26 U.S.C. § 3505

Liability of third parties paying or providing for wages

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(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.

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, § 105(a), Nov. 2, 1966, 80 Stat. 1138.)Statutory Notes and Related SubsidiariesEffective 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.

Notes of Decisions

Cited in 60 cases, 1970–2019 · leading case: Slodov v. United States

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Slodov v. United States (1978) scotus · cites it 2× “26 U. S. C. § 3505 . [15] Indeed, the IRS's policy is to augment the personal liability of the responsible person by earmarking the taxes he collects and pays from current wages first to the past due direct corporate employment tax, that is, the employer's share of FICA taxes,…”

In Re Windsor Communications Group, Inc. (1985) paeb · cites it 3× “§ 6672 (1954); 26 U.S.C. § 3505 (b) (1971). After the bankruptcy case was commenced, Windsor, its shareholders, Security Pacific, and Hamilton Bank, entered into a “Stipulation Authorizing Distribution of Proceeds, Marshalling Collateral Between Secured Creditors, and Providing…”

Farmers-Peoples Bank, Cross-Appellee v. United States of America, Cross-Appellant (1973) ca6 · cites it 6× “The government counterclaimed under 26 U.S.C. § 3505 (b), which imposes personal liability on lenders under certain conditions.”

United States v. First National Bank of Circle (1981) ca1 “SCHWARZER, District Judge: The United States brought this action under Section 3505(b) of the Internal Revenue Code, 26 U.S.C. § 3505 (b), to collect from the First National Bank of Circle (Bank) the unpaid withholding and Federal Insurance Contribution Act (F.”

United States v. Hunter Engineers & Constructors, Inc. (1986) ca9 · cites it 3× “FACTS AND PROCEEDINGS BELOW The United States sought a personal judgment against Hunter for tax liability under 26 U.S.C. § 3505 (b) (1982). The alleged liability arose from unpaid federal withholding taxes owed by Hunter’s subcontractor, L & L Construction, Inc.”

Russell v. United States (2008) ca10 “1125 (as codified in 26 U.S.C. §§ 3505 , 7425-26, 7810) (1966).”

Pacific National Insurance Company v. United States (1970) ca9 · cites it 2× “1139 (1966), 26 U.S.C. § 3505 (b), explicitly requires the result which we reach under section 6672.”

Quattrone Accountants, Inc. And Philip P. Quattrone v. Internal Revenue Service (1990) ca3 “1988) (Section 505(a) does not confer bankruptcy court jurisdiction to determine the 26 U.S.C. § 3505 liability of a non-debtor); United States v.”

United States v. Prescription Home Health Care, Inc. (In Re Prescription Home Health Care, Inc.) (2002) ca5 “That case addressed the liability of a payroll financier for a debtor’s withholding taxes under 26 U.S.C. § 3505 ; the bankruptcy court “did not have the jurisdiction to determine the § 3505 liability of’ the financier, because he was “a non-debtor”.”

United States of America, and Cross-Appellant v. Intercontinental Industries, Inc., and Cross-Appellee (1980) ca6 · cites it 2× “95 in unpaid withholding taxes under 26 U.S.C. § 3505 (b) (1976). The court refused, however, to impose approximately $30,000 in additional liability for prejudgment interest.”

United States v. Daniel A. Wright and Lois W. Wright (1995) ca7 · cites it 2× “3505—1(d)(1) disables the IRS from taking full advantage of the Updike principle when § 6503 suspends the statute of limitations for persons who have personal liability under 26 U.S.C. § 3505 . (Actually, Harvis did not cite Updike any more than Associates had.”

Brandt-Airflex Corp. v. Long Island Trust Co., N.A. (In Re Brandt-Airflex Corp.) (1987) nyed · cites it 5× “The complaint alleges a private cause of action pursuant to 26 U.S.C. § 3505 (b) 1 and its New York State counter *12 part, N.”

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— 26 U.S.C. § 3505(b) — 1 case

United States v. Fred A. Arnold, Inc. (1975) cand

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