§ 3509. — Determination of employer's liability for certain employment taxes.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 26USC3509]
TITLE 26--INTERNAL REVENUE CODE
Subtitle C--Employment Taxes
CHAPTER 25--GENERAL PROVISIONS RELATING TO EMPLOYMENT TAXES
Sec. 3509. Determination of employer's liability for certain
employment taxes
(a) In general
If any employer fails to deduct and withhold any tax under chapter
24 or subchapter A of chapter 21 with respect to any employee by reason
of treating such employee as not being an employee for purposes of such
chapter or subchapter, the amount of the employer's liability for--
(1) Withholding taxes
Tax under chapter 24 for such year with respect to such employee
shall be determined as if the amount required to be deducted and
withheld were equal to 1.5 percent of the wages (as defined in
section 3401) paid to such employee.
(2) Employee social security tax
Taxes under subchapter A of chapter 21 with respect to such
employee shall be determined as if the taxes imposed under such
subchapter were 20 percent of the amount imposed under such
subchapter without regard to this subparagraph.
(b) Employer's liability increased where employer disregards reporting
requirements
(1) In general
In the case of an employer who fails to meet the applicable
requirements of section 6041(a), 6041A, or 6051 with respect to any
employee, unless such failure is due to reasonable cause and not
willful neglect, subsection (a) shall be applied with respect to
such employee--
(A) by substituting ``3 percent'' for ``1.5 percent'' in
paragraph (1); and
(B) by substituting ``40 percent'' for ``20 percent'' in
paragraph (2).
(2) Applicable requirements
For purposes of paragraph (1), the term ``applicable
requirements'' means the requirements described in paragraph (1)
which would be applicable consistent with the employer's treatment
of the employee as not being an employee for purposes of chapter 24
or subchapter A of chapter 21.
(c) Section not to apply in cases of intentional disregard
This section shall not apply to the determination of the employer's
liability for tax under chapter 24 or subchapter A of chapter 21 if such
liability is due to the employer's intentional disregard of the
requirement to deduct and withhold such tax.
(d) Special rules
For purposes of this section--
(1) Determination of liability
If the amount of any liability for tax is determined under this
section--
(A) the employee's liability for tax shall not be affected
by the assessment or collection of the tax so determined,
(B) the employer shall not be entitled to recover from the
employee any tax so determined, and
(C) sections \1\ 3402(d) and section 6521 shall not apply.
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\1\ So in original. Probably should be ``section''.
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(2) Section not to apply where employer deducts wage but not
social security taxes
This section shall not apply to any employer with respect to any
wages if--
(A) the employer deducted and withheld any amount of the tax
imposed by chapter 24 on such wages, but
(B) failed to deduct and withhold the amount of the tax
imposed by subchapter A of chapter 21 with respect to such
wages.
(3) Section not to apply to certain statutory employees
This section shall not apply to any tax under subchapter A of
chapter 21 with respect to an individual described in subsection
(d)(3) of section 3121 (without regard to whether such individual is
described in paragraph (1) or (2) of such subsection).
(Added Pub. L. 97-248, title II, Sec. 270(a), Sept. 3, 1982, 96 Stat.
553; amended Pub. L. 100-647, title II, Sec. 2003(d), Nov. 10, 1988, 102
Stat. 3598; Pub. L. 101-508, title V, Sec. 5130(a)(4), Nov. 5, 1990, 104
Stat. 1388-289.)
Amendments
1990--Subsec. (d)(3). Pub. L. 101-508 substituted ``subsection
(d)(3)'' for ``subsection (d)(4)''.
1988--Subsec. (d)(3). Pub. L. 100-647 substituted ``subsection
(d)(4)'' for ``subsection (d)(3)''.
Effective Date of 1990 Amendment
Amendment by Pub. L. 101-508 effective as if included in the
enactment of Pub. L. 100-647, Sec. 2003(d), see section 5130(b) of Pub.
L. 101-508, set out as a note under section 1402 of this title.
Effective Date
Section 270(c) of Pub. L. 97-248 provided that: ``The amendment made
by this section [enacting this section] shall take effect on the date of
the enactment of this Act [Sept. 3, 1982], except that such amendments
shall not apply to any assessment made before January 1, 1983.''
