44 U.S.C. 
3507(d)) under control number 1545-2097. The collection of information 
in these regulations is in Sec. Sec.  31.6011(a)-1, 31.6011(a)-2, 
31.6205-1, 31.6402(a)-2, 31.6413(a)-1, and 31.6413(a)-2. This 
information is required by the IRS to verify compliance with return 
requirements under section 6011, employment tax adjustments under 
sections 6205 and 6413, and claims for refund of overpayments under 
section 6402. This information will be used to determine whether the 
amount of tax has been reported and calculated correctly. The likely 
respondents are employers and individuals.
    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information unless it displays a valid 
control number assigned by the Office of Management and Budget.
    Books or records relating to a collection of information must be 
retained as long as their contents may become material in the 
administration of any internal revenue law. Generally, tax returns and 
tax return information are confidential, as required by 26 U.S.C. 6103.

Background

    These final regulations are issued in connection with the 
Additional Hospital Insurance Tax on income above threshold amounts 
(``Additional Medicare Tax''), as added by section 9015 of the Patient 
Protection and Affordable Care Act (PPACA), Public Law 111-148 (124 
Stat. 119 (2010)), and as amended by section 10906 of the PPACA and 
section 1402(b) of the Health Care and Education Reconciliation Act of 
2010, Public Law 111-152 (124 Stat. 1029 (2010)) (collectively, the 
``Affordable Care Act''). The final regulations include amendments to 
Sec.  1.1401-1 of the Income Tax Regulations, and Sec. Sec.  31.3101-2, 
31.3102-1, 31.3102-4, 31.3202-1, 31.6011(a)-1, 31.6011(a)-2, 31.6205-1, 
31.6402(a)-2, 31.6413(a)-1, and 31.6413(a)-2 of the Employment Tax 
Regulations. The final regulations provide guidance for employers and 
individuals relating to the implementation of Additional Medicare Tax, 
including the requirement to withhold Additional Medicare Tax on 
certain wages and compensation, the requirement to file a return 
reporting Additional Medicare Tax, the employer process for adjusting 
underpayments and overpayments of Additional Medicare Tax, and the 
employer and individual processes for filing a claim for refund of 
Additional Medicare Tax.
    A notice of proposed rulemaking (REG-130074-11) was published in 
the Federal Register (77 FR 72268) on December 5, 2012. A public 
hearing was scheduled for April 4, 2013. The IRS did not receive any 
requests to testify at the public hearing, and therefore the public 
hearing was cancelled. Comments responding to the proposed regulations 
were received. All comments were considered and are available for 
public inspection and copying at http://www.regulations.gov or upon 
request. After consideration of all the comments, the proposed 
regulations are adopted as amended by this Treasury decision. The 
public comments and revisions are discussed in this preamble.

Summary of Comments and Explanation of Revisions

    The IRS received five comments in response to the proposed 
regulations. One commenter expressed concern that the 2013 Old Age, 
Survivors and Disability Insurance (OASDI) tax rate for employees of 
6.2 percent was applied to wages for services performed in the last two 
weeks of 2012, when the OASDI tax rate for employees was 4.2 percent. 
This comment is outside the scope of these regulations.
    Another commenter requested that the comment period for the 
proposed regulations be extended by 60 days. The Administrative 
Procedure Act does not set a time frame for a comment period on 
regulations. However, Executive Order (E.O.) 12866 provides that 
generally a comment period should be no less than 60 days. The public 
was given 90 days to comment on the proposed regulations, which exceeds 
the period required by E.O. 12866. The IRS received only five comments 
during the 90-day comment period, no comments were received after the 
90-day comment period expired, and there is no indication that more 
comments would have been received if the comment period had been 
extended. Therefore, an extension of the comment period beyond the 90 
days provided in the proposed regulations was not warranted.
    One commenter noted that because Additional Medicare Tax will 
involve new recordkeeping and withholding procedures for employers and 
certain employees, there may be inadvertent errors involved with 
implementing the tax, especially in the first year of implementation. 
Therefore, the commenter requested that the IRS grant employers 
flexibility in correcting overpayments and underpayments of Additional 
Medicare Tax by allowing additional time to correct errors, allowing 
corrections for a certain period without penalty, and granting an 
exemption from penalties for de minimis errors.
    No such changes were made in these final regulations. The 
regulations under Sec. Sec.  31.6205-1(a) and 31.6413(a)-2 already 
allow employers flexibility in making interest-free adjustments of 
underpayments and overpayments and, to the extent an employer discovers 
an error in withholding, paying, or reporting Additional Medicare Tax, 
the regulations provide procedures for

[[Page 71469]]

