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Under these interpretative regulations, the Commissioner has
allowed an employer such as petitioner to deduct compensation
paid to an employee through a transfer of property in the year
that the corresponding income is includable in the employee's
income if the employer deducts and withholds income tax on the
payment under section 3402. See sec. 1.83-6(a)(2), Income Tax
Regs.; see also sec. 7805(a) (the Commissioner authorized to
"prescribe all needful rules and regulations for the enforcement
of this title"). Petitioner does not benefit from these
regulations because it did not withhold income tax on any of the
payments underlying the claimed deduction. Although petitioner
attempts to avoid this result by arguing that these regulations
are invalid, we do not agree. The statutory text allows a
deduction when the corresponding amount is included in income,
and the Commissioner's regulations merely establish a "safe
harbor" for concluding that the corresponding amount was included
in income. The Commissioner's regulatory implementation of the
congressional mandate set forth in section 83(h) is reasonable,
which, in turn, means that the regulations are valid. United
States v. Vogel Fertilizer Co., 455 U.S. 16, 24 (1982); United
States v. Correll, 389 U.S. 299, 307 (1967). The special rule as
to the deduction and withholding of payroll taxes was meant to
alleviate the "difficult[ies] that a service recipient may have
in demonstrating that an amount has actually been included in the
service provider's gross income", see T.D. 8599, 1995-2 C.B. 12,
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