CCA 201312039: employment tax disputes followed the refund claim process

Plain-English summary

Chief Counsel advised on the procedure for disputing employment tax on amounts paid to employees. If the taxpayer disagreed, the tax would be assessed, paid on Form 941, and challenged through a refund claim on Form 941-X. If the IRS did not act on the claim within six months or issued a notice disallowing it, the taxpayer could bring a refund suit in federal district court or the Court of Federal Claims. The IRS would not issue a notice of deficiency for employment tax that should have been treated as wages, so the taxpayer could not petition the Tax Court.

Ruling snapshot

• Question: What procedure applied to employment tax assessed on amounts received by employees?
• Outcome: Advice given, the taxpayer had to use the employment-tax refund claim process rather than petitioning the Tax Court.
• Key authorities: IRC § 6211; Forms 941 and 941-X

Full text (IRS public release)

ID: CCA_2013011712065170 Number: 201312039
Release Date: 3/22/2013
Office: ------------------------------
UILC: 6211.00-00

From: ----------------------
Sent: Thursday, January 17, 2013 12:06:51 PM
To: ---------------------------
Cc:
Subject: Employment Tax

Regarding employment tax on amounts employees received, if taxpayer does not agree, the tax is assessed. Taxpayer can pay the income tax withholding and FICA tax on Form 941 and file a claim for refund on Form 941-X. If the IRS does not act on the claim within 6 months or if the IRS issues a notice of claim disallowance, taxpayer can file a refund suit in a United States District Court or the Court of Federal Claims. The IRS does not issue a notice of deficiency for employment tax on amounts employees received that should have been characterized as wages; taxpayer cannot file a petition in Tax Court.