correcting that error on an adjusted employer return generally without 
imposition of interest. Further, under sections 6651 and 6656, 
penalties for failure to pay or deposit Additional Medicare Tax do not 
apply to the extent the failure is due to reasonable cause and not 
willful neglect.
    To correct an overpayment of income tax or Additional Medicare Tax, 
an employer may make an adjustment only if it repays or reimburses the 
employee prior to the end of the calendar year in which the wages or 
compensation was paid. Similarly, to correct an underpayment of income 
tax or Additional Medicare Tax, an employer may make an interest-free 
adjustment only if the error is ascertained within the calendar year in 
which the wages or compensation was paid. Because employees will report 
Additional Medicare Tax on Form 1040, ``U.S. Individual Tax Return,'' 
allowing employers time beyond the end of the calendar year in which 
the error was made to correct overpayments and underpayments would 
create complexity and confusion for individuals filing individual 
income tax returns and would adversely affect tax administration. 
Accordingly, these final regulations do not include additional 
procedures specifically for correcting Additional Medicare Tax errors, 
but rather generally rely on existing procedures for correcting income 
tax withholding errors.
    One commenter questioned how employers should treat repayment by an 
employee of wage payments received by the employee in a prior year for 
Additional Medicare Tax purposes (for example, sign on bonuses paid to 
employees that are subject to repayment if certain conditions are not 
satisfied). Employers cannot make an adjustment or file a claim for 
refund for Additional Medicare Tax withholding when there is a 
repayment of wages received by an employee in a prior year because the 
employee determines liability for Additional Medicare Tax on the 
employee's income tax return for the prior year; however, the employee 
may be able to file an amended return claiming a refund of the 
Additional Medicare Tax.
    More specifically, under current employment tax adjustment 
procedures, if the repayment occurs within the period of limitations 
for refund, the employer can repay or reimburse the social security and 
Medicare taxes withheld from the wage payment to the employee and file 
a refund claim, or make an interest-free adjustment, for the social 
security and Medicare tax overwithholding. However, under Sec.  
31.6413(a)-1(a)(2)(ii) of these regulations, an employer may adjust 
overpaid Additional Medicare Tax withheld from employees only in the 
calendar year in which the wages or compensation are paid, and only if 
the employer repays or reimburses the employee the amount of the 
overcollection prior to the end of the calendar year. Further, under 
Sec.  31.6402(a)-2(a)(1)(iii) of these regulations, employers may claim 
a refund of overpaid Additional Medicare Tax only if the employer did 
not deduct or withhold the overpaid Additional Medicare Tax from the 
employee's wages or compensation. Accordingly, these regulations at 
Sec.  31.6402(a)-2(b)(3)(ii) provide that, in the case of an 
overpayment of Additional Medicare Tax for a year for which an 
individual has filed Form 1040, a claim for refund should be made by 
the individual on Form 1040X, ``Amended U.S. Individual Income Tax 
Return.'' Since a wage repayment reduces the wages subject to 
Additional Medicare Tax for the period during which the wages were 
originally paid, the employee is entitled to file an amended return (on 
Form 1040X) to recover Additional Medicare Tax with respect to the 
repaid wages.\1\
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    \1\ In this situation, Additional Medicare Tax is treated 
differently than federal income tax. For federal income tax 
purposes, wages paid in a year are considered income to the employee 
in that year, even when the wages are repaid by the employee to the 
employer in a subsequent year. If an employee repays wages to an 
employer in a year following the year in which the wages were 
originally paid, the employee cannot reduce the federal income tax 
for the prior year (i.e., the employee cannot file an amended income 
tax return for the prior year using Form 1040X). Instead, depending 
on the circumstances, the employee may be entitled to a deduction 
for the repaid wages (or in some cases, if the requirements of 
section 1341 are satisfied, a reduction of tax) on his or her income 
tax return for the year of repayment. By contrast, the Additional 
Medicare Tax is part of FICA and, similar to social security tax and 
Medicare tax, the repayment of wages reduces the employee's 
liability for Additional Medicare Tax for the prior year.
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    Finally, one commenter expressed concern about the impact of the 
regulations on the small business and individual community. The 
commenter disagreed with the conclusion in the proposed regulations 
that no regulatory assessment was required under E.O. 12866 because the 
rulemaking is not a significant regulatory action. The commenter also 
disagreed with the conclusion in the proposed regulations that a 
regulatory flexibility analysis was not required under the Regulatory 
Flexibility Act (5 U.S.C. 601) (RFA) because the collection of 
information contained in the proposed regulations will not have a 
significant economic impact on a substantial number of small entities.
    Section 3(a)(4)(B) of E.O. 12866 requires agencies to prepare a 
regulatory assessment for ``significant regulatory actions'' as defined 
in section 3(f) of E.O. 12866. As part of its definition of significant 
regulatory actions, section 3(f) includes economically significant 
regulations, that is, regulatory actions that are likely to have an 
annual effect on the economy of $100 million or more. The commenter 
contends that the skills equivalent to a junior associate accountant 
would be needed to comply with the regulations. The commentator 
contends that, assuming a junior associate reasonably bills for 
services at the rate of $100 per hour, and using the estimated annual 
reporting or recordkeeping burden for these regulations of 1,900,000 
hours, the estimated annual effect on the economy is $190 million.
    The Treasury Department and the IRS do not agree with the 
commenter's assertion that all individuals and entities subject to 
these regulations will require the services of an accountant. Many 
employers utilize payroll service providers that are equipped to comply 
with these regulations and that will include Additional Medicare Tax as 
part of the payroll services they provide. Other employers and 
individuals will be able to comply with these regulations without 
assistance by following the instructions that accompany tax forms and 
by utilizing other information provided by the IRS. Therefore, neither 
the proposed regulations, nor these final regulations, are significant 
regulatory actions within the meaning of E.O. 12866, and a regulatory 
assessment is not required.
    The RFA requires agencies to prepare a regulatory flexibility 
analysis addressing the impact of proposed or final regulations on 
small entities. The proposed regulations certified that a regulatory 
flexibility analysis is not required because the collection of 
information contained in the regulations will not have a significant 
economic impact on a substantial number of small entities. The 
commenter challenged this certification.
    A ``collection of information'' is defined in the RFA as a 
requirement that a small entity report information to the Federal 
Government, or maintain specified records, regardless of whether the 
information in those records is reported to the Federal Government. The 
regulations contain a collection of information requirement.
    The RFA does not define ``substantial number.'' In general, for 
purposes of the RFA, regulations with a broad effect on

[[Page 71470]]

