FURNISHING INFORMATION CONCERNING COMPENSATION OF FEDERAL EMPLOYEES TO STATES AND OTHER GOVERNMENTAL UNITS TAXING COMPENSATION FOR PERSONAL SERVICES

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP62-00631R000400100001-7
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 26
• Document Creation Date: December 16, 2016
• Document Release Date: February 3, 2005
• Sequence Number: 1
• Publication Date: December 23, 1954
• Content Type: REGULATION

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EXECUTIVE OFFICE OF THE PRESIDENT
BUREAU OF THE BUDGET
WASHINGTON 25, D. C.
December 23, 1954
CIRCULAR NO. A-38
Revised
TO THE HEADS OF EXECUTIVE DEPARTM1ENTS AND ESTABLISHMENTS
SUBJECT: Furnishing information concerning compensation of Federal
employees to States and other governmental units taxing
compensation for personal services
1. Purpose. This revision of Circular No. A-38 replaces the
revision dated December 28, 1953. The Circular sets forth instructions
for reporting to State and other taxing authorities compensation paid
to officers and employees of the Federal Government, in accordance
with the established policy of cooperation between the Federal Govern-
ment and State or other taxing authorities in providing information or
withholding taxes with respect to taxable compensation paid to their
respective officers and employees. Inclusion of a taxing authority in
this Circular or the supplying of information by any Federal agency in
accordance with these instructions does not constitute an expression
as to the actual tax liability of any particular Federal employee,
2. Assistance to Federal agencies and offices. Any taxing
authority receiving information under this Circular shall be requested
to furnish copies of its income tax law, regulations, and explanatory
materials to the various Federal agencies and offices affected, to be
available to employees who seek to determine whether they are
individually liable for the tax. The taxing authorities shall also be
requested to assist Federal officials in simplifying procedural
arrangements so as to save labor and expense for the Federal Government
in preparing information needed by the taxing authority.
3. Taxing authorities to receive information. Information
concerning compensation paid to Federal employees shall be furnished
to any taxing authority which taxes compensation for personal services.
This information shall be furnished, without further request from the
taxing authority, to those authorities listed in Appendix A of this
Circular or in any subsequent transmittal memorandum issued under it.
In the case of any other taxing authority which taxes compensation for
personal services, the information shall be furnished in response to a
request from the taxing authority to the agency, office, or establishment
affected.
a. Duplicate returns. In certain cases, it wi1i be necessary to give
information for the same employee to more than one taxing authority.
This situation may arise in cases (a) where the place of employment
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and the employee's residence are within different taxing jurisdictions,
or (b) where the tax is imposed by two or more overlapping jurisdic-
tions, such as a State and a city or (as in Pennsylvania) a city and a
school district. Under these circumstances, the information should be
supplied to each of these jurisdictions listed in Appendix A or other-
wise requesting information.
Appendix A indicates those taxing authorities which have requested
information based on place of residence, those taxing authorities which
have requested information based on place of employment, those taxing
authorities which have requested information on both bases, and those
whose request is affected by other considerations.
be Withholdint* agreements. When, pursuant to Public Law 587, 82d
Congress, an agreement has been concluded between the Secretary of the
Treasury and an individual State governing the withholding of State
income tax by Federal agencies from the compensation of Federal
employees whose regular place of employment is within the State, the
provision of information to that State on the employees so covered is
within the jurisdiction of Treasury Department Circular No. 918 and
its supplements and therefore excluded from this Circular A-38. This
exclusion does not affect the responsibility of Federal agencies under
Circular No. A-38 to furnish information returns covering employees who
may be subject to the taxing authority of such a State but are not
covered by i:n agree:ent oetween the Treasury Department and that State.
It may also be necessary to furnish under this Circular to one or more
other taxing authorities information concerning some employees from
whom a State tax has been withheld under a Treasury Department agreement.
4. Forms to be used. When statements are prepared on Treasury
Department Forms W-2 and 1099 with respect to compensation paid Federal
officers and employees, additional copies shall be prepared for the
information of taxing authorities which are entitled to information
under paragraph 3. Form W-2 in quadruplicate sets may be procured from
any District Director of Internal Revenue. Supplies varying from the
standard form either in design or in number of copies in a set may be
obtained through normal procurement procedures; rules for the manu-
facture of substitute Forms W-2 are prescribed annually by the Internal
Revenue Service. All entries shall be complete and legible.
