[Federal Register Volume 78, Number 230 (Friday, November 29, 2013)]
[Rules and Regulations]
[Page 71476]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-28526]

[[Page 71476]]



Internal Revenue Service

26 CFR Part 31

[TD 9646]
RIN 1545-BL93

Authority for Voluntary Withholding on Other Payments

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Temporary regulations.


SUMMARY: This document contains temporary regulations under the 
Internal Revenue Code (Code) relating to voluntary withholding 
agreements. The regulations allow the Secretary to issue guidance in 
the Internal Revenue Bulletin to describe payments for which the 
Secretary finds that income tax withholding under a voluntary 
withholding agreement would be appropriate. The text of these 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 in this issue of the Federal Register. These 
temporary regulations affect persons making and persons receiving 
payments for which the IRS issues subsequent guidance authorizing the 
parties to enter into voluntary withholding agreements.

DATES: Effective Date: These regulations are effective on November 27, 
    Applicability date: For date of applicability, see Sec.  

FOR FURTHER INFORMATION CONTACT: Linda L. Conway-Hataloski at (202) 
317-6798 (not a toll-free number).



    Section 3402(p) allows for voluntary income tax withholding 
agreements. Section 3402(p)(3) authorizes the Secretary to provide 
regulations for withholding from (A) remuneration for services 
performed by an employee for the employee's employer which does not 
constitute wages, and (B) from any other payment with respect to which 
the Secretary finds that withholding would be appropriate, if the 
employer and employee, or the person making and the person receiving 
such other type of payment, agree to such withholding. Section 
3402(p)(3) also authorizes the Secretary to prescribe in regulations 
the form and manner of such agreement. Section 31.3402(p)-1 of the 
Employment Tax Regulations describes how an employer and an employee 
may enter into an income tax withholding agreement under section 
3402(p) for amounts that are excepted from the definition of wages in 
section 3401(a).

Explanation of Provisions

    These temporary regulations under section 31.3402(p)-1T allow the 
Secretary to describe other payments subject to voluntary withholding 
agreements in guidance to be published in the Internal Revenue Bulletin 
(IRB). The temporary regulations also provide that the IRB guidance 
will set forth requirements regarding the form and duration of the 
voluntary withholding agreement specific to the type of payment from 
which withholding is authorized.
    Expanding the use of voluntary withholding agreements to payments 
designated by the Secretary as eligible for voluntary withholding will 
permit taxpayers to use the withholding regime (rather than the 
estimated tax payment process) to meet their tax payment obligations on 
a timely basis, minimize the risk of underpayment of taxes, and achieve 
administrative simplification for taxpayers and the IRS.

Special Analyses

    It has been determined that this Treasury decision is not a 
significant regulatory action as defined in Executive Order 12866, as 
supplemented by Executive Order 13563. 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. For the applicability of the Regulatory 
Flexibility Act (5 U.S.C. chapter 6), refer to the cross-reference 
notice of proposed rulemaking published elsewhere in this Federal 
Register. Pursuant to section 7805(f) of the Code, these regulations 
have been 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 Linda L. Conway-
Hataloski, Office of Associate Chief Counsel (Tax Exempt and Government 
Entities). 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:


Paragraph 1. The authority citation for part 31 continues to read in 
part as follows:

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

Par. 2. Sec.  31.3402(p)-1T is added to read as follows:

Sec.  31.3402(p)-1T  Voluntary Withholding Agreements (temporary).

    (a)-(b) [Reserved] For further guidance, see Sec.  31.3402(p)-1(a) 
and (b).
    (c) Other payments. The Secretary may issue guidance by publication 
in the Internal Revenue Bulletin (IRB) (which will be available at 
www.IRS.gov) describing other payments for which withholding under a 
voluntary withholding agreement would be appropriate and authorizing 
payors to agree to withhold income tax on such payments if requested by 
the payee. Requirements regarding the form and duration of voluntary 
withholding agreements authorized by this paragraph (c) will be 
provided in the IRB guidance issued regarding specific types of 
    (d) Effective/applicability date. (1) This section applies on and 
after November 27, 2013.
    (2) The applicability of this section expires on November 25, 2016.

John Dalrymple,
Deputy Commissioner for Services and Enforcement.

    Approved: November 21, 2013.
Mark J. Mazur,
Assistant Secretary of the Treasury (Tax Policy).
[FR Doc. 2013-28526 Filed 11-27-13; 8:45 am]