business are presumed to have an impact on a substantial number of 
small entities. Since these regulations have a broad effect on 
business, these regulations will have an impact on a substantial number 
of small entities.
    The RFA also does not define ``significant economic impact.'' As 
stated in connection with the discussion of E.O. 12866, the commenter 
assumed a billing rate of $100 per hour, and multiplied that rate by 
the estimated aggregate annual PRA reporting or recordkeeping burden 
for these regulations of 1,900,000 hours, to estimate the annual effect 
on the economy to be $190 million. Based on this calculation, the 
commenter concluded that the collection of information had a 
significant economic impact on a substantial number of small entities.
    The commenter's approach is not an appropriate measure of the 
economic impact of these regulations on small entities. The 1,900,000 
hours estimated to be the aggregate annual PRA burden for these 
regulations represents an estimated 1,900,000 respondents with an 
estimated average annual burden per respondent of 1 hour. The number of 
respondents comprises all respondents affected by these regulations, 
including individuals as well as entities. It is not an estimated 
number of affected entities only. The IRS estimates that approximately 
325,000 entities report Medicare wages to one or more individuals in 
excess of the $200,000 Additional Medicare Tax withholding threshold. 
Thus, approximately 325,000 entities, encompassing both large and small 
entities, are affected by these regulations. Therefore, the reporting 
or recordkeeping burden of these regulations on small entities is 
estimated to be significantly less than 1,900,000 hours. The 
commenter's use of this number to assess the annual economic impact of 
these regulations on small entities is incorrect.
    In addition, to the extent that there is a significant economic 
impact, the economic impact principally results directly from the 
underlying statutes. For example, the statute imposing Additional 
Medicare Tax requires the employer to withhold the tax from wages paid 
to the employee. Other provisions of the Internal Revenue Code (Code) 
require the employer to report and pay the correct amount of withheld 
tax to the government. Similarly, the collection of information 
required with regard to interest-free adjustments and claims for refund 
apply existing statutory rules to Additional Medicare Tax. The 
regulations implement the underlying statutes and provide guidance for 
employers and individuals relating to the requirement to file a return 
reporting Additional Medicare Tax, the employer process for making 
adjustments of underpayments and overpayments of Additional Medicare 
Tax, and the employer and individual processes for filing a claim for 
refund for an overpayment of Additional Medicare Tax. As a result, the 
estimated annual PRA burden per taxpayer for these regulations is very 
low. Consequently, the economic impact of these regulations is not 
expected to be significant, and neither the proposed regulations nor 
these final regulations will have a significant economic impact on a 
substantial number of small entities within the meaning of the RFA. 
Therefore a regulatory flexibility analysis is not required.
    The proposed regulations provided that if the employer deducts less 
than the correct amount of Additional Medicare Tax, it is nevertheless 
liable for the correct amount of tax that it was required to withhold, 
unless and until the employee pays the tax. Consistent with section 
3102(f)(3) of the Code, the proposed regulations also provided that if 
an employee subsequently pays the tax that the employer failed to 
deduct, the tax will not be collected from the employer. These final 
regulations further provide that an employer is not relieved of its 
liability for payment of any Additional Medicare Tax required to be 
withheld unless it can show that the tax has been paid by the employee. 
Section 3102(f)(3) contains language similar to section 3402(d) of the 
Code, and this provision of the final regulations is consistent with 
the approach used in the regulations under section 3402(d). Employers 
will use Form 4669, ``Statement of Payments Received,'' and Form 4670, 
``Request for Relief from Payment of Income Tax Withholding,'' the same 
forms used for requesting federal income tax withholding relief, to 
request relief from paying Additional Medicare Tax that has already 
been paid by the employee.
    The final regulations also amend the proposed regulations to comply 
with formatting requirements of the Office of the Federal Register.

Special Analyses

    It has been determined that this Treasury decision is not a 
significant regulatory action as defined in E.O. 12866, and 
supplemented by E.O. 13653. The regulations implement the underlying 
statutes and the economic impact is principally a result of the 
underlying statutes, rather than the regulations. Therefore, a 
regulatory assessment is not required. It has also been determined that 
section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) 
does not apply to these regulations.
    Sections 603 and 604 of the RFA (5 U.S.C. chapter 6) generally 
require agencies to prepare a regulatory flexibility analysis 
addressing the impact of proposed and final regulations, respectively, 
on small entities. Section 605(b) of the RFA, however, provides that 
sections 603 and 604 shall not apply if the head of the agency 
certifies that the rule will not have a significant economic impact on 
a substantial number of small entities. For the reasons discussed in 
the Summary of Comments section of the preamble, as well as the reasons 
set forth in the succeeding paragraphs, it is hereby certified that the 
collection of information requirements contained in these regulations 
will not have a significant economic impact on a substantial number of 
small entities.
    The regulations under sections 6205, 6402, and 6413 affect all 
taxpayers that file employment tax returns or claims for refund of 
employment taxes. Many small entities fall into this category. 
Therefore, it has been determined that these regulations will affect a 
substantial number of small entities. It also has been determined, 
however, that the economic impact on entities affected by these 
regulations will not be significant.
    As stated above, the regulations implement the underlying statutes 
and the economic impact is principally a result of the underlying 
statutes, rather than the regulations. The regulations require 
taxpayers that file employment tax returns and that make interest-free 
adjustments to the returns for underpayments or overpayments of 
Additional Medicare Tax, or that file claims for refund of an 
overpayment of Additional Medicare Tax, to provide an explanation 
setting forth the basis for the correction or the claim in detail, 
designating the return period in which the error was ascertained and 
the return period being corrected, and setting forth such other 
information as may be required by the instructions to the form. In 
addition, for adjustments of overpayments of Additional Medicare Tax, 
employers must obtain and retain the written receipt of the employee 
showing the date and amount of the repayment to the employee or retain 
evidence of reimbursement. The requirement to collect this information 
is not newly imposed by these regulations. The regulations merely apply 
procedures from existing regulations, with appropriate

[[Page 71471]]

modifications, to corrections of Additional Medicare Tax.
    It is estimated that the annual PRA burden per taxpayer to comply 
with the collection of information requirements in these regulations is 
one hour. This minimal burden does not constitute a significant 
economic impact. Accordingly, a regulatory flexibility analysis is not 
required.
    Pursuant to section 7805(f) of the Code, the proposed regulations 
preceding these regulations were submitted to the Chief Counsel for 
Advocacy of the Small Business Administration for comment on its impact 
on small business.

Drafting Information

    The principal author of the regulations is Andrew Holubeck of the 
Office of the Division Counsel/Associate Chief Counsel (Tax Exempt and 
Government Entities). However, other personnel from the IRS and the 
Treasury Department participated in their development.

List of Subjects

26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

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 parts 1 and 31 are amended as follows:

PART 1--INCOME TAXES

0
Paragraph 1. The authority citation for part 1 continues to read in 
part as follows:

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

0
Par. 2. Section 1.1401-1 is amended by revising paragraph (b) and 
adding paragraphs (d) and (e) to read as follows:


Sec.  1.1401-1  Tax on self-employment income.

* * * * *
    (b) The rates of tax on self-employment income are as follows 
(these regulations do not reflect off-Code revisions to the following 
rates):
    (1) For Old-age, Survivors, and Disability Insurance:

------------------------------------------------------------------------
                      Taxable year                            Percent
------------------------------------------------------------------------
Beginning after December 31, 1983 and before January 1,            11.40
 1988...................................................
Beginning after December 31, 1987 and before January 1,            12.12
 1990...................................................
Beginning after December 31, 1989.......................           12.40
------------------------------------------------------------------------

    (2)(i) For Hospital Insurance:

------------------------------------------------------------------------
                      Taxable year                            Percent
------------------------------------------------------------------------
Beginning after December 31, 1983 and before January 1,             2.60
 1985...................................................
Beginning after December 31, 1984 and before January 1,             2.70
 1986...................................................
Beginning after December 31, 1985.......................            2.90
------------------------------------------------------------------------

    (ii) For Additional Medicare Tax:

------------------------------------------------------------------------
                      Taxable year                            Percent
------------------------------------------------------------------------
Beginning after December 31, 2012.......................             0.9
------------------------------------------------------------------------

* * * * *
    (d) Special rules regarding Additional Medicare Tax. (1) General 
rule. An individual is liable for Additional Medicare Tax to the extent 
that his or her self-employment income exceeds the following threshold 
amounts.