In preparing the information returns which are to be forwarded to
State or other taxing authorities, the Federal agencies should report,
if readily available, the number of exemptions for Federal income tax
withholding purposes claimed by the employee at the end of the year, or
at the conclusion of his employment if this occurs during the year. In
requesting compliance with the wish of State tax administrators that
Federal agencies be asked to supply this information, the Bureau of the
Budget recognizes that exemptions claimed for Federal income tax
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withholding do not in all cases coincide with exemptions to which an
employee may be entitled under State, local, or territorial tax law,
This difficulty has been emphasized in discussions with representatives
of the States. It is suggested further that employees be advised that
information returns supplied to State or other taxing authorities may
include the number of Federal tax-withholding exemptions claimed.
The information returns for each calendar year shall be forwarded
during the following January to each appropriate taxing authority with
a letter of transmittal stating that these are information returns
furnished in accordance with Bureau of the Budget Circular A-38.
5. Notification to employees. Representatives of the States have
suggested that it would be helpful if the agencies would advise their
employees that information returns will be sent to State, territorial,
or local taxing authorities of the employees' places of residence and
employment, where such authorities tax compensation for personal
services and have requested such information. The notice should point
out that individual employees may have income tax liabilities to these
taxing jurisdictions.
6. Questions pertaining to subject matter of Circular. Questions
concerning the provisions of this Circular should be addressed to:
Mr. J. F. Worley
Employment Tax Branch
Internal Revenue Service
Washington 25, D. C.
Telephone: Sterling 3-8100, extension 759
ROWLAND R. HUGHES
Director
(No. A-38)
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Appendix A
Circular No. A-38
Revised
TAXING AUTHORITIES WHICH HAVE REQUESTED INFORMATION
(December 23, 1954)
I. The following taxing authorities should receive information
concerning compensation paid to employees whose residence is
within the jurisdiction of the taxing authority:
State Agency Designated to Receive Information
Georgia
Wisconsin State Department of Taxation
Madison, Wisconsin
Other Taxing Authorities
District of Columbia
State Revenue Commissioner
Atlanta, Georgia
Commissioner of Corporations and Taxation
Boston, Massachusetts
Assessor, District of Columbia
Washington, D. C.
II. The following taxing authorities should receive information
concerning compensation paid to employees whose place of employment
is within the jurisdiction of the taxing authori y:
City Agency Designated to Receive Information
Lexington, Kentucky Director of Finance
City of Lexington
Lexington, Kentucky
Louisville, Kentucky Commissioners of the Sinking Fund of
the City of Louisville
Louisville, Kentucky
Paducah, Kentucky City Treasurer
Paducah, Kentucky
III. The following taxing authorities should receive information
concerning compensation paid to employees whose place of employment
or residence is within the jurisdiction of the taxing authority:
State Agency Designated to Receive Information
Alabama State Department of Revenue
Montgomery, Alabama
Arkansas Commissioner of Revenue
Little Rock, Arkansas
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California
Kansas
Louisiana
Maryland
Minnesota
Mississippi
Missouri
Montana
New Mexico
New York
North Carolina
North Dakota
Oklahoma
Agency Designated to Receive jnfgEmation
Franchise Tax Board
Sacramento, California
State Tax Collector
Boise, Idaho
Department of State Revenue
Indianapolis, Indiana
State Tax Commission
Des Moines, Iowa
State Director of Revenue
Topeke., Kansas
State Collectcr of Revenue
Baton Rouge, Louis r_a
State Comptroller
Annapolis, Maryland
State Department of Taxation
St. Paai, Minnesota
State Tax Commission
Jackson, Mississippi
State Department of Revenue
Jefferson City,. Missouri
State Board of Equalization
Helena, Montana
State Pureau of Revenue
Santa Fe, New Mexico
State Department of Taxation and Finance
Albany, New York
Commissioner of Revenue
Raleigh, North Carolina
State Tax Commissioner
Bismarck, North Dakota
Oklahoma Tax Commission
Oklahoma City, Oklahoma
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State Agency Designated to Receive Information
South Carolina State Tax Commission
Columbia, South Carolina
Utah State Tax Commission
Salt Lake City, Utah
Virginia State Department of Taxation
Richmond, Virginia
Other Taxing Authorities
St. Louis, Missouri Collector of the Revenue
City of St. Louis
St. Louis, Missouri
Columbus, Ohio Income Tax Division
City of Columbus
Columbus, Ohio
Dayton, Ohio Superintendent of Taxes
Dayton, Ohio
Springfield, Ohio Commissioner of Taxation
Springfield, Ohio
Toledo, Ohio Commissioner of Taxation
Toledo, Ohio
Youngstown, Ohio Director of Finance
City of Youngstown
Youngstown, Ohio
Pittsburgh, Treasurer
Pennsylvania City of Pittsburgh
414 Grant Street
Pittsburgh 19, Pennsylvania
Philadelphia, Receiver of Taxes of the City of
Pennsylvania Philadelphia
Philadelphia, Pennsylvania-
Information returns need not be supplied to the State of Virginia
for Federal employees who actually reside in Maryland or the
District of Columbia and have no place of abode in Virginia during
the calendar year and whose only income from Virginia is from
salaries and wages.
