Final regs. permit agents to withhold FUTA for home care service recipients.
Recipients of home care services are usually elderly or physically or mentally disabled, but they are nonetheless considered to be the employer of their home health care aides, with the result that they are responsible for withholding employment taxes from the aides' wages, even though the wages are paid in whole or in part by a government agency. The final rules fully relieve the recipients of this burden.
These rules adopt with a few minor changes proposed regulations issued in 2010 (REG-137036-08). A number of the comments on the proposed regulations were concerned with different procedural issues beyond the regulations' scope, which the IRS addressed in a revenue procedure released at the same time (Rev. Proc. 201339). The revenue procedure updates the rules that apply to authorize a person to act as a service recipients' agent.
Most of the comments on the proposed rules were addressed by further explanation in the preamble to the final regulations. One clarification was to the rules to qualify as a home care recipient. Because these rules require recipients to receive federal, state, or local government funds to pay for these services in whole or in part, the preamble clarified that a service recipient could pay for the services out of his or her own pocket, but must be reimbursed in whole or in part to qualify under the rules.
The only change made in response to comments was to the definition of home care services, which were proposed to include health care and personal attendant care services rendered in the recipient's home or local community. The regulations are intended to apply to services provided in the recipient's home as well as to services provided outside the home, without any geographical limitation. Therefore, the final regulations eliminate the phrase, "rendered in the home care service recipient's home or local community."
The rules apply to wages paid on or after Jan. 1, 2014. Agents that have a valid authorization in effect do not have to file another application to be authorized to collect FUTA tax.
From Sally P. Schreiberd.D.
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|Title Annotation:||Federal Unemployment Tax Act|
|Author:||Schreiber, Sally P.|
|Publication:||The Tax Adviser|
|Date:||Feb 1, 2014|
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