------------------------------------------------------------------------
                     Filling status                          Threshold
------------------------------------------------------------------------
Married individual filing a joint return................        $250,000
Married individual filing a separate return.............         125,000
Any other case..........................................         200,000
------------------------------------------------------------------------

    Note: These threshold amounts are specified under section 
1401(b)(2)(A).
    (2) Coordination with Federal Insurance Contributions Act. (i) 
General rule. Under section 1401(b)(2)(B), the applicable threshold 
specified under section 1401(b)(2)(A) is reduced (but not below zero) 
by the amount of wages (as defined in section 3121(a)) taken into 
account in determining Additional Medicare Tax under section 3101(b)(2) 
with respect to the taxpayer. This rule does not apply to Railroad 
Retirement Tax Act (RRTA) compensation (as defined in section 3231(e)).
    (ii) Examples. The rules provided in paragraph (d)(2)(i) of this 
section are illustrated by the following examples:

    Example 1. A, a single filer, has $130,000 in self-employment 
income and $0 in wages. A is not liable to pay Additional Medicare 
Tax.
    Example 2. B, a single filer, has $220,000 in self-employment 
income and $0 in wages. B is liable to pay Additional Medicare Tax 
on $20,000 ($220,000 in self-employment income minus the threshold 
of $200,000).
    Example 3. C, a single filer, has $145,000 in self-employment 
income and $130,000 in wages. C's wages are not in excess of 
$200,000 so C's employer did not withhold Additional Medicare Tax. 
However, the $130,000 of wages reduces the self-employment income 
threshold to $70,000 ($200,000 threshold minus the $130,000 of 
wages). C is liable to pay Additional Medicare Tax on $75,000 of 
self-employment income ($145,000 in self-employment income minus the 
reduced threshold of $70,000).
    Example 4.  E, who is married and files a joint return, has 
$140,000 in self-employment income. F, E's spouse, has $130,000 in 
wages. F's wages are not in excess of $200,000 so F's employer did 
not withhold Additional Medicare Tax. However, the $130,000 of F's 
wages reduces E's self-employment income threshold to $120,000 
($250,000 threshold minus the $130,000 of wages). E and F are liable 
to pay Additional Medicare Tax on $20,000 of E's self-employment 
income ($140,000 in self-employment income minus the reduced 
threshold of $120,000).
    Example 5. D, who is married and files married filing 
separately, has $150,000 in self-employment income and $200,000 in 
wages. D's wages are not in excess of $200,000 so D's employer did 
not withhold Additional Medicare Tax. However, the $200,000 of wages 
reduces the self-employment income threshold to $0 ($125,000 
threshold minus the $200,000 of wages). D is liable to pay 
Additional Medicare Tax on $75,000 of wages ($200,000 in wages minus 
the $125,000 threshold for a married filing separately return) and 
on $150,000 of self-employment income ($150,000 in self-employment 
income minus the reduced threshold of $0).

    (e) Effective/applicability date. Paragraphs (b) and (d) of this 
section apply to quarters beginning on or after November 29, 2013.

PART 31--EMPLOYMENT TAXES AND COLLECTION OF INCOME TAX AT THE 
SOURCE

0
Par. 3. The authority citation for part 31 continues to read in part as 
follows:

    Authority: 26 U.S.C. 7805 * * *
    Par. 4. Revise Sec.  31.3101-2 to read as follows:


Sec.  31.3101-2  Rates and computation of employee tax.

    (a) Old-Age, Survivors, and Disability Insurance. The rates of 
employee tax for Old-Age, Survivors, and Disability Insurance (OASDI) 
with respect to wages received in calendar years after 1983 are as 
follows (these regulations do not reflect off-Code revisions to the 
following rates):

------------------------------------------------------------------------
                      Calendar year                           Percent
------------------------------------------------------------------------
1984, 1985, 1986, or 1987...............................             5.7
1988 or 1989............................................            6.06
1990 and subsequent years...............................             6.2
------------------------------------------------------------------------


[[Page 71472]]

    (b)(1) Hospital Insurance. The rates of employee tax for Hospital 
Insurance (HI) with respect to wages received in calendar years after 
1973 are as follows:

------------------------------------------------------------------------
                      Calendar year                           Percent
------------------------------------------------------------------------
1974, 1975, 1976, or 1977...............................            0.90
1978....................................................            1.00
1979 or 1980............................................            1.05
1981, 1982, 1983, or 1984...............................            1.30
1985....................................................            1.35
1986 and subsequent years...............................            1.45
------------------------------------------------------------------------

    (2) Additional Medicare Tax. (i) The rate of Additional Medicare 
Tax with respect to wages received in taxable years beginning after 
December 31, 2012, is as follows:

------------------------------------------------------------------------
                      Taxable year                            Percent
------------------------------------------------------------------------
Beginning after December 31, 2012.......................             0.9
------------------------------------------------------------------------

    (ii) Individuals are liable for Additional Medicare Tax with 
respect to wages received in taxable years beginning after December 31, 
2012, which are in excess of:

------------------------------------------------------------------------
                     Filling status                          Threshold
------------------------------------------------------------------------
Married individual filing a joint return................        $250,000
Married individual filing a separate return.............         125,000
Any other case..........................................         200,000
------------------------------------------------------------------------

    (c) Computation of employee tax. The employee tax is computed by 
applying to the wages received by the employee the rates in effect at 
the time such wages are received.

    Example. In 1989, A performed services for X which constituted 
employment (see Sec.  31.3121(b)-2). In 1990 A receives from X 
$1,000 as remuneration for such services. The tax is payable at the 
6.2 percent OASDI rate and the 1.45 percent HI rate in effect for 
the calendar year 1990 (the year in which the wages are received) 
and not at the 6.06 percent OASDI rate and the 1.45 percent HI rate 
which were in effect for the calendar year 1989 (the year in which 
the services were performed).

