Sickness or Accident Disability Payments, 74198-74200 [05-23945]
Download as PDF
<![CDATA[
74198
Federal Register / Vol. 70, No. 240 / Thursday, December 15, 2005 / Rules and Regulations
action is not expected to cause any
potentially significant impacts, and no
extraordinary circumstances exist that
warrant preparation of an
environmental assessment.
Issued in Washington, DC, on December 8,
2005.
Edith V. Parish,
Manager, Airspace and Rules.
[FR Doc. 05–24069 Filed 12–14–05; 8:45 am]
List of Subjects in 14 CFR Part 71
BILLING CODE 4910–13–P
Airspace, Incorporation by Reference,
Navigation (air).
Adoption of the Amendment
DEPARTMENT OF THE TREASURY
Internal Revenue Service
In consideration of the foregoing, the
Federal Aviation Administration
amends 14 CFR part 71 as follows:
I
26 CFR Parts 31 and 32
[TD 9233]
PART 71—DESIGNATION OF CLASS A,
B, C, D, AND E AIRSPACE AREAS; AIR
TRAFFIC SERVICE ROUTES; AND
REPORTING POINTS
RIN 1545–BC89
1. The authority citation for part 71
continues to read as follows:
AGENCY:
I
Authority: 49 U.S.C. 106(g), 40103, 40113,
40120; E.O. 10854, 24 FR 9565, 3 CFR, 1959–
1963 Comp., p. 389.
§ 71.1
[Amended]
2. The incorporation by reference in
14 CFR 71.1 of FAA Order 7400.9N,
Airspace Designations and Reporting
Points, dated September 1, 2005, and
effective September 15, 2005, is
amended as follows:
I
Paragraph 2006—Area Navigation Routes
*
*
*
*
*
Q–20 CNX to JCT [New]
CNX VORTAC
(lat. 34°22′01″ N., long. 105°40′41″ W)
HONDS FIX
(lat. 33°33′60″ N., long. 104°51′12″ W)
UNNOS WP
(lat. 32°57′00″ N., long. 103°56′00″ W)
FUSCO WP
(lat. 31°11′02″ N., long. 101°19′30″ W)
JCT VORTAC
(lat. 30°35′53″ N., long. 099°49′03″ W)
*
*
*
*
*
Q–22 GUSTI to CATLN [New]
GUSTI FIX
(lat. 29°58′15″ N., long. 092°54′35″ W)
OYSTY FIX
(lat. 30°28′15″ N., long. 090°11′49″ W)
RUBAE WP
(lat. 30°55′27″ N., long. 088°22′11″ W)
CATLN FIX
(lat. 31°18′26″ N., long. 087°34′48″ W)
*
*
*
*
*
Q–24 LCH to PAYTN [New]
LCH VORTAC
(lat. 30°08′29″ N., long. 093°06′20″ W)
BTR VORTAC
(lat. 30°29′06″ N., long. 091°17′39″ W)
IRUBE WP
(lat. 31°00′16″ N., long. 088°56′19″ W)
PAYTN FIX
(lat. 31°28′04″ N., long. 087°53′08″ W)
*
*
*
VerDate Aug<31>2005
*
*
12:19 Dec 14, 2005
Jkt 208001
Sickness or Accident Disability
Payments
Internal Revenue Service (IRS),
Treasury.
ACTION: Final regulations.
SUMMARY: This document contains final
regulations providing guidance
regarding the treatment of payments
made on account of sickness or accident
disability under a workers’
compensation law for purposes of the
Federal Insurance Contributions Act
(FICA).
Effective Date: These regulations
are effective December 15, 2005.
Applicability Date: These regulations
apply to payments on account of
sickness or accident disability payments
made on or after December 15, 2005.
FOR FURTHER INFORMATION CONTACT:
David Ford (202) 622–6040 (not toll-free
number).
SUPPLEMENTARY INFORMATION:
DATES:
Background
This document contains amendments
to 26 CFR parts 31 and 32 under section
3121(a)(2) of the Internal Revenue Code
(Code). This section excepts from wages
for Federal Insurance Contributions Act
(FICA) purposes payments made on
account of sickness or accident
disability that are received under a
‘‘workmen’s compensation law,’’
hereinafter referred to as a workers’
compensation law.
