Rev. Rul. 54-221

Advice is requested whether an employee receiving `wages' in excess of $3,600 during the calendar year by reason of his having performed services for two or more employers is entitled to credit against his income tax liability the excess over $54 ($72 after 1953) of employee tax imposed by the Federal Insurance Contributions Act and withheld by his employers with respect to such `wages,' including an amount which was erroneously deducted by one of the employers with respect to remuneration in excess of $3,600.

If, during any calendar year commencing after December 31, 1950, an employee receives wages in excess of $3,600 from two or more employers, the employee is entitled to a special refund of the amount, if any, by which the employee tax imposed under the Federal Insurance Contributions Act with respect to such wages and deducted therefrom exceeds the employee tax with respect to the first $3,600 of such wages.

An employee who is entitled to a special refund of employee tax with respect to wages received during a calendar year and who is also required to file an income tax return for such calendar year may obtain the benefits of such refund only by claiming credit therefor in the same manner as though it were an amount deducted and withheld as income tax at the source under section 1622 of the Internal Revenue Code.

An employee who is entitled to a special refund and who is not required to file an income tax return for the taxable year involved may obtain the refund by filing a claim establishing his right thereto. The claim should be filed on Form 843 with the District Director of Internal Revenue for the district in which the employee resides. The employee shall submit with the claim, as a part thereof, a statement setting forth the reason why he is entitled to claim the special refund including the following information, with respect to each employer from whom he received wages during the calendar year: (1) the name and address of such employer, (2) the account number of the employee and the employee's name as reported by the employer on his returns, (3) the amount of wages received during the calendar year to which the claim relates, (4) the amount of employee tax on such wages deducted by the employer, and (5) the amount of such tax, if any, which has been refunded or otherwise returned to the employee. Form SS-9, Revised, may be used in supplying this information.

The procedure set forth above is applicable only with respect to an employee who has received wages from two or more employers and only with respect to the tax deducted by each employer on the first $3,600 of the employee's total wages. Such procedure does not apply to employee tax which is erroneously deducted from remuneration exceeding $3,600 during a calendar year received by an employee for employment performed for only one employer.

If the employee tax is erroneously withheld with respect to wages in excess of $3,600 paid by a single employer, the employer should adjust the overcollection of employee tax with the employee. (Sec. 1401(c) of the Act.) If the overcollection cannot be so adjusted, a claim for refund or credit may be filed in accordance with the provisions of section 1421 of the Act relating to erroneous or illegal collections of tax. Pursuant to such section the employee may authorize the employer to file a claim and receive refund or credit of the overpayment or the employee may file such claim on his own behalf. Each claim for refund shall be made on Form 843 in accordance with instructions relating to such form and shall have attached as a part of the claim a complete statement in support thereof. Credit may be claimed by the employer on his return, Form 941, Employer's Quarterly Federal Tax Return, in accordance with the instructions thereon.

The evidence in support of an employer's claim shall include the statement (1) that the employer has repaid the tax to the employee or has secured the written consent of such employee to allowance of the refund or credit, and (2) that the employer has obtained from the employee a written statement that the employee has not claimed and will not claim refund or credit of the amount of the overcollection. In every case, the employer shall maintain as part of his records the written receipt of the employee, showing the date and amount of the repayment, or the written consent of the employee, whichever is used in support of the claim, and the written statement of the employee that he has not claimed and will not claim refund or credit of the amount of the overcollection.

An employee's claim shall be supported by (1) a statement setting forth whether the employee has claimed credit against, or refund of, his income tax by reason of a special refund for the calendar year of such overcollection, and the amount, if any, so claimed and (2) a statement setting forth the extent, if any, to which the employer has reimbursed the employee in any manner for the overcollection, the amount, if any, of credit or refund of such overpayment claimed by the employer or authorized by the employee to be claimed by the employer, and such facts as will establish that the overpayment is not adjustable by and between the employer and employee. The employee shall obtain the latter statement, if possible, from the employer, who should include in such statement the fact that it is made in support of a claim to be filed by the employee for refund of employee tax paid by such employer to the District Director of Internal Revenue. If the employer's statement is not submitted with the claim, the employee shall make the statement to the best of his knowledge and belief, and shall include therein an explanation of his inability to obtain the statement from the employer.

No refund or credit will be allowed after the expiration of the applicable statutory period of limitation upon refunds and credit.

Mim. 5142, C.B. 1940-2, 238, and Mim. 6198, C.B. 1947-2, 145, are inapplicable with respect to wages paid after December 31, 1950.