    (d) Effective/applicability date. Paragraphs (a) (b), and (c) of 
this section apply to quarters beginning on or after November 29, 2013. 
Taxpayers may rely on the rules contained in the proposed regulations 
for quarters beginning before November 29, 2013.

    Par. 5. Section 31.3102-1 is amended by adding a sentence at the 
end of paragraph (a) and adding paragraph (f) to read as follows:


Sec.  31.3102-1  Collection of, and liability for, employee tax; in 
general.

    (a) * * * For special rules relating to Additional Medicare Tax 
imposed under section 3101(b)(2), see Sec.  31.3102-4.
* * * * *
    (f) Effective/applicability date. Paragraph (a) of this section 
applies to quarters beginning on or after November 29, 2013.

    Par. 6. Section 31.3102-4 is added to read as follows:


Sec.  31.3102-4  Special rules regarding Additional Medicare Tax.

    (a) Collection of tax from employee. An employer is required to 
collect from each of its employees the tax imposed by section 
3101(b)(2) (Additional Medicare Tax) with respect to wages for 
employment performed for the employer by the employee only to the 
extent the employer pays wages to the employee in excess of $200,000 in 
a calendar year. This rule applies regardless of the employee's filing 
status or other income. Thus, the employer disregards any amount of 
wages or Railroad Retirement Tax Act (RRTA) compensation paid to the 
employee's spouse. The employer also disregards any RRTA compensation 
paid by the employer to the employee or any wages or RRTA compensation 
paid to the employee by another employer.

    Example.  H, who is married and files a joint return, receives 
$100,000 in wages from his employer for the calendar year. I, H's 
spouse, receives $300,000 in wages from her employer for the same 
calendar year. H's wages are not in excess of $200,000, so H's 
employer does not withhold Additional Medicare Tax. I's employer is 
required to collect Additional Medicare Tax only with respect to 
wages it pays which are in excess of the $200,000 threshold (that 
is, $100,000) for the calendar year.

    (b) Collection of amounts not withheld. To the extent the employer 
does not collect Additional Medicare Tax imposed on the employee by 
section 3101(b)(2), the employee is liable to pay the tax.

    Example. J, who is married and files a joint return, receives 
$190,000 in wages from his employer for the calendar year. K, J's 
spouse, receives $150,000 in wages from her employer for the same 
calendar year. Neither J's nor K's wages are in excess of $200,000, 
so neither J's nor K's employers are required to withhold Additional 
Medicare Tax. J and K are liable to pay Additional Medicare Tax on 
$90,000 ($340,000 minus the $250,000 threshold for a joint return).

    (c) Employer's liability for tax. If the employer deducts less than 
the correct amount of Additional Medicare Tax, or if it fails to deduct 
any part of Additional Medicare Tax, it is nevertheless liable for the 
correct amount of tax that it was required to withhold, unless and 
until the employee pays the tax. If an employee subsequently pays the 
tax that the employer failed to deduct, the tax will not be collected 
from the employer. The employer will not be relieved of its liability 
for payment of the tax required to be withheld unless it can show that 
the tax under section 3101(b)(2) has been paid. The employer, however, 
will remain subject to any applicable penalties or additions to tax 
resulting from the failure to withhold as required.
    (d) Effective/applicability date. This section applies to quarters 
beginning on or after November 29, 2013.

    Par. 7. Section 31.3202-1 is amended by adding paragraphs (g) and 
(h) to read as follows:


Sec.  31.3202-1  Collection of, and liability for, employee tax.

* * * * *
    (g) Special rules regarding Additional Medicare Tax. (1) An 
employer is required to collect from each of its employees the portion 
of the tax imposed by section 3201(a) (as calculated under section 
3101(b)(2)) (Additional Medicare Tax) with respect to compensation for 
employment performed for the employer by the employee only to the 
extent the employer pays compensation to the employee in excess of 
$200,000 in a calendar year. This rule applies regardless of the 
employee's filing status or other income. Thus, the employer disregards 
any amount of compensation or Federal Insurance Contributions Act 
(FICA) wages paid to the employee's spouse. The employer also 
disregards any FICA wages paid by the employer to the employee or any 
compensation or FICA wages paid to the employee by another employer.

    Example. A, who is married and files a joint return, receives 
$100,000 in compensation from her employer for the calendar year. B, 
A's spouse, receives $300,000 in compensation from his employer for 
the same calendar year. A's compensation is not in excess of 
$200,000, so A's employer does not withhold Additional Medicare Tax. 
B's employer is required to collect Additional Medicare Tax only 
with respect to compensation it pays to B that is in excess of the 
$200,000 threshold (that is, $100,000) for the calendar year.

    (2) To the extent the employer does not collect Additional Medicare 
Tax imposed on the employee by section 3201(a) (as calculated under 
section 3101(b)(2)), the employee is liable to pay the tax.


[[Page 71473]]


    Example. C, who is married and files a joint return, receives 
$190,000 in compensation from her employer for the calendar year. D, 
C's spouse, receives $150,000 in compensation from his employer for 
the same calendar year. Neither C's nor D's compensation is in 
excess of $200,000, so neither C's nor D's employers are required to 
withhold Additional Medicare Tax. C and D are liable to pay 
Additional Medicare Tax on $90,000 ($340,000 minus the $250,000 
threshold for a joint return).

    (3) If the employer deducts less than the correct amount of 
Additional Medicare Tax, or if it fails to deduct any part of 
Additional Medicare Tax, it is nevertheless liable for the correct 
amount of tax that it was required to withhold, unless and until the 
employee pays the tax. If an employee subsequently pays the tax that 
the employer failed to deduct, the tax will not be collected from the 
employer. The employer will not be relieved of its liability for 
payment of the tax required to be withheld unless it can show that the 
tax under section 3201(a) (as calculated under section 3101(b)(2)) has 
been paid. The employer, however, will remain subject to any applicable 
penalties or additions to tax resulting from the failure to withhold as 
required.
    (h) Effective/applicability date. Paragraph (g) of this section 
applies to quarters beginning on or after November 29, 2013.



