Internal Revenue Code:Sec. 3505. Liability of third parties paying or providing for wages

From TaxAlmanac

Location in Internal Revenue Code

     TITLE 26 - INTERNAL REVENUE CODE
      Subtitle C - Employment Taxes
       CHAPTER 25 - GENERAL PROVISIONS RELATING TO EMPLOYMENT TAXES
     

Statute

    Sec. 3505. Liability of third parties paying or providing for wages
 
    (a) Direct payment by third parties
      For purposes of sections 3102, 3202, 3402, and 3403, if a lender,
    surety, or other person, who is not an employer under such sections
    with respect to an employee or group of employees, pays wages
    directly to such an employee or group of employees, employed by one
    or more employers, or to an agent on behalf of such employee or
    employees, such lender, surety, or other person shall be liable in
    his own person and estate to the United States in a sum equal to
    the taxes (together with interest) required to be deducted and
    withheld from such wages by such employer.
    (b) Personal liability where funds are supplied
      If a lender, surety, or other person supplies funds to or for the
    account of an employer for the specific purpose of paying wages of
    the employees of such employer, with actual notice or knowledge
    (within the meaning of section 6323(i)(1)) that such employer does
    not intend to or will not be able to make timely payment or deposit
    of the amounts of tax required by this subtitle to be deducted and
    withheld by such employer from such wages, such lender, surety, or
    other person shall be liable in his own person and estate to the
    United States in a sum equal to the taxes (together with interest)
    which are not paid over to the United States by such employer with
    respect to such wages.  However, the liability of such lender,
    surety, or other person shall be limited to an amount equal to 25
    percent of the amount so supplied to or for the account of such
    employer for such purpose.
    (c) Effect of payment
      Any amounts paid to the United States pursuant to this section
    shall be credited against the liability of the employer.
 

Sources

    (Added Pub. L. 89-719, title I, Sec. 105(a), Nov. 2, 1966, 80 Stat.
    1138.)
 

Miscellaneous

                               EFFECTIVE DATE
      Section applicable only with respect to wages paid on or after
    Jan. 1, 1967, see section 114(c)(1) of Pub. L. 89-719, set out as
    an Effective Date of 1966 Amendment note under section 6323 of this
    title.