Proposed regulations (Reg–160315–
03) under section 3121(a)(2) were
published in the Federal Register (70
FR 12164) on March 11, 2005. No
written comments responding to the
notice of proposed rulemaking were
received and a public hearing was not
requested or held. Accordingly, the
proposed regulations are adopted as
final regulations. In addition, this
document contains amendments to
§ 32.1 of the Temporary Employment
Tax Regulations to provide guidance
PO 00000
Frm 00006
Fmt 4700
Sfmt 4700
that the definition of workers’
compensation law in the final
regulations under § 31.3121(a)(2)–1
applies for payments on account of
sickness or accident disability made on
or after December 15, 2005.
Explanation of Provisions
Section 3121(a)(2)(A) of the Code
excepts from ‘‘wages’’ for FICA tax
purposes payments to an employee or
any of his dependents on account of
sickness or accident disability only if
the payments are received under a
workers’ compensation law.
Section 3121(a)(4) provides that
wages does not include any payment on
account of sickness or accident
disability made by an employer to or on
behalf of an employee after the
expiration of 6 calendar months
following the last calendar month in
which the employee worked for the
employer. Thus, unless made under a
workers’ compensation law, payments
received on account of sickness or
accident disability are wages subject to
FICA during the first 6 months the
employee is out of work.
These final regulations amend
§ 31.3121(a)(2)–1 to provide that
payments made under a statute in the
nature of a workers’ compensation act
will be treated as having been made
under a workers’ compensation law and,
therefore excluded from wages for FICA
purposes. For income tax purposes,
section 104(a)(1) excludes from gross
income certain amounts received under
‘‘workmen’s compensation acts.’’
Section 1.104–1(b) of the Income Tax
Regulations, provides that amounts
received under section 104(a)(1) include
amounts received by an employee under
a statute in the nature of a workers’
compensation act. Thus, the final
regulations align the interpretation of
what constitutes payments received
under a workers’ compensation law for
FICA purposes with § 1.104–1(b) of the
Income tax regulations.
The preamble to the proposed
regulations specified that § 32.1 of the
Temporary Employment Tax
Regulations would be amended, if
needed. It is necessary to remove the
reference to § 31.3121(a)(2)–1(a)(2) in
the first phrase of § 32.1(a) and insert a
reference to § 31.3121(a)(2)–1(d)(3) in
§ 32.1(a)(1) to specify that the definition
of workers’ compensation law
applicable to payments on account of
sickness or accident disability made on
or after December 15, 2005, is now in
final regulation § 31.3121(a)(2)–1(d)(3).
No other amendments are made to
§ 32.1.
The preamble to the proposed
regulations also specified that guidance
E:\FR\FM\15DER1.SGM
15DER1
Federal Register / Vol. 70, No. 240 / Thursday, December 15, 2005 / Rules and Regulations
would be provided related to Federal
Unemployment Tax Act (FUTA) to the
extent necessary. The Service has
concluded that no additional guidance
is necessary for FUTA since these
payments are made to employees of
states and local governments and FUTA
does not apply to services performed by
state or local government employees.
Special Analyses
It has been determined that these
regulations are not a significant
regulatory action as defined in
Executive Order 12866. 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. In addition,
because no collection of information is
imposed on small entities, the
provisions of the Regulatory Flexibility
Act (5 U.S.C. chapter 6) do not apply,
and, therefore, a Regulatory Flexibility
Analysis is not required. 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 the impact on small business.
Drafting Information
The principal author of these
regulations is David Ford of the Office
of Division Counsel/Associate Chief
Counsel (Tax Exempt/Government
Entities). However, other personnel
from the IRS and Treasury Department
participated in their development.
List of Subjects
26 CFR Part 31
Employment taxes; Fishing vessels;
Gambling; Income taxes; Penalties;
Pensions; Railroad retirement; Reporting
and recordkeeping requirements; Social
security; Unemployment compensation.
26 CFR Part 32
Employment taxes; Railroad
retirement; Reporting and recordkeeping
requirements; Social security.
