You are on page 1of 3

74198 Federal Register / Vol. 70, No.

240 / Thursday, December 15, 2005 / Rules and Regulations

action is not expected to cause any Issued in Washington, DC, on December 8, that the definition of workers’
potentially significant impacts, and no 2005. compensation law in the final
extraordinary circumstances exist that Edith V. Parish, regulations under § 31.3121(a)(2)–1
warrant preparation of an Manager, Airspace and Rules. applies for payments on account of
environmental assessment. [FR Doc. 05–24069 Filed 12–14–05; 8:45 am] sickness or accident disability made on
BILLING CODE 4910–13–P or after December 15, 2005.
List of Subjects in 14 CFR Part 71
Explanation of Provisions
Airspace, Incorporation by Reference,
Navigation (air). Section 3121(a)(2)(A) of the Code
DEPARTMENT OF THE TREASURY excepts from ‘‘wages’’ for FICA tax
Adoption of the Amendment purposes payments to an employee or
Internal Revenue Service
■ In consideration of the foregoing, the any of his dependents on account of
Federal Aviation Administration 26 CFR Parts 31 and 32 sickness or accident disability only if
amends 14 CFR part 71 as follows: the payments are received under a
[TD 9233] workers’ compensation law.
PART 71—DESIGNATION OF CLASS A, Section 3121(a)(4) provides that
RIN 1545–BC89
B, C, D, AND E AIRSPACE AREAS; AIR wages does not include any payment on
TRAFFIC SERVICE ROUTES; AND Sickness or Accident Disability account of sickness or accident
REPORTING POINTS Payments disability made by an employer to or on
behalf of an employee after the
■ 1. The authority citation for part 71 AGENCY: Internal Revenue Service (IRS), expiration of 6 calendar months
continues to read as follows: Treasury. following the last calendar month in
Authority: 49 U.S.C. 106(g), 40103, 40113, ACTION: Final regulations. which the employee worked for the
40120; E.O. 10854, 24 FR 9565, 3 CFR, 1959– employer. Thus, unless made under a
1963 Comp., p. 389. SUMMARY: This document contains final workers’ compensation law, payments
regulations providing guidance received on account of sickness or
§ 71.1 [Amended] regarding the treatment of payments accident disability are wages subject to
■ 2. The incorporation by reference in made on account of sickness or accident FICA during the first 6 months the
14 CFR 71.1 of FAA Order 7400.9N, disability under a workers’ employee is out of work.
Airspace Designations and Reporting compensation law for purposes of the These final regulations amend
Points, dated September 1, 2005, and Federal Insurance Contributions Act § 31.3121(a)(2)–1 to provide that
effective September 15, 2005, is (FICA). payments made under a statute in the
amended as follows: nature of a workers’ compensation act
DATES: Effective Date: These regulations
will be treated as having been made
are effective December 15, 2005.
Paragraph 2006—Area Navigation Routes under a workers’ compensation law and,
Applicability Date: These regulations
* * * * * therefore excluded from wages for FICA
apply to payments on account of
purposes. For income tax purposes,
Q–20 CNX to JCT [New] sickness or accident disability payments
section 104(a)(1) excludes from gross
made on or after December 15, 2005.
CNX VORTAC income certain amounts received under
(lat. 34°22′01″ N., long. 105°40′41″ W) FOR FURTHER INFORMATION CONTACT: ‘‘workmen’s compensation acts.’’
HONDS FIX David Ford (202) 622–6040 (not toll-free Section 1.104–1(b) of the Income Tax
(lat. 33°33′60″ N., long. 104°51′12″ W) number). Regulations, provides that amounts
UNNOS WP SUPPLEMENTARY INFORMATION: received under section 104(a)(1) include
(lat. 32°57′00″ N., long. 103°56′00″ W)
FUSCO WP Background amounts received by an employee under
(lat. 31°11′02″ N., long. 101°19′30″ W) a statute in the nature of a workers’
JCT VORTAC This document contains amendments compensation act. Thus, the final
(lat. 30°35′53″ N., long. 099°49′03″ W) to 26 CFR parts 31 and 32 under section regulations align the interpretation of
* * * * * 3121(a)(2) of the Internal Revenue Code what constitutes payments received
(Code). This section excepts from wages under a workers’ compensation law for
Q–22 GUSTI to CATLN [New] for Federal Insurance Contributions Act FICA purposes with § 1.104–1(b) of the
GUSTI FIX (FICA) purposes payments made on Income tax regulations.
(lat. 29°58′15″ N., long. 092°54′35″ W) account of sickness or accident The preamble to the proposed
OYSTY FIX disability that are received under a regulations specified that § 32.1 of the
(lat. 30°28′15″ N., long. 090°11′49″ W) ‘‘workmen’s compensation law,’’ Temporary Employment Tax
RUBAE WP hereinafter referred to as a workers’
(lat. 30°55′27″ N., long. 088°22′11″ W)
Regulations would be amended, if
CATLN FIX
compensation law. needed. It is necessary to remove the
(lat. 31°18′26″ N., long. 087°34′48″ W) Proposed regulations (Reg–160315– reference to § 31.3121(a)(2)–1(a)(2) in
03) under section 3121(a)(2) were the first phrase of § 32.1(a) and insert a
* * * * *
published in the Federal Register (70 reference to § 31.3121(a)(2)–1(d)(3) in
Q–24 LCH to PAYTN [New] FR 12164) on March 11, 2005. No § 32.1(a)(1) to specify that the definition
LCH VORTAC written comments responding to the of workers’ compensation law
(lat. 30°08′29″ N., long. 093°06′20″ W) notice of proposed rulemaking were applicable to payments on account of
BTR VORTAC received and a public hearing was not sickness or accident disability made on
(lat. 30°29′06″ N., long. 091°17′39″ W) requested or held. Accordingly, the or after December 15, 2005, is now in
IRUBE WP proposed regulations are adopted as final regulation § 31.3121(a)(2)–1(d)(3).
(lat. 31°00′16″ N., long. 088°56′19″ W) final regulations. In addition, this
PAYTN FIX
No other amendments are made to
(lat. 31°28′04″ N., long. 087°53′08″ W)
document contains amendments to § 32.1.
§ 32.1 of the Temporary Employment The preamble to the proposed
* * * * * Tax Regulations to provide guidance regulations also specified that guidance

