Internal Revenue Service
Revenue Ruling

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 Rev. Rul. 70-22

1970-1 C.B. 204

IRS Headnote

An estate is the "employer" and only one return for each return period should be filed by the domiciliary administrator with respect to wages of all employees of the estate, even though there are ancillary administrators in other states; S.S.T. 380 superseded.

Full Text

Rev. Rul. 70-22/1/

The purpose of this Revenue Ruling is to update and restate, under the current statute and regulations, the position set forth in S.S.T. 380, C.B. 1939-2, 289.

The question presented concerns the manner in which returns should be filed by an estate in reporting the taxes incurred under the Federal Insurance Contributions Act, the Federal Unemployment Tax Act, and the Collection of Income Tax at Source on Wages (chapters 21, 23, and 24, respectively, subtitle C, Internal Revenue Code of 1954).

B, while residing in the State of R, owned and operated small loan offices in the States of T and Y. B died and A was appointed domiciliary administrator of the decedent's estate in the State of R. A was also appointed ancillary administrator in the State of T, and C was appointed ancillary administrator in the State of Y. The operation of the small loan offices has been continued by the estate of B during the period of administration and pending the payment of the debts and legacies, each office being operated under the direction and control of the administrator in the state where the office is located. The specific question is whether each administrator should file separate returns reporting the Federal employment taxes with respect to the wages of all the employees performing services in the state in which that administrator is acting, or whether the taxes with respect to the wages of all employees performing services for the estate should be reported on returns filed for the estate by the domiciliary administrator.

A trust or estate managed and conducted by a fiduciary is generally the employer for Federal employment tax purposes of all employees managed and controlled by him. See  Rev. Rul. 69-657, C.B. 1969-2, 189. The trustee of a testamentary trust is considered to be engaged in the management and operation of the trust as a separate entity. In such a case the trust estate is, therefore, the employing entity distinct from the trustor, or his estate if deceased, and any individuals employed in connection with the management or operation of the trust estate are employees of the trust estate. See Rev. Rul. 69-658, C.B. 1969-2, 189.

In the instant case there is only one "employer," that is, the estate of B. It is immaterial that certain employees may perform services under the direction of, and receive remuneration from, an ancillary administrator in another state. Accordingly, it is held that only one return reporting the taxes under chapters 21 and 24, and one return reporting the tax under chapter 23 for each return period should be filed with respect to the wages of all employees of the estate of B.

S.S.T. 380 is superseded, since the position set forth therein is restated under current law in this Revenue Ruling.

/1/ Prepared pursuant to Rev. Proc. 67-6, C.B. 1967-1, 576.