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14576

FEDERAL REGISTER, Tkursday, December 14, 1944

as compensation for services performed by the employee for his employer.
The basis upon which the remunera tion is paid is immaterial in determining whether the remuneration constitutes wages. Thus it may be paid on the basis of piecework, or a percentage of profits;
and may be paid hourly, daily, weekly, t monthly, or annually.
Wages may be paid in money or in some medium other than money, as, for ex ample, stocks, bonds, or other forms of property. If services are paid for in a medium other than money, the fair market value of the thing taken in pay ment is the amount to be included as wages subject to withholding. If the services were rendered at a stipulated price, in the absence of evidence to the contrary such price will be presumed to be the fair value of the remuneration received. If a corporation transfers to its employees its own stock as remunera tion for services rendered by the em ployee, the amount of such remunera tion is the fair market value of the stock at the time of the transfer. If a person receives as remuneration for services rendered a salary and in addition there to living quarters or meals, the value to such person of the quarters and meals so furnished shall be added to the remu neration otherwise paid for the purpose of determining the amount of wages sub ject to withholding. If, however, living quarters or meals are furnished to an employee for the convenience of the em ployer, the value thereof need not be included as wages subject to withholding.
Ordinarily, facilities or privileges such as entertainment, medical serv ices, or so-called courtesy discounts on purchases, furnished or offered by an employer to his employees generally, are not considered as wages subject to withholding if such facilities or privileges are of relatively small value and are offered or furnished by the employer merely as a means of promoting the health, good will, contentment, or effi ciency of his employees.
Where wages are paid in property other than money, the .employer should make necessary arrangements to insure that the amount of the tax required to be withheld is available for payment to the collector.
Tips or gratuities paid directly to an employee by a customer of an employer, and not accounted for by the employee to the employer, are not subject to with holding.
Remuneration for services, unless such remuneration is specifically excepted by the statute, constitutes wages even though at the time paid the relation ship of employer and employee no longer eixsts between the person in whose em ploy the services were performed and the individual who performed them.
Example. A is employed by B during the month of January 1946 and is entitled to receive remuneration of $100 for the serv ices performed for B, the employer, during the month. A leaves the employ of B at the close of business on January 31, 1945.
On February 15, 1945 when A is no longer an employee of B , B pays A the remunera tion of $100 which was earned for the serv ices performed in January. The $100 is wages within the meaning of the statute.

b Pensions, retired pay, and em f Deductions by employer from ployees trusts. In general, pensions and wages of employee. The amount of any retired pay are wages subject to with tax which is required by law to be de holding. However, no withholding is re ducted by the employer from the wages quired with respect to amounts paid to of an employee is considered to be a part an employee upon retirement which are of the employees wages and is deemed to taxable as annuities under the provisions be paid to the employee as wages at the of section 22 b 2. So-called pensions time the deduction is made. Other amounts deducted from the wages of an awarded by one to whom no services have been rendered are mere gifts or gratuities employee by an employer also constitute wages paid to the employee at the time and do not constitute wages.
No withholding is required with re of the deduction. It is immaterial that spect to an employers contributions to, the Internal Revenue Code, or anyAct of or with respect to distributions under, a Congress, or the law of any State, re pension, stock bonus, profit-sharing, quires or permits such deductions and annuity plan, or other plan deferring the the payment of the amounts thereof to repeipt of compensation by the employee, the United States, a State, a Territory, or including amounts paid or contributed the District of Columbia, or any political by an employer in conjunction with such subdivision of any one dr more of the a plan in respect of life insurance or foregoing.
death benefits, if the contributions of the g Payment by art employer of em employer to such plan are of the charac ployees tax, or employees contributions ter for which a deduction is allowable under a State law. The term wages under section 23 p. As to information includes the amount paid by an employer at the source with respect to payments on behalf of an employee without de referred to in this paragraph, see section duction from the remuneration of, or 147 and the regulations thereunder.
other reimbursements from, the em Wages representing retired pay for ployee on account of any payment re service in the military or naval fbrces quired from an employee under a State of the United States are subject to with unemployment compensation law, or on holding unless the individual receiving account of any tax imposed upon the such pay has been retired because of employee by any taxing authority, in personal injuries or sickness resulting cluding the taxes imposed by sections from active service with such forces.
1400 ad 1500.
Where such retired pay is paid to a non h Remuneration for services as em resident alien individual no withholding is ployee of nonresident alien individual or required. See section 1621 a 6. foreign entity. The term wages in Payments of pensions or other benefits cludes remuneration for services per under the War Risk Insurance Act, as formed by a citizen or resident of the amended, the World War Veterans Act, United States asan employee of a non 1924, as amended, the Emergency Offi resident alien individual, foreign part cers Retirement Act, as amended, the nership, or foreign corporation whether World War Adjusted Compensation Act, or not such alien individual or foreign as amended, the pension laws in effect entity is engaged in trade or business prior to March 20,1933, Public Law Num within the United States. Any person bered 2, Seventy-third Congress, as paying wages on behalf of a nonresident amended, Public Law Numbered,484, alien individual, foreign partnership, or SejJChty-third Congress, and,Any>Act or foreign corporation, not engaged in trade Acts amendatory of such .Acts, are not or business within the United States, is includible in gross income under Chapter subject to all the provisions of law and 1 of thgxinternal Revenue Code and regulations applicable with respect to an hence/eire not subject to withholding.
employer. See 405.105.
Traveling and other expenses.
405.102 Exclusions f r o m wages Amounts paid specificallyeither as ad vances or reimbursementfor. travelinga Fees paid to a public official. Au or other bona fide ordinary and necessary thorized fees paid to public officials such expenses incurred or reasonably ex as notaries public, clerks of courts, sher pected to be incurred in the business of iffs, etc., for services rendered in the the employer are not wages and are not performance of their official duties are subject to withholding. Traveling and excepted from the definition of the term other reimbursed expenses must be iden wages and hence are not subject to tified either by making a separate paywithholding. However, salaries paid - ment or by specifically indicating the such officials by the Government, or Gov separate amounts where both wages and ernment agency or instrumentality, are expense allowances are combined in a subject to withholding.
b Compensation of military and na single payment.
d Vacation allowances. Amounts of val forces. . Remuneration paid for serv so-called vacation allowances paid to ices performed as a member of the mili an employee constitute wages. Thus, tary or naval forces of the United States the salary of an employee on vacation, is excepted from the definition of the paid notwithstanding his absence from term wages. Pensions and retired pay, if includible in gross income under work, constitutes wages.
e Dismissal payments. Any pay Chapter 1 of the Internal Revenue ments made byan. employer to any em Code, are not within the exception and ployee on account of-dismissal, that is, hence constitute wages subject to with involuntary separation from the service holding. For the purpose of the excep of the employer, constitute wages re tion, the military and naval forces of the gardless of whether, the employer is United States include but are not neces legally bound by contract, statute, or sarily limited to the Army, the Navy the Marine Corps, the Coast Guard, the otherwise to make such payments.