LIABILITY FOR WITHHELD TAXES.

SEC. 105. LIABILITY FOR WITHHELD TAXES. (a) Effect on Third Parties.—Chapter 25 (relating to general provisions relating to employment taxes) is amended by adding at the end thereof the following new section: “SEC. 3505. LIABILITY OF THIRD PARTIES PAYING OR PROVIDING FOR WAGES. “(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 80 Stat. 1139agent 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)(l)) 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. “(c) Effect of Payment.—Any amounts paid to the United States pursuant to this section shall be credited against the liability of the employer.” (b) Performance Bonds of Contractors for Public Buildings or Works.—The first section of the Act entitled “An Act requiring contracts for the construction, alteration, and repair of any public building or public work of the United States to be accompanied by a performance bond protecting the United States and by an additional bond for the protection of persons furnishing material and labor for the construction, alteration, or repair of said public buildings or public work”, approved August 24, 1935 (49 Stat. 793; 40 U.S.C. 270a), is amended by adding at the end thereof the following new subsection: “(d) Every performance bond required under this section shall specifically provide coverage for taxes imposed by the United States which are collected, deducted, or withheld from wages paid by the contractor in carrying out the contract with respect to which such bond is furnished. However, the United States shall give the surety or sureties on such bond written notice, with respect to any such unpaid taxes attributable to any period, within ninety days after the date when such contractor files a return for such period, except that no such notice shall be given more than one hundred and eighty days from the date when a return for the period was required to be filed under the Internal Revenue Code of 1954. No suit on such bond for such taxes shall be commenced by the United States unless notice is given as provided in the preceding sentence, and no such suit shall be commenced after the expiration of one year after the day on which such notice is given.” (c) Clerical Amendment.—The table of sections for chapter 25 is amended by adding at the end thereof the following: “Sec. 3505. Liability of third parties paying or providing for wages.”.