(No. A-38)
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IV. The following States and Territories have entered into withholding
agreements with the Secretary of the Treasury under Treasury Depart-
ment Circular No. 918 and its supplements. Under the terms of these
agreements, compensation paid to employees whose regular place of
employment is within the State is subject to withholding of State
tax. Provision of information under this Circular No. A-38 relates
only to residents of the State who are not within the jurisdiction
of Treasury Department Circular No. 918 and therefore not subject
to withholding of State tax by the employing agency (see paragraph
3b of this Circular).
State or
Territory Agency Designated to Receive Information
Territory of Alaska Tax Commissioner of the Territory of
Alaska
Juneau, Alaska
Arizona State Tax Commission
Phoenix, Arizona
Colorado State Department of Revenue
Denver, Colorado
Delaware State Tax Department
Wilmington, Delaware
Territory of Hawaii Tax Commissioner of the Territory of
Hawaii
Honolulu, Hawaii
Kentucky
Oregon
State Department of Revenue
Frankfort, Kentucky
State Tax Commission
Salem, Oregon
Vermont Commissioner of Taxes
Montpelier, Vermont
V. Federal agencies should report information concerning compensation
paid to those employees from whom income tax is not withheld by the
Federal agency and who may be liable for income taxes of Guam.
This jurisdiction has special arrangements with the United States
for personal income tax collections (Treasury Department IR
Mimeograph No. 73, Com. No. 7, December 2, 1952).
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Territory Agency Designated to Receive Information
Director of Finance
Government of Guam
Agana, Guam
VI. In addition to the taxing jurisdictions named in this Appendix,
Federal agencies should, in response to a request from the
taxing authority, furnish information concerning compensation
paid to Federal employees to any other taxing authority which
taxes compensation for personal services (see paragraph 3 of
Circular).
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Appendix B
Circular No. A-38
Revised
SUMMARY OF PRESENT FEDERAL INTERNAL REVENUE SERVICE
REGULATIONS CONCERNING FORMS AND THEIR USE
Form W-2, Every employer is required by Sec. 1633 of the
Internal Revenue Code of 1939 (applicable to Federal income tax with-
holding with respect to wages paid through December 31, 1954) and the
regulations prescribed thereunder (Regulations 120, section 406.501)
to furnish to each employee from whose wages tax is withheld, or would
be withheld if such employee had claimed no more than one withholding
exemption, a Withholding Tax Statement on Form W-2, showing gages paid
and tax withheld, if any, during the calendar year. Sec. 6051 of the
Internal Revenue Code of 1954, which is substantially the same as
Sec. 1633 of the Internal Revenue Code of 1939, will apply with respect
to Federal income tax withholding from wages paid after December 31,
1954, and new regulations will be prescribed.
Copy B and Copy C of the Withholding Tax Statement, Form W-2, for
any calendar year must be furnished to the employee on or before
January 31 of the succeeding year, unless employment terminated before
the close of the calendar year, in which event the statement must be
furnished within thirty drys after wages were last paid.
It is further required by section 406.601 of Regulations 120 that
the District Director's copy, Copy A, of each Form W-2 issued for the
year be included with the return and annual reconciliation filed on
Form 941 for the fourth quarter of the calendar year. Form 941 for
the fourth quarter of the calendar year is required to be filed during
January of the succeeding year.