0
Par. 8. Section 31.6011(a)-1 is amended by:
0
1. Designating paragraph (g) as paragraph (h) and adding a sentence to 
the end.
0
2. Adding new paragraph (g).
    The additions read as follows:


Sec.  31.6011(a)-1  Returns under Federal Insurance Contributions Act.

* * * * *
    (g) Returns by employees in respect of Additional Medicare Tax. An 
employee who is paid wages, as defined in sections 3121(a), subject to 
the tax under section 3101(b)(2) (Additional Medicare Tax), must make a 
return for the taxable year in respect of such tax. The return shall be 
made on Form 1040, ``U.S. Individual Income Tax Return.'' The form to 
be used by residents of the U.S. Virgin Islands, Guam, American Samoa, 
or the Northern Mariana Islands is Form 1040-SS, ``U.S. Self-Employment 
Tax Return (Including Additional Child Tax Credit for Bona Fide 
Residents of Puerto Rico).'' The form to be used by residents of Puerto 
Rico is either Form 1040-SS or Form 1040-PR, ``Planilla para la 
Declaraci[oacute]n de la Contribuci[oacute]n Federal sobre el Trabajo 
por Cuenta Propia (Incluyendo el Cr[eacute]dito Tributario Adicional 
por Hijos para Residentes Bona Fide de Puerto Rico).''
    (h) * * * Paragraph (g) of this section applies to taxable years 
beginning on or after November 29, 2013.


0
Par. 9. Section 31.6011(a)-2 is amended by adding paragraphs (d) and 
(e) to read as follows:


Sec.  31.6011(a)-2  Returns under Railroad Retirement Tax Act.

* * * * *
    (d) Returns by employees and employee representatives in respect of 
Additional Medicare Tax. An employee or employee representative who is 
paid compensation, as defined in section 3231(e), subject to the tax 
under sections 3201(a) (as calculated under section 3101(b)(2)) or 
section 3211(a) (as calculated under section 3101(b)(2)) (Additional 
Medicare Tax), must make a return for the taxable year in respect of 
such tax. The return shall be made on Form 1040, ``U.S. Individual 
Income Tax Return.'' The form to be used by residents of the U.S. 
Virgin Islands, Guam, American Samoa, or the Northern Mariana Islands 
is Form 1040-SS, ``U.S. Self-Employment Tax Return (Including 
Additional Child Tax Credit for Bona Fide Residents of Puerto Rico).'' 
The form to be used by residents of Puerto Rico is either Form 1040-SS 
or Form 1040-PR, ``Planilla para la Declaraci[oacute]n de la 
Contribuci[oacute]n Federal sobre el Trabajo por Cuenta Propia 
(Incluyendo el Cr[eacute]dito Tributario Adicional por Hijos para 
Residentes Bona Fide de Puerto Rico).''
    (e) Effective/applicability date. Paragraph (d) of this section 
applies to taxable years beginning on or after November 29, 2013.


0
Par. 10. Section 31.6205-1 is amended by:
0
1. Revising the first sentence in paragraph (b)(2)(i).
0
2. Adding a sentence after the first sentence in paragraphs (b)(2)(ii) 
and (iii).
0
3. Adding two sentences after the sixth sentence in paragraph (b)(3).
0
4. Adding paragraphs (b)(4) and (e).
0
5. Revising paragraph (d)(1).
    The revisions and additions read as follows:


Sec.  31.6205-1  Adjustments of underpayments.

* * * * *
    (b) * * *
    (2) * * * (i) If an employer files a return on which FICA tax or 
RRTA tax is required to be reported, and reports on the return less 
than the correct amount of employee or employer FICA or RRTA tax with 
respect to a payment of wages or compensation, and if the employer 
ascertains the error after filing the return, the employer shall 
correct the error through an interest-free adjustment as provided in 
this section, except as provided in paragraph (b)(4) of this section 
for Additional Medicare Tax. * * *
    (ii) * * * However, if the employer also reported less than the 
correct amount of Additional Medicare Tax, the employer shall correct 
the underwithheld and underpaid Additional Medicare Tax in accordance 
with paragraph (b)(4) of this section. * * *
    (iii) * * * However, if the employer also reported less than the 
correct amount of Additional Medicare Tax, the employer shall correct 
the underwithheld and underpaid Additional Medicare Tax in accordance 
with paragraph (b)(4) of this section. * * *
    (3) * * * However, an adjustment of Additional Medicare Tax 
required to be withheld under section 3101(b)(2) or section 3201(a) may 
only be reported pursuant to this section if the error is ascertained 
within the same calendar year that the wages or compensation were paid 
to the employee, or if section 3509 applies to determine the amount of 
the underpayment, or if the adjustment is reported on a Form 2504 or 
Form 2504-WC. See paragraph (b)(4) of this section. * * *
    (4) Additional Medicare Tax. If an employer files a return on which 
FICA tax or RRTA tax is required to be reported, and reports on the 
return less than the correct amount of Additional Medicare Tax required 
to be withheld with respect to a payment of wages or compensation, and 
if the employer ascertains the error after filing the return, the 
employer shall correct the error through an interest-free adjustment as 
provided in this section. An adjustment of Additional Medicare Tax may 
only be reported pursuant to this paragraph (b)(4) if the error is 
ascertained within the same calendar year that the wages or 
compensation were paid to the employee, unless the underpayment is 
attributable to an administrative error (that is, an error involving 
the inaccurate reporting of the amount actually withheld), section 3509 
applies to determine the amount of the underpayment, or the adjustment 
is reported on a Form 2504 or Form 2504-WC. The employer shall adjust 
the underpayment of Additional Medicare Tax by reporting the additional 
amount due on an adjusted return for the return period in which the 
wages or compensation were paid, accompanied by a detailed explanation 
of the amount

