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IRS Service Center Advice
FILE-NAME: SCA
COVERAGE: From September 1997 through December 2005
FREQUENCY: Weekly
UPDATE-SCHEDULE: Within 1 week of publication
CONTENT-SUMMARY:
The IRS Service Center Advice (SCA file) contains legal advice provided by the Office of Chief Counsel to IRS service centers and related IRS functions with respect to their tax administration responsibilities. This advice is distributed and published to provide consistent legal advice to all affected IRS functions and Counsel offices on matters raised by the various functions.
PUBLISHER:
Internal Revenue Service
SEGMENT-DESCRIP: | CITE | This segment will contain the LEXIS cite as well as the ciation issued by the IRS. | | | cite (SCA 200644018 or 2005 SCA LEXIS 1) | | | | | DATE | This segment contains the date the matter was resolved by the IRS. | | | date=12/23/2005 | | | | | REFERENCE | This segment contains the IRS internal document information. | | | reference (200644018) | | | | | TEXT | This segment contains the text of the issuance. | | | text (withholding credits) | | | |
DOC-DESCRIPTION:
A document consists of a release from the IRS.
DISPLAY-SEQUENCE:
Reverse chronological order by date
HIER-LOC:
Area of Law - By Topic/Accounting/Access Directories/Tax Center/Federal/Primary/IRS
Area of Law - By Topic/Accounting/Find Statutes, Regulations & Administrative Materials/By Subtopic/Taxation/Find Federal Administrative Materials/Agency Decisions
Area of Law - By Topic/Administrative Law/Find Specific Agency Decisions & Materials/Tax - Federal
Area of Law - By Topic/Federal Practice/Find Statutes, Regulations, Administrative Materials & Court Rules/Adminstrative Agency Materials/Taxation/Agency Decisions
Area of Law - By Topic/Financial Crisis Litigation/Find Statutes, Regulations, Administrative Materials & Court Rules/Administrative Agency Materials/Taxation/Find Federal Administrative Materials/Agency Decisions
Area of Law - By Topic/Taxation/Find Federal Administrative Materials/Agency Decisions
Federal Legal - U.S./Find Statutes, Regulations, Administrative Materials & Court Rules/Administrative Agency Materials/Taxation/Agency Decisions
SAMPLE-DOC:
Service Center Advice Memoranda 200644018
Withholding Credits
SCA 200644018; 2005 SCA LEXIS 1
December 23, 2005
[*1]
UI LIST:
UI No. 31.00-00
REFERENCE: 200644018, Release Date: 11/3/2006
CC:PSI:B02:SCAF-100537-04
TEXT:
to: Associate Area Counsel (Long Island)
(Small Business/Self-Employed)
from: Chief, Branch 2, Office of Associate Chief Counsel
(Passthroughs & Special Industries)
This significant Service Center Advice responds to your request for assistance dated September 27, 2005. This advice may not be used or cited as precedent.
ISSUES
Whether and how withholding credits under ? 31 of the Internal Revenue Code for income paid by employers or other parties (Payors) to trusts, estates, partnerships, or S corporations (Passthrough Entities) may be allowed to beneficiaries of a trust or estate, partners in a partnership, or shareholders in a S corporation (Individuals) on the Individuals' federal income tax returns.
CONCLUSIONS
The "recipient" of the income subject to withholding, as defined in ? 31, is the person entitled to the credit. Payments made to a Passthrough Entity in its capacity as a separate legal entity are not wages and are not subject to income tax withholding. However, we understand that instead of making wage payments directly to an individual performing services as an employee, employers sometimes make the [*2] payments to a Passthrough Entity, subjecting the payments to income tax withholding in the same manner as if the payments were made directly to the employee. If an Individual is the recipient, then the Individual may claim the credit even if the income was in fact paid to the Passthrough Entity. Current Internal Revenue Service procedures do not offer a method for ensuring that the credit is allocated to the account of the correct taxpayer. Therefore, Payors, Individuals, and Passthrough Entities may have to file amended returns (including Forms W-2 or 1099) to receive proper treatment if they did not initially file consistent with the proper determination of the recipient. Those offices with jurisdiction over relevant forms and procedures, including the Internal Revenue Manual, should consider any changes necessary to avoid duplicative filings and ensure proper reporting. We will be happy to provide any necessary assistance to those offices on the revision of forms and procedures dealing with issues under our jurisdiction.
[REMAINDER OF TEXT OMITTED IN ORDER TO SHORTEN EXAMPLE]
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