Adoption of Amendments to the
Regulations
Accordingly, 26 CFR parts 31 and 32
are amended as follows:
I
PART 31—EMPLOYMENT TAXES AND
COLLECTION OF INCOME TAX AT THE
SOURCE
Paragraph 1. The authority section for
part 31 continues to read, in part, as
follows:
I
Authority: 26 U.S.C. 7805 * * *
Par. 2. Section 31.3121(a)(2)–1 is
amended by:
I
VerDate Aug<31>2005
12:19 Dec 14, 2005
Jkt 208001
1. Revising the section heading.
2. Removing paragraph (a)(1).
3. Redesignating paragraphs (a)(2)
through (a)(4) as (a)(1) through (a)(3),
respectively.
4. Revising newly designated
paragraph (a)(1).
5. Redesignating paragraph (d) as (f).
6. Adding new paragraphs (d) and (e).
The revisions and additions are as
follows:
§ 31.3121(a)(2)–1 Payments on account of
sickness or accident disability, medical or
hospitalization expenses, or death.
(a) * * *
(1) Sickness or accident disability of
an employee or any of his dependents,
only if payment is received under a
workers’ compensation law;
*
*
*
*
*
(d) Workers’ compensation law. (1)
For purposes of paragraph (a)(1) of this
section, a payment made under a
workers’ compensation law includes a
payment made pursuant to a statute in
the nature of a workers’ compensation
act.
(2) For purposes of paragraph (a)(1) of
this section, a payment made under a
workers’ compensation law does not
include a payment made pursuant to a
State temporary disability insurance
law.
(3) If an employee receives a payment
on account of sickness or accident
disability that is not made under a
workers’ compensation law or a statute
in the nature of a workers’
compensation act, the payment is not
excluded from wages as defined by
section 3121(a)(2)(A) even if the
payment must be repaid if the employee
receives a workers’ compensation award
or an award under a statute in the
nature of a workers’ compensation act
with respect to the same period of
absence from work.
(4) If an employee receives a payment
on account of non-occupational injury
sickness or accident disability such
payment is not excluded from wages, as
defined by section 3121(a)(2)(A).
(e) Examples. The following examples
illustrate the principles of paragraph (d)
of this section:
Example 1. A local government employee
is injured while performing work-related
activities. The employee is not covered by
the State workers’ compensation law, but is
covered by a local government ordinance that
requires the local government to pay the
employee’s full salary when the employee is
out of work as a result of an injury incurred
while performing services for the local
government. The ordinance does not limit or
otherwise affect the local government’s
liability to the employee for the work-related
injury. The local ordinance is not a workers’
compensation law, but it is in the nature of
PO 00000
Frm 00007
Fmt 4700
Sfmt 4700
74199
a workers’ compensation act. Therefore, the
salary the employee receives while out of
work as a result of the work-related injury is
excluded from wages under section
3121(a)(2)(A).
Example 2. The facts are the same as in
Example 1 except that the local ordinance
requires the employer to continue to pay the
employee’s full salary while the employee is
unable to work due to an injury whether or
not the injury is work-related. Thus, the local
ordinance does not limit benefits to instances
of work-related disability. A benefit paid
under an ordinance that does not limit
benefits to instances of work-related injuries
is not a statute in the nature of a workers’
compensation act. Therefore, the salary the
injured employee receives from the employer
while out of work is wages subject to FICA
even though the employee’s injury is workrelated.
Example 3. The facts are the same as in
Example 1 except that the local ordinance
includes a rebuttable presumption that
certain injuries, including any heart attack
incurred by a firefighter or other law
enforcement personnel is work-related. The
presumption in the ordinance does not
eliminate the requirement that the injury be
work-related in order to entitle the injured
worker to full salary. Therefore, the
ordinance is a statute in the nature of a
workers’ compensation act, and the salary the
injured employee receives pursuant to the
ordinance is excluded from wages under
section 3121(a)(2)(A).
*
*
*
*
*
PART 32—TEMPORARY
EMPLOYMENT TAX REGULATIONS
UNDER THE ACT OF DECEMBER 29,
1981 (PUB. L. 97–123)
I Par 3. The authority section for part
32 continues to read, in part, as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 4. Section 32.1 is amended by:
1. Revising paragraph (a) introductory
text.