VerDate Aug<31>2005 12:19 Dec 14, 2005 Jkt 208001 PO 00000 Frm 00006 Fmt 4700 Sfmt 4700 E:\FR\FM\15DER1.SGM 15DER1
Federal Register / Vol. 70, No. 240 / Thursday, December 15, 2005 / Rules and Regulations 74199

would be provided related to Federal 1. Revising the section heading. a workers’ compensation act. Therefore, the
Unemployment Tax Act (FUTA) to the 2. Removing paragraph (a)(1). salary the employee receives while out of
extent necessary. The Service has 3. Redesignating paragraphs (a)(2) work as a result of the work-related injury is
concluded that no additional guidance through (a)(4) as (a)(1) through (a)(3), excluded from wages under section
is necessary for FUTA since these respectively. 3121(a)(2)(A).
payments are made to employees of 4. Revising newly designated Example 2. The facts are the same as in
states and local governments and FUTA paragraph (a)(1). Example 1 except that the local ordinance
does not apply to services performed by 5. Redesignating paragraph (d) as (f). requires the employer to continue to pay the
state or local government employees. 6. Adding new paragraphs (d) and (e). employee’s full salary while the employee is
The revisions and additions are as unable to work due to an injury whether or
Special Analyses not the injury is work-related. Thus, the local
follows:
It has been determined that these ordinance does not limit benefits to instances
regulations are not a significant § 31.3121(a)(2)–1 Payments on account of of work-related disability. A benefit paid
regulatory action as defined in sickness or accident disability, medical or under an ordinance that does not limit
hospitalization expenses, or death.
Executive Order 12866. Therefore, a benefits to instances of work-related injuries
regulatory assessment is not required. It (a) * * * is not a statute in the nature of a workers’
has also been determined that section (1) Sickness or accident disability of compensation act. Therefore, the salary the
553(b) of the Administrative Procedure an employee or any of his dependents, injured employee receives from the employer
Act (5 U.S.C. chapter 5) does not apply only if payment is received under a while out of work is wages subject to FICA
to these regulations. In addition, workers’ compensation law; even though the employee’s injury is work-
because no collection of information is * * * * * related.
imposed on small entities, the (d) Workers’ compensation law. (1) Example 3. The facts are the same as in
provisions of the Regulatory Flexibility For purposes of paragraph (a)(1) of this Example 1 except that the local ordinance
Act (5 U.S.C. chapter 6) do not apply, section, a payment made under a includes a rebuttable presumption that
and, therefore, a Regulatory Flexibility workers’ compensation law includes a certain injuries, including any heart attack
Analysis is not required. Pursuant to payment made pursuant to a statute in incurred by a firefighter or other law
section 7805(f) of the Code, these the nature of a workers’ compensation enforcement personnel is work-related. The
regulations have been submitted to the act. presumption in the ordinance does not
Chief Counsel for Advocacy of the Small (2) For purposes of paragraph (a)(1) of eliminate the requirement that the injury be
Business Administration for comment this section, a payment made under a work-related in order to entitle the injured
on the impact on small business. workers’ compensation law does not worker to full salary. Therefore, the
