The IRS issued final regulations under which qualified subchapter S
subsidiaries (QSubs) and other disregarded entities—rather than the
entities’ owners—are responsible for reporting and paying employment
taxes. The rules represent a change from temporary provisions of Notice
99-6, under which either the entities or their owners could be regarded
as the employer for purposes of reporting and paying employment taxes.
The final regulations, issued as Treasury Decision 9356, also designate
disregarded entities as responsible for some excise taxes and clarify
that an owner of a disregarded entity treated as a sole proprietorship
is subject to self-employment taxes. The employment tax provisions apply
to wages paid on or after Jan. 1, 2009.