Form 1099. If an employer, in the course of his trade or business,
pays an individual compensation of $600 or more in a taxable year and
a portion thereof is reported on Form W-2, the remainder of the compen-
sation must be reported on Form 1099, regardless of the amount. If no
amount was reported on Form W-2, then the entire amount must be reported
on Form 1099.
Omission of travel expense. Amounts paid by the United States to
persons in its service as an allowance for traveling expenses, includ-
ing an allowance for meals and lodgings, as, for example, a per diem
allowance in lieu of subsistence, and amounts paid as reimbursements
for traveling expenses, need not be reported on Forms W-2 or 1099.
(No. A-38)
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EXECUTIVE OFFICE OF THE PRESIDENT
BUREAU OF THE BUDGET
WASHINGTON 25, D. C.
December 2. 1955
CIRCULAR No. A-38
Revised
Transmittal Memorandum No. 1
TO THE HEADS OF EXECUTIVE DEPARTPNTS AND ESTABLISHMENTS
SUBJECT: Furnishing information concerning compensation of Federal
employees to States and other governmental units taxing
compensation for personal services
Appendixes ?A and B of Circular A-38, as issued December 23, 1954,
are superseded by revised Appendixes A and B, attached hereto.
:LOWLAND R. HUGHES
Director
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Appendix A
Circular No. A-38
Revised
TAXING AUTHORITIES WHICH HAVE REQUESTED INFORMATION
(December 2, 1955)
I. The following taxing authorities should receive information
concerning compensation paid to employees whose residence is
within the jurisdiction of the taxing authority:
State Agency Designated to Receive Information
Georgia State Revenue Commissioner
Atlanta, Georgia
Wisconsin State Department of Taxation
Madison, Wisconsin
Other Taxing Authorities
Assessor, District of Columbia
Washington, D. C.
II. The following taxing authorities should receive information
concerning compensation paid to employees whose place of employment
is within the jurisdiction of the taxing authors y:
District of., Columbia
City Agency Designated to Receive Information
Lexington, Kentucky Director of Finance
City of Lexington
Lexington, Kentucky
Louisville, Kentucky Commissioners of the Sinking Fund of
the City of Louisville
Louisville, Kentucky
Paducah, Kentucky City'Treasurer
Paducah, Kentucky
III. The following taxing authorities should receive information
concerning compensation paid to employees whose place of employment
or residence is within the jurisdiction of the taxing authority:
State Agency Designated to Receive Information
Alabama * State'Department of Revenue
Montgomery, Alabama
# A withholding agreement will be effective January 1, 1956. Therefore,
this State should be classified under IV for compensation paid after
1955.
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Arkansas
California
Indiana
Iowa
Kansas
Louisiana
Massachusetts
Minnesota
Mississippi
Missouri
New Mexico
New York
North Carolina
North Dakota
Oklahoma
South Carolina
Agency Designated to Receive Information
Commissioner of Revenue
Little Rock, Arkansas
Franchise Tax Board
Sacramento, California
Department of State Revenue
Indianapolis, Indiana
State Tax Commission
Des Moines, Iowa
State Director of Revenue
Topeka, Kansas
State Collector of Revenue
Baton Rouge, Louisiana
Commissioner of Corporations and Taxation
Boston, Massachusetts
State Department of Taxation
St. Paul, Minnesota
State Tax Commission
Jackson, Mississippi
State Department of Revenue
Jefferson City, Missouri
State Bureau of Revenue
Santa Fe, New Mexico
State Department of Taxation and Finance
Albany, New York _
Commissioner of Revenue
Raleigh, North Carolina
State Tax Commissioner
Bismarck, North Dakota
Oklahoma Tax Commission
Oklahoma City, Oklahoma
State Tax Commission
Columbia, South Carolina
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State Agency Designated to Receive Information
Utah State Tax Commission
Salt Lake City, Utah
Virginia l,/ State Department of Taxation
Richmond, Virginia
Other Taxing Authorit .e~
St. Louis, Missouri, Collector of the Revenue
City of St. Louis
St. Louis, Missouri
Columbus, Ohio Income Tax Division
City of Columbus
Columbus, Ohio
Dayton, Ohio Superintendent of Taxes
Dayton, Ohio
Springfield, Ohio Commissioner of Taxation
Springfield, Ohio
Toledo, Ohio Commissioner of Taxation
Toledo, Ohio
Youngstown, Ohio Director of Finance
City of Youngstown
Youngstown, Ohio
Pittsburgh, Treasurer
Pennsylvania City of Pittsburgh
414 Grant Street
Pittsburgh 19, Pennsylvania
Philadelphia, Receiver of Taxes of the City of
Pennsylvania Philadelphia
Philadelphia, Pennsylvania
l/ Information returns need not be supplied to the State of Virginia
for Federal employees who actually reside in Maryland or the
District of Columbia and have no place of abode in Virginia during
the calendar year and whose only income from Virginia is from
salaries and wages.