include a payment made pursuant to a ordinance is a statute in the nature of a
Drafting Information workers’ compensation act, and the salary the
State temporary disability insurance
The principal author of these law. injured employee receives pursuant to the
regulations is David Ford of the Office (3) If an employee receives a payment ordinance is excluded from wages under
of Division Counsel/Associate Chief section 3121(a)(2)(A).
on account of sickness or accident
Counsel (Tax Exempt/Government disability that is not made under a * * * * *
Entities). However, other personnel workers’ compensation law or a statute
from the IRS and Treasury Department in the nature of a workers’ PART 32—TEMPORARY
participated in their development. compensation act, the payment is not EMPLOYMENT TAX REGULATIONS
List of Subjects excluded from wages as defined by UNDER THE ACT OF DECEMBER 29,
section 3121(a)(2)(A) even if the 1981 (PUB. L. 97–123)
26 CFR Part 31 payment must be repaid if the employee
Employment taxes; Fishing vessels; receives a workers’ compensation award ■ Par 3. The authority section for part
Gambling; Income taxes; Penalties; or an award under a statute in the 32 continues to read, in part, as follows:
Pensions; Railroad retirement; Reporting nature of a workers’ compensation act
and recordkeeping requirements; Social with respect to the same period of Authority: 26 U.S.C. 7805 * * *
security; Unemployment compensation. absence from work. ■ Par. 4. Section 32.1 is amended by:
(4) If an employee receives a payment
26 CFR Part 32 on account of non-occupational injury 1. Revising paragraph (a) introductory
Employment taxes; Railroad sickness or accident disability such text.
retirement; Reporting and recordkeeping payment is not excluded from wages, as 2. Revising paragraph (a)(1).
requirements; Social security. defined by section 3121(a)(2)(A). The revisions and additions are as
Adoption of Amendments to the (e) Examples. The following examples follows:
Regulations illustrate the principles of paragraph (d)
of this section: * * * * *
■ Accordingly, 26 CFR parts 31 and 32 Example 1. A local government employee (a) General rule. The amount of any
are amended as follows: is injured while performing work-related payment on or after January 1, 1982,
activities. The employee is not covered by made to, or on behalf of, an employee
PART 31—EMPLOYMENT TAXES AND the State workers’ compensation law, but is
covered by a local government ordinance that or any of his dependents on account of
COLLECTION OF INCOME TAX AT THE
requires the local government to pay the sickness or accident disability is not
SOURCE
employee’s full salary when the employee is excluded from the term wages as
■ Paragraph 1. The authority section for out of work as a result of an injury incurred defined in section 3121(a)(2)(A) unless
part 31 continues to read, in part, as while performing services for the local such payment is—
follows: government. The ordinance does not limit or
otherwise affect the local government’s (1) Received under a workmen’s
Authority: 26 U.S.C. 7805 * * * liability to the employee for the work-related compensation law (as defined in
■Par. 2. Section 31.3121(a)(2)–1 is injury. The local ordinance is not a workers’
amended by: compensation law, but it is in the nature of

VerDate Aug<31>2005 12:19 Dec 14, 2005 Jkt 208001 PO 00000 Frm 00007 Fmt 4700 Sfmt 4700 E:\FR\FM\15DER1.SGM 15DER1
74200 Federal Register / Vol. 70, No. 240 / Thursday, December 15, 2005 / Rules and Regulations

