The final regulations that were released last week more or less adhere to the proposed regulations that were released last year for the Additional Hospital Insurance Tax on income above threshold amounts, usually referred to as the Additional Medicare Tax (see Tax Strategy: Proposed Guidance on Medicare Contribution Taxes). The tax took effect on
The 0.9 percent Additional Medicare Tax applies to wages, railroad retirement compensation, and self-employment income over certain thresholds. Employers are responsible for withholding the tax on wages and Railroad Retirement Tax Act compensation in certain circumstances.
The only major change from the proposed regulations that were issued last December is that the proposed regulations had provided that if the employer deducts less than the correct amount of Additional Medicare Tax, it is nonetheless liable for the correct amount of tax that it was required to withhold, unless the employee pays the tax. The proposed regulations also provided that if an employee subsequently pays the tax that the employer failed to deduct, the tax would not be collected from the employer.
The final regulations, however, further say that an employer is not relieved of its liability for payment of any Additional Medicare Tax that is required to be withheld unless it can show that the tax has been paid by the employee. Employers will use Form 4669, “Statement of Payments Received,” and Form 4670, “Request for Relief from Payment of Income Tax Withholding,” the same forms used for requesting federal income tax withholding relief, to request relief from paying Additional Medicare Tax that has already been paid by the employee. The final regulations also amend the proposed regulations to comply with the formatting requirements of the
A 1993 executive order requires agencies to prepare a regulatory assessment for "significant regulatory actions" and economically significant regulations, that is, regulatory actions that are likely to have an annual effect on the economy of
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