Masonry Magazine June 1970 Page. 28
Taxes
(Continued from page 27)
hours per week he is paid for 30 hours. In the latter case, the difference of 10 hours is what the company designates as "idle time."
The IRS ruled that the payments made by the company to its employees for "idle time" are "wages" for Federal income tax withholding and employment tax purposes. The term wages includes all remuneration for employment. Rev. Rul. 70-235.
SWISS BANK ACCOUNTS
The role of the Swiss banks in helping certain citizens amass large tax-free accounts may soon be a thing of the past. Assistant Secretary of the Treasury Eugene Rossides has disclosed a reform program of the Administration to "combat the use of secret bank accounts by organized crime and white-collar crime to violate U.S. tax and other laws." It seems that the Swiss law can be interpreted to hold that the duty of a Swiss bank to furnish information about tax fraud overrides its duty to observe secrecy about the affairs of depositors.
UNEMPLOYMENT BENEFIT TRUSTS
Section 501 of the Code provides for the exemption from Federal income tax of trusts forming part of a plan to pay benefits to an employee because of his involuntary separation from employment resulting directly from a reduction in force, the discontinuance of a plant or operation, or other similar condition.
In two recent IRS rulings, a somewhat different use of funds from such trusts did not affect the tax exemption of the trusts. In the first case presented for a ruling, the personnel needs of a company's main plant lessened and a number of employees were to be separated involuntarily from employment. The employer offered employment in another city to those persons scheduled for separation who would relocate to an area in which employees were needed. The relocation expenses of several employees were paid from the company's supplemental unemployment benefit trust.
The IRS ruled that such use of the funds from the trust was all right because the relocation allowances prevented involuntary separation from employment. Thus, such benefits constituted supplemental unemployment compensation benefits within the meaning of the Code.
The IRS arrived at a similar conclusion where the personnel needs of a company lessened and, rather than reduce the number of its employees, it cut the hours that each employee worked each week. Each employee thus suffered a loss in pay but no employee suffered a loss of his job. The supplemental unemployment benefit trust partially compensated each employee the wages lost because of the company's action. Here too the IRS ruled that these payments could be treated as supplemental unemployment compensation benefits. Rev. Rul. 70-188.
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masonry • June, 1970