§ 31.3121(a)(2)–1(d)(3) for payments purposes. On December 16, 2004, the federal agencies may have direct
made on or after December 15, 2005), or Compact Council published in the terminal access to the III to conduct
* * * * * Federal Register, 69 FR 75243, an record checks of individuals being
interim final rule with request for considered for assignment or retention
Mark E. Matthews, comments. This rule permits a third in a position with access to classified
Deputy Commissioner of Services and party to perform noncriminal justice information, a critical or sensitive
Enforcement. administrative functions relating to the position, a position of public trust, etc.
Approved: December 1, 2005. processing of CHRI maintained in the III The SCIA also provides that ‘‘Such a
Eric Solomon, System, subject to appropriate controls, request to a State criminal history
Acting Deputy Assistant of the Treasury (Tax when acting as an agent for a record repository shall be accompanied
Policy). governmental agency or other by the fingerprints of the individual
[FR Doc. 05–23945 Filed 12–14–05; 8:45 am] authorized recipient of CHRI. Published who is the subject of the request if
BILLING CODE 4830–01–U in a notice elsewhere in today’s edition required by State law and if the
of the Federal Register is the Security repository uses the fingerprints in an
and Management Control Outsourcing automated fingerprint identification
NATIONAL CRIME PREVENTION AND Standard which establishes the system.’’ Accordingly, the Outsourcing
PRIVACY COMPACT COUNCIL appropriate controls. Rule has no impact on this SCIA
II. Discussion of Comments on the provision nor does the rule affect the
28 CFR Part 906 Interim Final Rule state law requiring fingerprints for use
[NCPPC 113]
in conducting a state automated
The 60-day comment period for the fingerprint identification system record
interim final rule closed on February 14, check for such purposes.
Outsourcing of Noncriminal Justice 2005. Two comments were received
Administrative Functions The Compact Council did not believe
from a state agency. that any changes to the rule were
AGENCY: National Crime Prevention and The first comment concerned section
necessary based on the comments;
Privacy Compact Council. 906.2(b). The state agency questioned
therefore, the interim final rule is being
the clarity of what specifically was
ACTION: Final rule. adopted as final without change.
contemplated in the exceptions to the
SUMMARY: The Compact Council, provision that contractors, agencies, or List of Subjects in 28 CFR Part 906
established pursuant to the National organizations shall not be permitted to Administrative practice and
Crime Prevention and Privacy Compact have terminal access to the III System procedure, Intergovernmental relations,
Act of 1998 (Compact), is adopting, as and suggested further explanation or Law Enforcement, Privacy.
a final rule, without change, an interim examples of what situations would
final rule which permits the outsourcing permit contractors to have direct PART 906—OUTSOURCING OF
of noncriminal justice administrative terminal access to the III System. The NONCRIMINAL JUSTICE
functions involving access to criminal Compact, at Article V (c), provides ADMINISTRATIVE FUNCTIONS
history record information (CHRI). ‘‘Direct access to the National
Identification Index by entities other Accordingly, the interim final rule
Procedures established to permit
than the FBI and State criminal history adding part 906 which was published at
outsourcing are required to conform
record repositories shall not be 69 FR 75243 on December 16, 2004, is
with the Compact Council’s
permitted for noncriminal justice adopted as a final rule without change.
interpretation of Articles IV and V of the
Compact. purposes’’ and 42 U.S.C. 14614(b) Dated: November 23, 2005.
provides that ‘‘Nothing in the Compact Donna M. Uzzell,
DATES: This rule is effective December
shall interfere in any manner with—(1)
15, 2005. Compact Council Chairman.
access, direct or otherwise, to records
FOR FURTHER INFORMATION CONTACT: Ms. [FR Doc. 05–24055 Filed 12–14–05; 8:45 am]
pursuant to—(the various laws specified
Donna M. Uzzell, Compact Council in that section) or (2) any direct access BILLING CODE 4410–02–P
Chairman, Florida Department of Law to Federal criminal history records
Enforcement, 2331 Phillips Road, authorized by law.’’ Therefore,
Tallahassee, Florida 32308–5333, authorized agencies (i.e., FBI, state PENSION BENEFIT GUARANTY
telephone number (850) 410–7100. repositories, and certain agencies CORPORATION
SUPPLEMENTARY INFORMATION: performing the background checks
authorized under 42 U.S.C. 14614(b)) 29 CFR Parts 4022 and 4044
I. Background
require direct access to III in order to Benefits Payable in Terminated Single-
The Compact, 42 U.S.C. 14616, perform their authorized functions. Employer Plans; Allocation of Assets
establishes uniform standards and Although these agencies may choose not in Single-Employer Plans; Interest
processes for the interstate and Federal- to outsource these functions, the Assumptions for Valuing and Paying
State exchange of criminal history exception language in the rule was Benefits
records for noncriminal justice intended to not prohibit that option.
purposes. The Compact was approved The second comment questioned AGENCY: Pension Benefit Guaranty
by the Congress on October 9, 1998, whether the Outsourcing Rule has any Corporation.
(Pub. L. 105–251) and became effective affect on a specific provision of the ACTION: Final rule.
on April 28, 1999, when ratified by the Security Clearance Information Act
second state. Article VI of the Compact (SCIA) (5 U.S.C. 9101) which authorizes SUMMARY: The Pension Benefit Guaranty
provides for a Compact Council that has a State criminal history record Corporation’s regulations on Benefits
the authority to promulgate rules and repository to require that fingerprints Payable in Terminated Single-Employer
procedures governing the use of the accompany a SCIA record check request Plans and Allocation of Assets in
Interstate Identification Index (III) if certain requirements are met. Single-Employer Plans prescribe interest
System for noncriminal justice Pursuant to the SCIA, the six covered assumptions for valuing and paying

VerDate Aug<31>2005 12:19 Dec 14, 2005 Jkt 208001 PO 00000 Frm 00008 Fmt 4700 Sfmt 4700 E:\FR\FM\15DER1.SGM 15DER1