26 U.S.C. § 3509 : US Code - Section 3509: Determination of employer's liability for certain employment taxes

Search 26 U.S.C. § 3509 : US Code - Section 3509: Determination of employer's liability for certain employment taxes

(a) In general
If any employer fails to deduct and withhold any tax under
chapter 24 or subchapter A of chapter 21 with respect to any
employee by reason of treating such employee as not being an
employee for purposes of such chapter or subchapter, the amount of
the employer's liability for -
(1) Withholding taxes
Tax under chapter 24 for such year with respect to such
employee shall be determined as if the amount required to be
deducted and withheld were equal to 1.5 percent of the wages (as
defined in section 3401) paid to such employee.
(2) Employee social security tax
Taxes under subchapter A of chapter 21 with respect to such
employee shall be determined as if the taxes imposed under such
subchapter were 20 percent of the amount imposed under such
subchapter without regard to this subparagraph.
(b) Employer's liability increased where employer disregards
reporting requirements
(1) In general
In the case of an employer who fails to meet the applicable
requirements of section 6041(a), 6041A, or 6051 with respect to
any employee, unless such failure is due to reasonable cause and
not willful neglect, subsection (a) shall be applied with respect
to such employee -
(A) by substituting "3 percent" for "1.5 percent" in
paragraph (1); and
(B) by substituting "40 percent" for "20 percent" in
paragraph (2).
(2) Applicable requirements
For purposes of paragraph (1), the term "applicable
requirements" means the requirements described in paragraph (1)
which would be applicable consistent with the employer's
treatment of the employee as not being an employee for purposes
of chapter 24 or subchapter A of chapter 21.
(c) Section not to apply in cases of intentional disregard
This section shall not apply to the determination of the
employer's liability for tax under chapter 24 or subchapter A of
chapter 21 if such liability is due to the employer's intentional
disregard of the requirement to deduct and withhold such tax.
(d) Special rules
For purposes of this section -
(1) Determination of liability
If the amount of any liability for tax is determined under this
section -
(A) the employee's liability for tax shall not be affected by
the assessment or collection of the tax so determined,
(B) the employer shall not be entitled to recover from the
employee any tax so determined, and
(C) sections (!1) 3402(d) and section 6521 shall not apply.
(2) Section not to apply where employer deducts wage but not
social security taxes
This section shall not apply to any employer with respect to
any wages if -
(A) the employer deducted and withheld any amount of the tax
imposed by chapter 24 on such wages, but
(B) failed to deduct and withhold the amount of the tax
imposed by subchapter A of chapter 21 with respect to such
wages.
(3) Section not to apply to certain statutory employees
This section shall not apply to any tax under subchapter A of
chapter 21 with respect to an individual described in subsection
(d)(3) of section 3121 (without regard to whether such individual
is described in paragraph (1) or (2) of such subsection).