# Supplemental wage payments.
**AGENCY:**
Internal Revenue Service (IRS), Treasury.
**ACTION:**
Correcting amendment.
**SUMMARY:**
This document contains correction to final regulations (TD 9276) that were published in the *Federal Register* on Tuesday, July 25, 2006 (71 FR 42049), amending the regulations that provide for determining the amount of income tax withholding on supplemental wages. These regulations apply to all employers and others making supplemental wage payments to employees.
**DATES:**
The correction is effective January 1, 2007.
**FOR FURTHER INFORMATION CONTACT:**
A.G. Kelley, (202) 622-6040 (not a toll-free number).
**SUPPLEMENTARY INFORMATION:**
**Background**
The final regulations that are the subject of this correction are under sections 3401 and 3402 of the Internal Revenue Code.
**Need for Correction**
As published, final regulations (TD 9276) contain an error that may prove to be misleading and is in need of clarification.
**List of Subjects in 26 CFR Part 31**
Employment taxes, Income taxes, Penalties, Pensions, Railroad retirement, Reporting and recordkeeping requirements, Social Security, Unemployment compensation.
**26 CFR Part 31**
**Correction of Publication**
Accordingly, 26 CFR part 31 is corrected by making the following correcting amendment:
**PART 31—EMPLOYMENT TAXES AND COLLECTION OF INCOME TAX AT SOURCE**
*Paragraph 1* . The authority citation for part 31 continues to read, in part, as follows:
**Authority:**
26 U.S.C. 7805 * * *
**26 CFR Part 31**
*Par. 2.* Section 31.3402(g)-1(a)(8) is amended by revising the last sentence of *Example 3* paragraph (iv). The revision reads as follows:
§ 31.3402(g)-1
(a) * * *
(8) * * *
*Example 3.* * * *
(iv) * * * If R elects to use optional flat rate withholding provided under paragraph (a)(7)(iii)(F) of this section, withholding would be calculated at 25 percent of the $1,000,000 portion of the payment and would be $250,000.
LaNita Van Dyke,
Chief, Publications and Regulations Branch, Legal Processing Division, Associate Chief Counsel, (Procedure and Administration).