2. Revising paragraph (a)(1).
The revisions and additions are as
follows:
*
*
*
*
*
(a) General rule. The amount of any
payment on or after January 1, 1982,
made to, or on behalf of, an employee
or any of his dependents on account of
sickness or accident disability is not
excluded from the term wages as
defined in section 3121(a)(2)(A) unless
such payment is—
(1) Received under a workmen’s
compensation law (as defined in
I
E:\FR\FM\15DER1.SGM
15DER1
74200
Federal Register / Vol. 70, No. 240 / Thursday, December 15, 2005 / Rules and Regulations
§ 31.3121(a)(2)–1(d)(3) for payments
made on or after December 15, 2005), or
*
*
*
*
*
Mark E. Matthews,
Deputy Commissioner of Services and
Enforcement.
Approved: December 1, 2005.
Eric Solomon,
Acting Deputy Assistant of the Treasury (Tax
Policy).
[FR Doc. 05–23945 Filed 12–14–05; 8:45 am]
BILLING CODE 4830–01–U
NATIONAL CRIME PREVENTION AND
PRIVACY COMPACT COUNCIL
28 CFR Part 906
[NCPPC 113]
Outsourcing of Noncriminal Justice
Administrative Functions
National Crime Prevention and
Privacy Compact Council.
ACTION: Final rule.
AGENCY:
SUMMARY: The Compact Council,
established pursuant to the National
Crime Prevention and Privacy Compact
Act of 1998 (Compact), is adopting, as
a final rule, without change, an interim
final rule which permits the outsourcing
of noncriminal justice administrative
functions involving access to criminal
history record information (CHRI).
Procedures established to permit
outsourcing are required to conform
with the Compact Council’s
interpretation of Articles IV and V of the
Compact.
DATES: This rule is effective December
15, 2005.
FOR FURTHER INFORMATION CONTACT: Ms.
Donna M. Uzzell, Compact Council
Chairman, Florida Department of Law
Enforcement, 2331 Phillips Road,
Tallahassee, Florida 32308–5333,
telephone number (850) 410–7100.
SUPPLEMENTARY INFORMATION:
I. Background
The Compact, 42 U.S.C. 14616,
establishes uniform standards and
processes for the interstate and FederalState exchange of criminal history
records for noncriminal justice
purposes. The Compact was approved
by the Congress on October 9, 1998,
(Pub. L. 105–251) and became effective
on April 28, 1999, when ratified by the
second state. Article VI of the Compact
provides for a Compact Council that has
the authority to promulgate rules and
procedures governing the use of the
Interstate Identification Index (III)
System for noncriminal justice
VerDate Aug<31>2005
12:19 Dec 14, 2005
Jkt 208001
purposes. On December 16, 2004, the
Compact Council published in the
Federal Register, 69 FR 75243, an
interim final rule with request for
comments. This rule permits a third
party to perform noncriminal justice
administrative functions relating to the
processing of CHRI maintained in the III
System, subject to appropriate controls,
when acting as an agent for a
governmental agency or other
authorized recipient of CHRI. Published
in a notice elsewhere in today’s edition
of the Federal Register is the Security
and Management Control Outsourcing
Standard which establishes the
appropriate controls.
II. Discussion of Comments on the
Interim Final Rule
The 60-day comment period for the
interim final rule closed on February 14,
2005. Two comments were received
from a state agency.
The first comment concerned section
906.2(b). The state agency questioned
the clarity of what specifically was
contemplated in the exceptions to the
provision that contractors, agencies, or
organizations shall not be permitted to
have terminal access to the III System
and suggested further explanation or
examples of what situations would
permit contractors to have direct
terminal access to the III System. The
Compact, at Article V (c), provides
‘‘Direct access to the National
Identification Index by entities other
than the FBI and State criminal history
record repositories shall not be
permitted for noncriminal justice
purposes’’ and 42 U.S.C. 14614(b)
provides that ‘‘Nothing in the Compact
shall interfere in any manner with—(1)
access, direct or otherwise, to records
pursuant to—(the various laws specified
in that section) or (2) any direct access
to Federal criminal history records
authorized by law.’’ Therefore,
authorized agencies (i.e., FBI, state
repositories, and certain agencies
performing the background checks
authorized under 42 U.S.C. 14614(b))
require direct access to III in order to
perform their authorized functions.