[[Page 71474]]

being reported on the adjusted return and any other information as may 
be required by this section and by the instructions relating to the 
adjusted return. The reporting of the underpayment on an adjusted 
return constitutes an adjustment within the meaning of this section 
only if the adjusted return is filed within the period of limitations 
for assessment for the return period being corrected, and by the due 
date for filing the return for the return period in which the error is 
ascertained. For purposes of the preceding sentence, the due date for 
filing the adjusted return is determined by reference to the return 
being corrected, without regard to the employer's current filing 
requirements. For example, an employer with a current annual filing 
requirement who is correcting an error on a previously filed quarterly 
return must file the adjusted return by the due date for filing a 
quarterly return for the quarter in which the error is ascertained. The 
amount of the underpayment adjusted in accordance with this section 
must be paid to the IRS by the time the adjusted return is filed. If an 
adjustment is reported pursuant to this section, but the amount of the 
adjustment is not paid when due, interest accrues from that date (see 
section 6601).
* * * * *
    (d) * * *
    (1) * * * If an employer collects less than the correct amount of 
employee FICA or RRTA tax from an employee with respect to a payment of 
wages or compensation, the employer must collect the amount of the 
undercollection by deducting the amount from remuneration of the 
employee, if any, paid after the employer ascertains the error. If an 
employer collects less than the correct amount of Additional Medicare 
Tax required to be withheld under section 3101(b)(2) or section 
3201(a), the employer must collect the amount of the undercollection on 
or before the last day of the calendar year by deducting the amount 
from remuneration of the employee, if any, paid after the employer 
ascertains the error. Such deductions may be made even though the 
remuneration, for any reason, does not constitute wages or 
compensation. The correct amount of employee tax must be reported and 
paid, as provided in paragraph (b) of this section, whether or not the 
undercollection is corrected by a deduction made as prescribed in this 
paragraph (d)(1), and even if the deduction is made after the return on 
which the employee tax must be reported is due. If such a deduction is 
not made, the obligation of the employee to the employer with respect 
to the undercollection is a matter for settlement between the employee 
and the employer. If an employer makes an erroneous collection of 
employee tax from two or more of its employees, a separate settlement 
must be made with respect to each employee. An overcollection of 
employee tax from one employee may not be used to offset an 
undercollection of such tax from another employee. For provisions 
relating to the employer's liability for the tax, whether or not it 
collects the tax from the employee, see Sec. Sec.  31.3102-1(d), 
31.3102-4(c), and 31.3202-1. This paragraph (d)(1) does not apply if 
section 3509 applies to determine the employer's liability.
* * * * *
    (e) Effective/applicability date. Paragraphs (b) and (d) of this 
section apply to adjusted returns filed on or after November 29, 2013.


0
Par. 11. Section 31.6402(a)-2 is amended by:
0
1. Revising paragraph (a)(1)(i) and the first sentence in paragraph 
(a)(1)(ii).
0
2. Redesignating paragraphs (a)(1)(iii) through (vi), as paragraphs 
(a)(1)(iv) through (vii), respectively.
0
3. Revising newly-redesignated paragraphs (a)(1)(iv) and (a)(1)(v).
0
4. Adding new paragraph (a)(1)(iii).
0
5. Revising paragraph (b).
0
6. Adding paragraph (c).
    The revisions and additions read as follows:


Sec.  31.6402(a)-2  Credit or refund of tax under Federal Insurance 
Contributions Act or Railroad Retirement Tax Act.

    (a) * * *
    (1) * * *
    (i) Except as provided in paragraph (a)(1)(iii) of this section, 
any person may file a claim for credit or refund for an overpayment 
(except to the extent that the overpayment must be credited pursuant to 
Sec.  31.3503-1) if the person paid to the Internal Revenue Service 
(IRS) more than the correct amount of employee Federal Insurance 
Contributions Act (FICA) tax under section 3101 or employer FICA tax 
under section 3111, employee Railroad Retirement Tax Act (RRTA) tax 
under section 3201, employee representative RRTA tax under section 
3211, or employer RRTA tax under section 3221, or interest, addition to 
the tax, additional amount, or penalty with respect to any such tax.
    (ii) Except as provided in paragraph (a)(1)(iii) of this section, 
the claim for credit or refund must be made in the manner and subject 
to the conditions stated in this section. * * *
    (iii) Additional Medicare Tax. No refund or credit to the employer 
will be allowed for the amount of any overpayment of Additional 
Medicare Tax imposed under section 3101(b)(2) or section 3201(a) (as 
calculated under section 3101(b)(2)), which the employer deducted or 
withheld from an employee.
    (iv) For adjustments without interest of overpayments of FICA or 
RRTA taxes, including Additional Medicare Tax, see Sec.  31.6413(a)-2.
    (v) For corrections of FICA and RRTA tax paid under the wrong 
chapter, see Sec.  31.6205-1(b)(2)(ii) and (b)(2)(iii) and Sec.  
31.3503-1.
* * * * *
    (b) Claim by employee--(1) In general. Except as provided in (b)(3) 
of this section, if more than the correct amount of employee tax under 
section 3101 or section 3201 is collected by an employer from an 
employee and paid to the IRS, the employee may file a claim for refund 
of the overpayment if--
    (i) The employee does not receive repayment or reimbursement in any 
manner from the employer and does not authorize the employer to file a 
claim and receive refund or credit,
    (ii) The overcollection cannot be corrected under Sec.  31.3503-1, 
and
    (iii) In the case of overpaid employee social security tax due to 
having received wages or compensation from multiple employers, the 
employee has not taken the overcollection into account in claiming a 
credit against, or refund of, his or her income tax, or if so, such 
claim has been rejected. See Sec.  31.6413(c)-1.
    (2) Statements supporting employee's claim. (i) Except as provided 
in (b)(3) of this section, each employee who makes a claim under 
paragraph (b)(1) of this section shall submit with such claim a 
statement setting forth (a) the extent, if any, to which the employer 
has repaid or reimbursed the employee in any manner for the 
overcollection, and (b) the amount, if any, of credit or refund of such 
overpayment claimed by the employer or authorized by the employee to be 
claimed by the employer. The employee shall obtain such statement, if 
possible, from the employer, who should include in such statement the 
fact that it is made in support of a claim against the United States to 
be filed by the employee for refund of employee tax paid by such 
employer to the IRS. If the employer's statement is not submitted with 
the claim, the employee shall make the statement to the best of his or 
her knowledge and belief, and shall include therein an explanation of 
his or her inability to obtain the statement from the employer.

