Rev. Proc. 83-66

SECTION 1. PURPOSE

.01. The purpose of this revenue procedure is to update Rev. Proc. 699, 1969-1 C.B. 400. This revenue procedure explains both the standard procedure and an acceptable alternative procedure for preparing and filing Forms W-2, Wage and Tax Statement, W-3, Reconciliation of Income Tax Withheld, and 941, Employer's Quarterly Federal Tax Return, and for the proper treatment of Form W4, Employee's Withholding Allowance Certificate, when an employer (successor) acquires substantially all the property (1) used in a trade or business of another employer (predecessor), or (2) used in a separate unit of a trade or business of a predecessor, and immediately after the acquisition (but during the same calendar year) the successor employs individuals who immediately prior to the acquisition were employed in the trade or business of the predecessor. (The term "trade or business," for purposes of this revenue procedure, may include the activity of a nonprofit organization or of a federal or state agency).

.02 This revenue procedure does not apply under the circumstances described in Rev. Rul. 62-60, 1962-1 C.B. 186, which relates to the absorption of one corporation by another in a statutory merger or consolidation, and in which the resultant entity is regarded as the same taxpayer and same employer as the absorbed corporation.

SEC. 2. CHANGES

.01 Section 2.01 of Rev. Proc. 699, which required the predecessor to furnish a Form W-2 to the employee, has been revised to conform with changes to section 31.6051-1(d) of the Employment Tax Regulations.

.02 Section 3.04 has been added to provide standard procedures for treatment of, Form W-4.

.03 Section 4.04 has been added to provide alternative procedures for the treatment of Form W-4.

Sec. 3. BACKGROUND

.01 Section 6011(a) of the Internal Revenue Code provides that any person made liable for any tax, or for the collection of the tax, must make a return or statement according to the forms or regulations prescribed by the Secretary.

.02 Section 31.6011(a)-4 of the regulations prescribes Form 941 as the form to use for persons required to make a return of income tax withheld from wages.

.03 Section 6051(a) of the Code provides that every person must furnish a written statement to an employee on or before January 31 of the succeeding year, or on the day in which the last payment of remuneration is made if employment is terminated before the close of the calendar year, if:

(1) the person is required to deduct and withhold income tax, or would have been required to deduct and withhold if the employee had claimed no more than I withholding exemption, or

(2) the person is an employer engaged in a trade or business who pays remuneration for services performed by an employee.

.04 Under section 31.6051-1(a) of the regulations, an employer must furnish the statement on a Form W-2. Section 31.6051-1(d) provides that if an employee's work is terminated before the close of the calendar year, the employer may furnish the statement to the employee at anytime after the termination of employment but no later than January 31 of the succeeding calendar year. However, if the employee requests the employer to furnish the statement at an earlier time, then the employer must furnish the statement within 30 days of the request or within 30 days after the final payment of wages, whichever is later.

SEC. 4. STANDARD PROCEDURE

.01 When a predecessor makes a final payment of wages to an e employee under the circumstances described in section 1.01, the predecessor must furnish a Form W-2 to the employee no later than January 31 of the next calendar year. However, if an employee requests the form earlier, the predecessor must furnish the form within 30 days of the request or within 30 days after the final payment of wages to the employee, whichever is later.

.02 The predecessor's return on Form 941 for the last quarter of the calendar year, or the "final return" on Form 941 if the predecessor ceases to pay wages, ordinarily would be accompanied by the Internal Revenue Service copies of each of the Forms W-2 and by the predecessor's Form W-3.

.03 Under the standard procedure, the predecessor thus performs all reporting duties for the wages and other compensation it pays. The successor, under standard procedure, reports only its own payments of wages and other compensation.

.04 The predecessor must keep on file the Forms W-4 provided by its former employees. The transferred employees must provide the successor employer with new Forms W-4 as the successor now becomes responsible for deducting and withholding tax from wages paid to the transferred employees.

SEC. 5 ALTERNATIVE PROCEDURE

.01 If the predecessor and successor so agree, the predecessor may be relieved from furnishing a Form W-2 to any employee to whom it makes a final payment of wages under the circumstances described in section 1.01. In such circumstances the employee presumably will be paid wages by the successor in the same calendar year, and the Form W-2 furnished to the employee by the successor for the year may include the wages paid, and taxes withheld, by both the predecessor and the successor. If the successor assumes the predecessor's obligation to furnish Forms W- 2 to employees for a calendar year, the successor must assume the predecessor's entire obligation. Thus, the successor must include in the Form W-2 any amount reportable by the predecessor as her "compensation" or as uncollected employee tax on tips.

.02 To the extent that wages paid and income tax withheld by the predecessor are to be included in the successor's Form W-2, there will be a difference between the predecessor's Form W-3 and its return on Form 941. When the predecessor files its return on Form 941, accompanied by the Form W-3, the explanation of the discrepancy should include the name, address, and identification number of the successor and a reference to this revenue procedure. The predecessor's Form 941 and Form W-3 also must be accompanied by copies of Forms W-2 furnished by the predecessor to its employees (for example, to employees who were not employed by the successor immediately after acquisition of the trade or business).

.03 To the extent of the difference referred to in section 3.02, there will be a corresponding difference between the successor's Form W-3 and its returns on Form 941. The successor's explanation of the discrepancy should include the predecessor's name, address, and identification number and a reference to this revenue procedure. For instructions relating to annual wage limitations, see section 31.3121(a)(1)-1 of the regulations.

.04 The Forms W4 that were provided to the predecessor employer by its former employees are to be transferred to the successor employer. The successor employer must keep the transferred Forms W-4 on file and deduct and withhold from the wages it pays to its employees according to the information supplied on those forms unless an employee submits a revised form. The successor employer must submit to the Service, in accordance with section 31.3402(f)(2)-I(g) of the regulations, copies of the Forms W-4 received by the predecessor employer during the current and preceding calendar quarters.

SEC. 6. EFFECT ON OTHER REVENUE PROCEDURES

This revenue procedure supersedes Rev. Proc. 69-9.

SEC. 7. EFFECTIVE DATE

This revenue procedure is effective September 6, 1983, the date of publication.