Although these agencies may choose not
to outsource these functions, the
exception language in the rule was
intended to not prohibit that option.
The second comment questioned
whether the Outsourcing Rule has any
affect on a specific provision of the
Security Clearance Information Act
(SCIA) (5 U.S.C. 9101) which authorizes
a State criminal history record
repository to require that fingerprints
accompany a SCIA record check request
if certain requirements are met.
Pursuant to the SCIA, the six covered
PO 00000
Frm 00008
Fmt 4700
Sfmt 4700
federal agencies may have direct
terminal access to the III to conduct
record checks of individuals being
considered for assignment or retention
in a position with access to classified
information, a critical or sensitive
position, a position of public trust, etc.
The SCIA also provides that ‘‘Such a
request to a State criminal history
record repository shall be accompanied
by the fingerprints of the individual
who is the subject of the request if
required by State law and if the
repository uses the fingerprints in an
automated fingerprint identification
system.’’ Accordingly, the Outsourcing
Rule has no impact on this SCIA
provision nor does the rule affect the
state law requiring fingerprints for use
in conducting a state automated
fingerprint identification system record
check for such purposes.
The Compact Council did not believe
that any changes to the rule were
necessary based on the comments;
therefore, the interim final rule is being
adopted as final without change.
List of Subjects in 28 CFR Part 906
Administrative practice and
procedure, Intergovernmental relations,
Law Enforcement, Privacy.
PART 906—OUTSOURCING OF
NONCRIMINAL JUSTICE
ADMINISTRATIVE FUNCTIONS
Accordingly, the interim final rule
adding part 906 which was published at
69 FR 75243 on December 16, 2004, is
adopted as a final rule without change.
Dated: November 23, 2005.
Donna M. Uzzell,
Compact Council Chairman.
[FR Doc. 05–24055 Filed 12–14–05; 8:45 am]
BILLING CODE 4410–02–P
PENSION BENEFIT GUARANTY
CORPORATION
29 CFR Parts 4022 and 4044
Benefits Payable in Terminated SingleEmployer Plans; Allocation of Assets
in Single-Employer Plans; Interest
Assumptions for Valuing and Paying
Benefits
Pension Benefit Guaranty
Corporation.
ACTION: Final rule.
AGENCY:
SUMMARY: The Pension Benefit Guaranty
Corporation’s regulations on Benefits
Payable in Terminated Single-Employer
Plans and Allocation of Assets in
Single-Employer Plans prescribe interest
assumptions for valuing and paying
E:\FR\FM\15DER1.SGM
15DER1
]]>Agencies
[Federal Register Volume 70, Number 240 (Thursday, December 15, 2005)]
[Rules and Regulations]
[Pages 74198-74200]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-23945]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Parts 31 and 32
[TD 9233]
RIN 1545-BC89
Sickness or Accident Disability Payments
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Final regulations.
-----------------------------------------------------------------------
SUMMARY: This document contains final regulations providing guidance
regarding the treatment of payments made on account of sickness or
accident disability under a workers' compensation law for purposes of
the Federal Insurance Contributions Act (FICA).
DATES: Effective Date: These regulations are effective December 15,
2005.
Applicability Date: These regulations apply to payments on account
of sickness or accident disability payments made on or after December
15, 2005.
FOR FURTHER INFORMATION CONTACT: David Ford (202) 622-6040 (not toll-
free number).
SUPPLEMENTARY INFORMATION:
Background
This document contains amendments to 26 CFR parts 31 and 32 under
section 3121(a)(2) of the Internal Revenue Code (Code). This section
excepts from wages for Federal Insurance Contributions Act (FICA)
purposes payments made on account of sickness or accident disability
that are received under a ``workmen's compensation law,'' hereinafter
referred to as a workers' compensation law.
