SECTION 10. EFFECTIVE DATE

This revenue procedure is effective for a Form 3115 filed on or after December 1, 2000, for taxable years ending on or after December 1, 2000. The Service will return any Form 3115 that is filed on or after December 1, 2000, for taxable years ending on or after December 1, 2000, if the Form 3115 is filed with the national office pursuant to the Code, regulations, or administrative guidance other than this revenue procedure and the change in method of accounting is within the scope of this revenue procedure.

DRAFTING INFORMATION

The principal author of this revenue procedure is John Huffman of the Office of the Associate Chief Counsel (Passthroughs & Special Industries). For further information regarding this revenue procedure, contact Mr. Huffman at (202) 622-3110 (not a toll-free call).

Social Security Contribution and Benefit Base for 2001

Under authority contained in the Social Security Act (“the Act”), the Commissioner, Social Security Administration, has determined and announced (65 F.R. 63663, dated October 24, 2000) that the contribution and benefit base for remuneration paid in 2001, and self-employment income earned in taxable years beginning in 2001 is $80,400.

“Old-Law” Contribution and Benefit Base

General

The “old-law” contribution and benefit base for 2001 is $59,700. This is the base that would have been effective under the Act without the enactment of the 1977 amendments. We compute the base under section 230(b) of the Act as it read prior to the 1977 amendments.

The “old-law” contribution and benefit base is used by:

(a) The Railroad Retirement program to determine certain tax liabilities and tier II benefits payable under that program to supplement the tier I payments which correspond to basic Social Security benefits,

(b) The Pension Benefit Guaranty Corporation to determine the maximum amount of pension guaranteed under the Employee Retirement Income Security Act (as stated in section 230(d) of the Social Security Act),

(c) Social Security to determine a year of coverage in computing the special minimum benefit, as described earlier, and

(d) Social Security to determine a year of coverage (acquired whenever earnings equal or exceed 25 percent of the “old-law’’ base for this purpose only) in computing benefits for persons who are also eligible to receive pensions based on employment not covered under section 210 of the Act.

Domestic Employee Coverage Threshold

General

Section 2 of the “Social Security Domestic Employment Reform Act of 1994’’ (Pub. L. 103–387) increased the threshold for coverage of a domestic employee’s

December 26, 2000 602 2000–52 I.R.B.

wages paid per employer from $50 per calendar quarter to $1,000 per annum in calendar year 1994. The statute held the coverage threshold at the $1,000 level for 1995 and then increased the threshold in $100 increments for years after 1995. Section 3121(x) of the Internal Revenue Code provides the formula for increasing the threshold.

Computation

Under the formula, the domestic employee coverage threshold amount for

2001 shall be equal to the 1995 amount of $1,000 multiplied by the ratio of the national average wage index for 1999 to that for 1993. If the resulting amount is not a multiple of $100, it shall be rounded to the next lower multiple of $100.

Domestic Employee Coverage Threshold Amount

The ratio of the national average wage index for 1999, $30,469.84, compared to that for 1993, $23,132.67, is 1.3171778.

Multiplying the 1995 domestic employee coverage threshold amount of $1,000 by the ratio of 1.3171778 produces the amount of $1,317.18, which must then be rounded to $1,300. Accordingly, the domestic employee coverage threshold amount is $1,300 for 2001.

(Filed by the Office of the Federal Register on October 23, 2000, 8:45 a.m., and published in the issue of the Federal Register for October 24, 2000, 65 F.R. 63663)

2000–52 I.R.B. 603 December 26, 2000