[[Page 71475]]

    (ii) Except as provided in paragraph (b)(3) of this section, each 
individual who makes a claim under paragraph (b)(1) of this section 
also shall submit with such claim a statement setting forth whether the 
individual has taken the amount of the overcollection into account in 
claiming a credit against, or refund of, his or her income tax, and the 
amount, if any, so claimed (see Sec.  31.6413(c)-1).
    (3) Additional Medicare Tax. (i) If more than the correct amount of 
Additional Medicare Tax under section 3101(b)(2) or section 3201(a) (as 
calculated under section 3101(b)(2)), is collected by an employer from 
an employee and paid to the IRS, the employee may file a claim for 
refund of the overpayment and receive a refund or credit if the 
overcollection cannot be corrected under Sec.  31.3503-1 and if the 
employee has not received repayment or reimbursement from the employer 
in the context of an interest-free adjustment. The claim for refund 
shall be made on Form 1040, ``U.S. Individual Income Tax Return,'' by 
taking the overcollection into account in claiming a credit against, or 
refund of, tax. The form to be used by residents of the U.S. Virgin 
Islands, Guam, American Samoa, or the Northern Mariana Islands is Form 
1040-SS, ``U.S. Self-Employment Tax Return (Including Additional Child 
Tax Credit for Bona Fide Residents of Puerto Rico).'' The form to be 
used by residents of Puerto Rico is either Form 1040-SS or Form 1040-
PR, ``Planilla para la Declaraci[oacute]n de la Contribuci[oacute]n 
Federal sobre el Trabajo por Cuenta Propia (Incluyendo el 
Cr[eacute]dito Tributario Adicional por Hijos para Residentes Bona Fide 
de Puerto Rico).'' The employee may not authorize the employer to claim 
the credit or refund for the employee. See Sec.  31.6402(a)-
2(a)(1)(iii).
    (ii) In the case of an overpayment of Additional Medicare Tax under 
section 3101(b)(2) or section 3201(a) for a taxable year of an 
individual for which a Form 1040 (or other applicable return in the 
Form 1040 series) has been filed, a claim for refund shall be made by 
the individual on Form 1040X, ``Amended U.S. Individual Income Tax 
Return.''
    (c) Effective/applicability date. This section applies to claims 
for refund filed on or after November 29, 2013.


0
Par. 12. Section 31.6413(a)-1 is amended by:
0
1. Revising the first sentence in paragraph (a)(2)(i).
0
2. Redesignating paragraphs (a)(2)(ii) through (vii) as paragraphs 
(a)(2)(iii) through (viii), respectively.
0
3. Revising newly-designated paragraph (a)(2)(viii).
0
3. Adding paragraph (a)(2)(ii).
0
4. Adding a sentence after the first sentence in newly-redesignated 
paragraph (a)(2)(iv).
0
5. Adding a sentence at the end of newly-redesignated paragraph 
(a)(2)(v).
0
6. Adding paragraph (c).
    The revisions and additions read as follows:


Sec.  31.6413(a)-1  Repayment or reimbursement by employer of tax 
erroneously collected from employee.

    (a) * * *
    (2) * * * (i) Except as provided in paragraph (a)(2)(ii) of this 
section, if an employer files a return for a return period on which 
FICA tax or RRTA tax is reported, collects from an employee and pays to 
the IRS more than the correct amount of the employee FICA or RRTA tax, 
and if the employer ascertains the error after filing the return and 
within the applicable period of limitations on credit or refund, the 
employer shall repay or reimburse the employee in the amount of the 
overcollection prior to the expiration of such limitations period. * * 
*
    (ii) If an employer files a return for a return period on which 
Additional Medicare Tax under section 3101(b)(2) or section 3201(a) is 
reported, collects from an employee and pays to the IRS more than the 
correct amount of Additional Medicare Tax required to be withheld from 
wages or compensation, and if the employer ascertains the error after 
filing the return but before the end of the calendar year in which the 
wages or compensation were paid, the employer shall repay or reimburse 
the employee in the amount of the overcollection prior to the end of 
the calendar year. However, this paragraph does not apply to the extent 
that, after reasonable efforts, the employer cannot locate the 
employee.
* * * * *
    (iv) * * * However, for purposes of overcollected Additional 
Medicare Tax under section 3101(b)(2) or section 3201(a), the employer 
shall reimburse the employee by applying the amount of the 
overcollection against the employee FICA or RRTA tax which attaches to 
wages or compensation paid by the employer to the employee in the 
calendar year in which the overcollection is made. * * *
    (v) * * * This paragraph (a)(2)(v) does not apply for purposes of 
overcollected Additional Medicare Tax under section 3101(b)(2) or 
section 3201(a) which must be repaid or reimbursed to the employee in 
the calendar year in which the overcollection is made.
* * * * *
    (viii) For corrections of FICA and RRTA tax paid under the wrong 
chapter, see Sec.  31.6205-1(b)(2)(ii) and (iii) and Sec.  31.3503-1.
* * * * *
    (c) Effective/applicability date. Paragraph (a) of this section 
applies to adjusted returns filed on or after November 29, 2013.


0
Par. 13. Section 31.6413(a)-2 is amended by:
0
1. Adding a sentence after the first sentence in paragraph (a)(1).
0
2. Adding a sentence after the second sentence in paragraph (b)(2)(i).
0
3. Adding paragraph (e).
    The additions read as follows:


Sec.  31.6413(a)-2  Adjustments of overpayments.

    (a) * * *
    (1) * * * However, this section only applies to overcollected or 
overpaid Additional Medicare Tax under section 3101(b)(2) or section 
3201(a) if the employer has repaid or reimbursed the amount of the 
overcollection of such tax to the employee in the year in which the 
overcollection was made. * * *
* * * * *
    (b) * * *
    (2) * * *
    (i) * * * However, for purposes of Additional Medicare Tax under 
section 3101(b)(2) or section 3201(a), if the amount of the 
overcollection is not repaid or reimbursed to the employee under Sec.  
31.6413(a)-1(a)(2)(ii), there is no overpayment to be adjusted under 
this section and the employer may only adjust an overpayment of such 
tax attributable to an administrative error, that is, an error 
involving the inaccurate reporting of the amount withheld, pursuant to 
this section. * * *
* * * * *
    (e) Effective/applicability date. Paragraphs (a) and (b) of this 
section apply to adjusted returns filed on or after November 29, 2013. 
Taxpayers may rely on the rules contained in the proposed regulations 
for adjusted returns filed before November 29, 2013.

John Dalrymple,
Deputy Commissioner for Services and Enforcement.
     Approved: November 18, 2013.

Mark J. Mazur,
 Assistant Secretary of the Treasury.
[FR Doc. 2013-28411 Filed 11-26-13; 4:15 pm]
BILLING CODE 4830-01-P