Proposed regulations (Reg-160315-03) under section 3121(a)(2) were
published in the Federal Register (70 FR 12164) on March 11, 2005. No
written comments responding to the notice of proposed rulemaking were
received and a public hearing was not requested or held. Accordingly,
the proposed regulations are adopted as final regulations. In addition,
this document contains amendments to Sec. 32.1 of the Temporary
Employment Tax Regulations to provide guidance that the definition of
workers' compensation law in the final regulations under Sec.
31.3121(a)(2)-1 applies for payments on account of sickness or accident
disability made on or after December 15, 2005.
Explanation of Provisions
Section 3121(a)(2)(A) of the Code excepts from ``wages'' for FICA
tax purposes payments to an employee or any of his dependents on
account of sickness or accident disability only if the payments are
received under a workers' compensation law.
Section 3121(a)(4) provides that wages does not include any payment
on account of sickness or accident disability made by an employer to or
on behalf of an employee after the expiration of 6 calendar months
following the last calendar month in which the employee worked for the
employer. Thus, unless made under a workers' compensation law, payments
received on account of sickness or accident disability are wages
subject to FICA during the first 6 months the employee is out of work.
These final regulations amend Sec. 31.3121(a)(2)-1 to provide that
payments made under a statute in the nature of a workers' compensation
act will be treated as having been made under a workers' compensation
law and, therefore excluded from wages for FICA purposes. For income
tax purposes, section 104(a)(1) excludes from gross income certain
amounts received under ``workmen's compensation acts.'' Section 1.104-
1(b) of the Income Tax Regulations, provides that amounts received
under section 104(a)(1) include amounts received by an employee under a
statute in the nature of a workers' compensation act. Thus, the final
regulations align the interpretation of what constitutes payments
received under a workers' compensation law for FICA purposes with Sec.
1.104-1(b) of the Income tax regulations.
The preamble to the proposed regulations specified that Sec. 32.1
of the Temporary Employment Tax Regulations would be amended, if
needed. It is necessary to remove the reference to Sec. 31.3121(a)(2)-
1(a)(2) in the first phrase of Sec. 32.1(a) and insert a reference to
Sec. 31.3121(a)(2)-1(d)(3) in Sec. 32.1(a)(1) to specify that the
definition of workers' compensation law applicable to payments on
account of sickness or accident disability made on or after December
15, 2005, is now in final regulation Sec. 31.3121(a)(2)-1(d)(3). No
other amendments are made to Sec. 32.1.
The preamble to the proposed regulations also specified that
guidance
[[Page 74199]]
would be provided related to Federal Unemployment Tax Act (FUTA) to the
extent necessary. The Service has concluded that no additional guidance
is necessary for FUTA since these payments are made to employees of
states and local governments and FUTA does not apply to services
performed by state or local government employees.
Special Analyses
It has been determined that these regulations are not a significant
regulatory action as defined in Executive Order 12866. 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. In addition, because no collection
of information is imposed on small entities, the provisions of the
Regulatory Flexibility Act (5 U.S.C. chapter 6) do not apply, and,
therefore, a Regulatory Flexibility Analysis is not required. 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 the impact on small business.
Drafting Information
The principal author of these regulations is David Ford of the
Office of Division Counsel/Associate Chief Counsel (Tax Exempt/
Government Entities). However, other personnel from the IRS and
Treasury Department participated in their development.
List of Subjects
26 CFR Part 31
Employment taxes; Fishing vessels; Gambling; Income taxes;
Penalties; Pensions; Railroad retirement; Reporting and recordkeeping
requirements; Social security; Unemployment compensation.
26 CFR Part 32
Employment taxes; Railroad retirement; Reporting and recordkeeping
requirements; Social security.
Adoption of Amendments to the Regulations
0
Accordingly, 26 CFR parts 31 and 32 are amended as follows:
PART 31--EMPLOYMENT TAXES AND COLLECTION OF INCOME TAX AT THE
SOURCE
0
Paragraph 1. The authority section for part 31 continues to read, in
part, as follows:
Authority: 26 U.S.C. 7805 * * *
0
Par. 2. Section 31.3121(a)(2)-1 is amended by:
1. Revising the section heading.
2. Removing paragraph (a)(1).
3. Redesignating paragraphs (a)(2) through (a)(4) as (a)(1) through
(a)(3), respectively.