(#o. A-38)
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IV. Provision of information under this Circular No. A-38 relates
only to residents of the State who are not within the scope
of Treasury Department Circular No. 918 and its supplements,
and therefore are not subject to withholding of State tax by the
employing agency (see paragraph 3b of this Circular). The
following States and Territories have entered into withholding
agreements with the Secretary of the Treasury under Treasury
Department Circular No. 918. Under the terms of these agree-
ments, compensation paid to employees whose regular place of
employment is within the State is subject to withholding of
State tax.
State or
Territory
Territory of Alaska
Arizona
Colorado
Delaware
Territory of Hawaii
Idaho
Kentucky
Maryland
Montana
Oregon
Vermont
Agency Designated to Receive Information
Tax Commissioner of the Territory of
Alaska
Juneau, Alaska
State Tax Commission
Phoenix, Arizona
State Department of Revenue
Denver, Colorado
State Tax Department
Wilmington, Delaware
Tax Commissioner of the Territory of
Hawaii
Honolulu, Hawaii
Office of the State Tax Collector
Boise, Idaho
State Department of Revenue
Frankfort, Kentucky
Comptroller of the Treasury
Income Tax Division
Annapolis, Maryland
State Board of Equalization
Helena, Montana
State Tax Commission
Salem, Oregon
Commissioner of Taxes
Montpelier, Vermont
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V. Federal agencies should report information concerning compensation
paid to those employees from whom income tax is not withheld by the
Federal agency and who may be liable for income taxes of Guam.
This jurisdiction has special arrangements with the United States
for personal income tax collections (Treasury Department IR
Mimeograph No. 73, Corn. No. 7, December 2, 1952).
Territory Agency Designated to Receive Information
Director of Finance
Government of Guam
Agana, Guam
VI. In addition to the taxing jurisdictions named in this Appendix,
Federal agencies should, in response to a request from the
taxing authority, furnish information concerning compensation
paid to Federal employees to any other taxing authority which
taxes compensation for personal services (see paragraph 3 of
Circular).
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Appendix B
Circular No, A-38
Revised
SUMMARY OF PRESENT FEDERAL INTERNAL REVENUE SERVICE
REGULATIONS CONCERNING FORMS AND THEIR USE
Form W-2. An employer must furnish each employee from whose wages
tax is withheld., or would be withheld if the employee had claimed no
more than one withholding exemption., a Withholding Tax Statement on
Form W-2, showing wages paid and tax withheld during the calendar year
(sec. 6051 of the Internal Revenue Code of 1954, sec. 406.501 of
Regulations 120., and Treasury Decision 6091, C.B. 19511-2, 117).
Copy B and Copy C of the Withholding Tax Statement., Form W-2,
must be furnished the employee on or before January 31 of the
succeeding year, unless employment terminated before the close of the
calendar year., in which event the statement must be furnished within
thirty days after wages were last paid.
Copy A., the District Director's copy of Form W-2 for each
employee (together with Form W-3, Reconciliation of Income Tax Withheld
from Wages, and the return on Form 9111 for the fourth quarter of the
calendar year) must be filed by the employer with the District Director
on or before January 31 following the year to which the forms relate,
or on or before the date fixed for filing a "final return" on Form 941
if such date occurs before January 31.
Form 1099. An employer who pays an employee compensation of $600
or more in a taxable year and reports only a portion on Form W-2 must
report the remainder on Form 1099, regardless of the amount. If no
amount was reported on Form W-2, the entire amount must be reported on
Form 1099.
Travel expense. Amounts paid by the Government to persons in its
service as an allowance for traveling expenses, including a per diem
allowance in lieu of subsistence and reimbursements for travel., need
not be reported on.Forms W-2 or 1099.
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EXECUTIVE OFFICE OF THE PRESIDENT
BUREAU OF THE BUDGET
WASHINGTON 25, D.C.
December 22 , 1956
CIRCULAR No. A