(1) The tax imposed by section 121 of this chapter shall be collected by the employer by deducting and withholding the tax imposed on any wages and salaries as and when paid or credited to the employee.
(2) Every employer required to deduct and withhold the tax imposed shall be liable for the payment and shall pay such tax to the National revenue officer of the State in which the employer has his principal place of business, or to the Secretary, if the employer has no place of business in the Federated States of Micronesia.
(3) Any employer who violates any of the provisions of this section shall be subject to the penalties prescribed in this chapter.
Cross-reference: The statutory provisions on Business Regulation are found in title 32 of this code. The statutory provisions on Corporations and Business Associations are found in title 36 of this code.
(1) The employer shall, on or before the last day of the month following the close of each quarter, to wit, on or before April 30, July 31, October 31, and January 31, pay the tax withheld, and make a full, true, and correct return showing all wages and salaries covered by section 131 of this chapter paid by him during the preceding quarter, and showing the tax due and withheld thereon, which return shall be filed at the place prescribed in section 131 of this chapter for payment of the tax and shall include such other information as shall be required or prescribed by the Secretary.
(2) With respect to salaries and wages paid out of public moneys, the Secretary at his discretion may prescribe special forms for, and different procedures and times for, the filing of such returns by employers paying such compensation, or may, upon such conditions and subject to such rules as he may prescribe from time to time, waive the filing of any such returns.
(3) The Secretary may require more frequent returns and payments as he in his discretion feels are advisable, but in no case shall an employer be required to make returns and payments more frequently than monthly. The Secretary, for good cause, may extend the time for making returns and payments but not beyond the last day of the first month next succeeding the regular due date thereof.
Source: COM PL 4C-2 § 4(a); COM PL 5-26 § 4; TT Code 1980, 77 TTC 254(1).
Cross-reference: The statutory provisions on Business Regulation are found in title 32 of this code. The statutory provisions on Corporations and Business Associations are found in title 36 of this code.
(1) Every employer required to deduct and withhold any tax on the salaries and wages of any employee shall furnish to each such employee on or before January 31 of the succeeding year (or, if his employment is terminated before the close of such calendar year, on the day on which the last payment of compensation is made) a written statement showing the wages or salaries paid by the employer to such employee during the year and the amount of the tax deducted and withheld or paid with respect to such compensation.
(2) Such employer shall include with his final return for the calendar year, or shall file on or before January 31, a duplicate copy of each such statement, at the place prescribed in section 131 of this chapter for the payment of the tax.
(3) The Secretary may grant to any employer a reasonable extension of time, not in excess of 60 days, with respect to any statement required by this section to be furnished to any employee or to be filed, and may by regulation provide for the furnishing or filing of statements at such other times and containing such other information as may be required for the administration of this chapter.
(4) The Secretary shall prescribe the form of statement required by this section and may adopt any United States Federal income tax form appropriate for the purpose.
(1) All taxes withheld by any employer under section 131 of this chapter shall be held in trust by such employer for the Government and for payment to the Secretary in the manner and at the time required by this chapter.
(2) If any employer shall fail, neglect, or refuse to deduct and withhold from the compensation paid to an employee, or to pay over, the amount of the tax imposed by this chapter, such employer shall, moreover, be liable to pay to the Government the amount of the tax, which amount shall (whether or not tax withholdings constituting trust funds have been commingled with said employer’s assets) form a lien on the employer’s entire assets, having priority over all other claims and liens, except as provided by the Secured Transactions Act.
(3) Any employer may recover from an employee any amount which he should have withheld but did not withhold from such employee’s wages and salaries, if he has been required to pay and has paid the amount to the Government out of his own funds pursuant to this section.
Case annotations: Liens under 54 F.S.M.C. 135 have priority even over liens which arose earlier in time. Bank of Guam v. Island Hardware, Inc. (II), 3 FSM R. 105, 108 (Pon. 1987).
Any lien rights of the government under § 135(2) supersede even preexisting lien rights of any other party. Bank of Guam v. Island Hardware, Inc. (II), 3 FSM R. 105, 110 (Pon. 1987).
Attachment and seizure create statutory and possessory lien rights which will be unaffected by subsequent writs of execution, but will be subject to national government’s wage and salary tax lien claims under 54 F.S.M.C. 135(2), to wage claims of low level employees and laborers, and to pre-existing national government lien rights under 54 F.S.M.C. 153. In re Mid-Pacific Constr. Co., 3 FSM R. 292, 303 (Pon. 1988).
Under 54 F.S.M.C. 135(2), government’s judgment for wages and salary taxes constitutes a lien that is entitled to highest priority. In re Island Hardware, 3 FSM R. 332, 337 (Pon. 1988).
The priority lien rights provided for the government in section 135(2) relate only to wage and salary tax claims and not to gross revenue taxes or other taxes. Bank of Guam v. Island Hardware, Inc. (II), 3 FSM R. 105, 111 (Pon. 1987).
Under 54 F.S.M.C. 135(2), no other payment to creditors may be made from execution sale proceeds until all amounts owing for wage and salary taxes are paid in full to the government. In re Mid-Pacific Constr. Co., 3 FSM R. 292, 297 (Pon. 1988).
Amounts owing for penalties and interest under the tax law, 54 F.S.M.C. §§ 155 and 902, do not qualify for lien treatment under 55 F.S.M.C. §§ 135 or 153. In re Island Hardware, Inc., 3 FSM R. 428, 433 (Pon. 1988).
No employee shall have any right of action against his employer with respect to any moneys deducted from such employee’s salaries and wages in compliance or intended compliance with this chapter, and paid to the person designated in section 131 of this chapter.
(1) Any individual who is paid or credited wages or salaries from an employer who does not have a place of business in the Federated States of Micronesia and does not have an agent within the Federated States of Micronesia responsible for making the returns, withholdings, and payments of taxes on compensation required by this chapter, shall file a return with and pay the tax due under this chapter to the National revenue officer of the State in which he resides or in which he is present at the time for payment as may be required by the rules of the Secretary, or, if he is not at the time within the Federated States of Micronesia, then with and to the Secretary.
(2) Any individual who is paid or credited wages from the United States or an instrumentality thereof shall be under the same duty as an individual who is paid or credited wages or salaries from an employer who does not have a place of business in the Federated States of Micronesia, unless the tax has been withheld from such salaries and wages as provided by section 131 of this chapter.
(1) All such returns shall be filed, and the payments thereon shall be made, at the times and in the manner prescribed in sections 131 and 132 of this chapter, and
(2) Each return shall state the name of the individual filing the same, the name, residence, and address of his employer, the total of all compensation received for the preceding three months, and the tax due thereon, and shall include such other information and be upon such form as the Secretary shall require or prescribe.
(1) The Secretary, upon request of a taxpayer required by section 137 of this chapter to make returns, may permit semiannual returns and payments of tax with respect to salaries and wages, and in granting such permission shall fix the date or dates for such filing of returns and payment of taxes.
(2) The Secretary, for good cause, may extend the time for making returns and payments, but not beyond the twentieth day of the second month succeeding the regular due date thereof.
(3) Failure to comply with the provisions of sections 137, 138, and 139 of this chapter shall be punishable under the penalties prescribed in this title.