DRS: 12-705(b)-5, Liability of third parties paying wages

DRS has reproduced this regulation. This is an unofficial copy. Official copies of regulations ONLY are available from the Commission on Official Legal Publications, 111 Phoenix Avenue, Enfield, CT 06082,  colp@jud.state.ct.us. Copies of DRS forms and publications are available at http://www.ct.gov/drs

Conn. Agencies Regs. § 12-705(b)-5. Liability of third parties paying wages.

(a)(1) A lender, surety or other person:

(A) who is neither an employer nor a fiduciary, agent or other person authorized to perform acts required of employers with respect to an employee or group of employees; and

(B) who pays wages directly to such employee or group of employees, employed by one or more employers, or to an agent on behalf of such employee or employees, is liable for payment of an amount equal to the sum of the Connecticut income taxes required to be deducted and withheld from those wages by the employer and interest from the due date of the Connecticut employer’s return relating to such Connecticut income taxes for the period in which the wages are paid.

Example: Pursuant to a wage claim, a surety company paid an employee of a construction company his net wages. This was done in accordance with the surety company’s payment bond covering a private construction job on which such employee was employed by the construction company. If the construction company fails to make timely payment or deposit of the Connecticut income tax required to be deducted and withheld from such employee’s wages, the surety company becomes personally liable for the amount equal to the unpaid Connecticut income taxes, plus interest upon such amount from the due date of the construction company’s Connecticut withholding tax payment.

(2) As used in this section, the term "other person" means any person who directly pays the wages of an employee or group of employees of another employer. It does not include a person acting only as agent of the employer or as agent of the employees.

(b)(1) A lender, surety or other person may satisfy the personal liability imposed by this section by payment of the amount of Connecticut income tax and interest due, accompanied by a letter of explanation. In the event the lender, surety or other person does not satisfy the liability imposed by this section, the Department may collect the liability from the lender, surety or other person in the manner provided in Section 12-734 of the general statutes after assessment of the Connecticut income tax against the employer.

(2)(A) A lender, surety or other person paying the amounts of Connecticut income tax required to be deducted and withheld pursuant to this section is not required to file quarterly or annual reconciliation of withholding returns with respect to those wages, or furnish annual wage and withholding tax statements to the employees.

(B) Any amounts paid by a lender, surety or other person to the Department pursuant to this section shall be credited against the liability of the employer on whose behalf those payments are made and also reduce the total liability imposed upon the lender, surety or other person under this section.

(C) Any amounts paid to the Department by an employer and applied to such employer’s liability reduces the total liability imposed upon that employer. Such payments shall also reduce the liability imposed upon a lender, surety or other person under this section, except that such liability shall not be reduced by any portion of an employer’s payment applied against the employer’s liability which is in excess of the total liability imposed upon the lender, surety or other person.

(c) This regulation does not relieve the employer of the responsibilities imposed upon him to file the Connecticut employer’s returns and supply the statements required under this Part.

(d) The liability under this section of a lender, surety or other person paying or supplying funds for the payment of wages is incurred on the last day prescribed for the filing of the Connecticut employer’s return of withheld Connecticut income taxes (determined without regard to any extension of time) in respect of such wages.

(Effective November 18, 1994.)