4. Revising newly designated paragraph (a)(1).
5. Redesignating paragraph (d) as (f).
6. Adding new paragraphs (d) and (e).
The revisions and additions are as follows:
Sec. 31.3121(a)(2)-1 Payments on account of sickness or accident
disability, medical or hospitalization expenses, or death.
(a) * * *
(1) Sickness or accident disability of an employee or any of his
dependents, only if payment is received under a workers' compensation
law;
* * * * *
(d) Workers' compensation law. (1) For purposes of paragraph (a)(1)
of this section, a payment made under a workers' compensation law
includes a payment made pursuant to a statute in the nature of a
workers' compensation act.
(2) For purposes of paragraph (a)(1) of this section, a payment
made under a workers' compensation law does not include a payment made
pursuant to a State temporary disability insurance law.
(3) If an employee receives a payment on account of sickness or
accident disability that is not made under a workers' compensation law
or a statute in the nature of a workers' compensation act, the payment
is not excluded from wages as defined by section 3121(a)(2)(A) even if
the payment must be repaid if the employee receives a workers'
compensation award or an award under a statute in the nature of a
workers' compensation act with respect to the same period of absence
from work.
(4) If an employee receives a payment on account of non-
occupational injury sickness or accident disability such payment is not
excluded from wages, as defined by section 3121(a)(2)(A).
(e) Examples. The following examples illustrate the principles of
paragraph (d) of this section:
Example 1. A local government employee is injured while
performing work-related activities. The employee is not covered by
the State workers' compensation law, but is covered by a local
government ordinance that requires the local government to pay the
employee's full salary when the employee is out of work as a result
of an injury incurred while performing services for the local
government. The ordinance does not limit or otherwise affect the
local government's liability to the employee for the work-related
injury. The local ordinance is not a workers' compensation law, but
it is in the nature of a workers' compensation act. Therefore, the
salary the employee receives while out of work as a result of the
work-related injury is excluded from wages under section
3121(a)(2)(A).
Example 2. The facts are the same as in Example 1 except that
the local ordinance requires the employer to continue to pay the
employee's full salary while the employee is unable to work due to
an injury whether or not the injury is work-related. Thus, the local
ordinance does not limit benefits to instances of work-related
disability. A benefit paid under an ordinance that does not limit
benefits to instances of work-related injuries is not a statute in
the nature of a workers' compensation act. Therefore, the salary the
injured employee receives from the employer while out of work is
wages subject to FICA even though the employee's injury is work-
related.
Example 3. The facts are the same as in Example 1 except that
the local ordinance includes a rebuttable presumption that certain
injuries, including any heart attack incurred by a firefighter or
other law enforcement personnel is work-related. The presumption in
the ordinance does not eliminate the requirement that the injury be
work-related in order to entitle the injured worker to full salary.
Therefore, the ordinance is a statute in the nature of a workers'
compensation act, and the salary the injured employee receives
pursuant to the ordinance is excluded from wages under section
3121(a)(2)(A).
* * * * *
PART 32--TEMPORARY EMPLOYMENT TAX REGULATIONS UNDER THE ACT OF
DECEMBER 29, 1981 (PUB. L. 97-123)
0
Par 3. The authority section for part 32 continues to read, in part, as
follows:
Authority: 26 U.S.C. 7805 * * *
0
Par. 4. Section 32.1 is amended by:
1. Revising paragraph (a) introductory text.
2. Revising paragraph (a)(1).
The revisions and additions are as follows:
* * * * *
(a) General rule. The amount of any payment on or after January 1,
1982, made to, or on behalf of, an employee or any of his dependents on
account of sickness or accident disability is not excluded from the
term wages as defined in section 3121(a)(2)(A) unless such payment is--
(1) Received under a workmen's compensation law (as defined in
[[Page 74200]]
Sec. 31.3121(a)(2)-1(d)(3) for payments made on or after December 15,
2005), or
* * * * *
Mark E. Matthews,
Deputy Commissioner of Services and Enforcement.
Approved: December 1, 2005.
Eric Solomon,
Acting Deputy Assistant of the Treasury (Tax Policy).
[FR Doc. 05-23945 Filed 12-14-05; 8:45 am]
BILLING CODE 4830-01-U
