Internal Revenue Service
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 Rev. Rul. 64-76

1964-1 C.B. 331

IRS Headnote

Where a corporation is absorbed by another corporation in a statutory merger or consolidation, the resultant corporation is considered the same employer as the absorbed corporation for Federal Insurance Contributions Act purposes and, therefore, is not required to enter into a new contract of coverage on Form 2032 in order to continue the social security coverage of United States citizens employed by the foreign subsidiaries of the absorbed corporation.

Full Text

Rev. Rul. 64-76

Advice has been requested as to the effect of a statutory merger or consolidation upon an absorbed corporation and the resultant entity with respect to continuing social security coverage extended to United States citizens employed by foreign subsidiaries of the absorbed corporation under an agreement entered into by the absorbed corporation under the provisions of section 3121(1) of the Federal Insurance Contributions Act (Chapter 21, subtitle C, Internal Revenue Code of 1954).

Pursuant to section 3121(1) of the Act, any domestic corporation having one or more foreign subsidiaries may request the district director to enter into an agreement for the purpose of extending the Federal old-age, survivors, and disability insurance system established by title II of the Social Security Act to certain services performed outside the United States by all citizens of the United States who are employees of any such foreign subsidiary.

In Revenue Ruling 62-60, C.B. 1961-1, 186, the Internal Revenue Service held that where a corporation is absorbed by another corporation in a statutory merger or consolidation the resultant corporation should be regarded as the same taxpayer and the same employer for purposes of the taxes imposed under the Federal Insurance Contributions Act.

Since, in the case of a statutory merger or consolidation, the resulant corporation is deemed to have assumed the contractual obligations of the absorbed corporation and is to be regarded as the same employer as the absorbed corporation insofar as liability arising from an agreement entered into by the absorbed corporation under the provisions of section 3121(1) of the Act is concerned, it is held that the resultant corporation is not required to enter into a new contract of coverage on Form 2032, Contract Coverage Under Title II of the Social Security Act as Amended, in order to continue the social security coverage of United States citizens employed by the foreign subsidiaries of  the absorbed corporation.

The first return filed under the `section 3121(1) agreement' by the resultant corporation subsequent to the merger should be accompanied by information indicating the change which has taken place, the date of the change, the name and address of the absorbed corporation and the identification number assigned to the absorbed corporation.