§ 3505. — Liability of third parties paying or providing for wages.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 26USC3505]
TITLE 26--INTERNAL REVENUE CODE
Subtitle C--Employment Taxes
CHAPTER 25--GENERAL PROVISIONS RELATING TO EMPLOYMENT TAXES
Sec. 3505. Liability of third parties paying or providing for
wages
(a) Direct payment by third parties
For purposes of sections 3102, 3202, 3402, and 3403, if a lender,
surety, or other person, who is not an employer under such sections with
respect to an employee or group of employees, pays wages directly to
such an employee or group of employees, employed by one or more
employers, or to an agent on behalf of such employee or employees, such
lender, surety, or other person shall be liable in his own person and
estate to the United States in a sum equal to the taxes (together with
interest) required to be deducted and withheld from such wages by such
employer.
(b) Personal liability where funds are supplied
If a lender, surety, or other person supplies funds to or for the
account of an employer for the specific purpose of paying wages of the
employees of such employer, with actual notice or knowledge (within the
meaning of section 6323(i)(1)) that such employer does not intend to or
will not be able to make timely payment or deposit of the amounts of tax
required by this subtitle to be deducted and withheld by such employer
from such wages, such lender, surety, or other person shall be liable in
his own person and estate to the United States in a sum equal to the
taxes (together with interest) which are not paid over to the United
States by such employer with respect to such wages. However, the
liability of such lender, surety, or other person shall be limited to an
amount equal to 25 percent of the amount so supplied to or for the
account of such employer for such purpose.
(c) Effect of payment
Any amounts paid to the United States pursuant to this section shall
be credited against the liability of the employer.
(Added Pub. L. 89-719, title I, Sec. 105(a), Nov. 2, 1966, 80 Stat.
1138.)
Effective Date
Section applicable only with respect to wages paid on or after Jan.
1, 1967, see section 114(c)(1) of Pub. L. 89-719, set out as an
Effective Date of 1966 Amendment note under section 6323 of this title.
