Internal Revenue Service
Revenue Ruling

TaxLinks.com   sm

 Rev. Rul. 70-23

1970-1 C.B. 212

IRS Headnote

A bankrupt corporation operated part of the year by a trustee shall report all wages for the calendar year on one FUTA return and file it with the Service Center in which its principal place of business is located; S.S.T. 151 superseded.

Full Text

Rev. Rul. 70-23 /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. 151, C.B. 1937-1, 464.

The questions presented concern liability for the tax imposed under the Federal Unemployment Tax Act (Chapter 23, subtitle C, Internal Revenue Code of 1954) in the case of a corporation that filed a petition for reorganization under section 77(B) of the National Bankruptcy Act, as amended, 11 U.S.C. 205. The corporation has been continuously operated by a trustee from the date the petition was filed.

Question No. 1: Should wages paid from the date the petition for reorganization was filed to the end of the calendar year, a period of less than 20 weeks during which time the trustee operated the business of the corporation, be included with wages paid by the corporation for the prior period in determining tax liability for the year, under the Federal Unemployment Tax Act?

Answer: The employing unit (the corporation) continued, for purposes of the Federal Unemployment Tax Act, uninterrupted by the filing of the petition for reorganization or the appointment of the trustee, during the period it was operated by the trustee. Accordingly, the wages paid to employees of the corporation during that period should be included with wages paid during the prior period by the corporation itself. It is immaterial that the period of operation by the trustees was less than 20 weeks.

Question No. 2: If liability for the tax under the Federal Unemployment Tax Act exists for the entire year, should the return for the entire year be filed with the Internal Revenue Service Center for the region in which the corporation is located or in the region where the trustee is located?

Answer: Section 31.6091-1(d) of the Employment Tax Regulations provides, in part, that whenever instructions applicable to the returns of a corporation provide that the returns shall be filed with a service center, such returns shall be so filed in accordance with the instructions. Under the applicable instructions, the return covering the entire calendar year should be filed with the Internal Revenue Service Center in which the principal place of business of the corporation is located.

S.S.T. 151 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.