WITHHOLDING.

SEC. 1207. WITHHOLDING. (a) Withholding State and District Income Taxes From Compensation of Members of Armed Forces Who Are Residents of the State or District of Columbia.— (1) Withholding of state income taxes.— The last sentence of section 5517(a) of title 5, United States Code, is amended to read as follows: “In the case of pay for Service as a member of the armed forces, the preceding sentence shall be applied by substituting ‘who are residents of the State with which the agree-90 STAT. 1705ment is made’ for ‘whose regular place of Federal employment is within the State with which the agreement is made’.” (2) Withholding of district income taxes.— Subsection (a) of section 5516 of title 5, United States Code, is amended— (A) by striking out in the third sentence “pay for service as a member of the armed forces, or to”; and (B) by adding after the third sentence the following new sentence: “In the case of pay for service as a member of the armed forces, the second sentence of this subsection shall be applied by substituting ‘who are residents of the District of Columbia’ for ‘whose regular place of employment is within the District of Columbia’.” (b) Withholding State and City Income Taxes From the Compensation of Members of the National Guard or the Ready Reserve.— Section 5517 of title 5, United States Code, is amended by adding at the end thereof the following new subsection: “(d) For the purpose of this section and sections 5516 and 5520, the terms ‘serve as a member of the armed forces’ and ‘service as a member of the Armed Forces’ do not include— “(1) participation in exercises or the performance of duty under section 502 of title 32, United States Code, by a member of the National Guard; and “(2) participation in scheduled drills or training periods, or service on active duty for training, under section 270(a) of title 10, United States Code, by a member of the Ready Reserve.” (c) Voluntary Withholding of State Income Taxes From the Compensation of Federal Employees.— Paragraphs (1) and (2) of section 5517(a) of title 5, United States Code, are amended to read as follows: “(1) provides for the collection of a tax either by imposing on employers generally the duty of withholding sums from the pay of employees and making returns of the sums to the State, or by granting to employers generally the authority to withhold sums from the pay of employees if any employee voluntarily elects to have such sums withheld; and “(2) imposes the duty or grants the authority to withhold generally with respect to the pay of employees who are residents of the State;”. (d) Withholding Tax on Certain Gambling Winnings.— Section 3402 (relating to income tax collected at source) is amended by adding at the end thereof the following new subsection: “(q) Extension or Withholding to Certain Gambling Winnings.— “(1) General rule.— Every person, including the Government of the United States, a State, or a political subdivision thereof, or any instrumentalities of the foregoing, making any payment of winnings which are subject to withholding shall deduct and withhold from such payment a tax in an amount equal to 20 percent of such payment. “(2) Exemption where tax otherwise withheld.— In the case of any payment, of winnings which are subject to withholding made to a nonresident, alien individual or a foreign corporation, the tax imposed under paragraph (1) shall not apply to any such payment subject to tax under section 1441(a) (relating to’withholding on nonresident aliens) or tax under section 1442(a) (relating to withholding on foreign corporations). 90 STAT. 1706 “(3) Winnings which are subject to withholding.— For purposes of this subsection, the term ‘winnings which are subject to withholding’ means proceeds from a wager determined in accordance with the following: “(A) In general.— Except as provided in subparagraphs (B) and (C), proceeds of more than $1,000 from a wagering transaction, if the amount of such proceeds is at least 300 times as large as the amount wagered. “(B) State-conducted lotteries.— Proceeds of more than $5,000 from a wager placed in a lottery conducted by an agency of a State acting under authority of State law, but only if such wager is placed with the State agency conducting such lottery, or with its authorized employees or agents. “(C) Sweepstakes, wagering pools, and other lotteries.— Proceeds of more than $1,000 from a wager placed in a sweepstakes, wagering pool, or lottery (other than a wager described in subparagraph (B)). “(4) Rules for determining proceeds from a wager.— For purposes of this subsection— “(A) proceeds from a wager shall be determined by reducing the amount received by the amount of the wager, and “(B) proceeds which are not money shall be taken into account at their fair market value. “(5) Exemption for bingo, keno, and slot machines.— The tax imposed under paragraph (1) shall not apply to winnings from a slot machine, keno, and bingo. “(6) Statement by recipient.— Every person who is to receive a payment of winnings which are subject to withholding shall furnish the person making such payment a statement, made under the penalties of perjury, containing the name, address, and tax-payer identification number of the person receiving the payment and of each person entitled to any portion of such payment. “(7) Coordination with other sections.— For purposes of sections 3403 and 3404 and for purposes of so much of subtitle F (except section 7205) as relates to this chapter, payments to any person of winnings which are subject to withholding shall be treated as if they were wages paid by an employer to an employee.” (e) Withholding of Federal Taxes on Certain Individuals Engaged in Fishing.— (1) In general.— (A) Section 3121(b)(defining employment) is amended by striking out “or” at the end of paragraph (18), by striking out the period at the end of paragraph (19) and inserting in lieu thereof “; or”, and by adding after paragraph (19) the following new paragraph: “(20) service performed by an individual on a boat engaged in catching fish or other forms of aquatic animal life under an arrangement with the owner or operator of such boat pursuant to which— “(A) such individual does not receive any cash remuneration (other than as provided in subparagraph (B)), “(B) such individual receives a share of the boat’s (or the boats’ in the case of a fishing operation involving more than one boat) catch of fish or other forms of aquatic animal 90 STAT. 1707life or a share of the proceeds from the sale of such catch, and “(C) the amount of such individual’s share depends on the amount of the bout’s (or the boats’ in the case of a fishing operation involving more than one boat) catch of fish or other forms of aquatic animal life, but only if the operating crew of such boat (or each boat from which the individual receives a share in the case of a fishing operation involving more than one boat) is normally made up of fewer than 10 individuals.” (B) Section 1402(c)(2)(defining trade or business) is amended by striking out “and” at the end of subparagraph (D), by striking out the semicolon at the end of subparagraph (E) and inserting in lieu thereof “, and”, and by adding after subparagraph (E) the following new subparagraph: “(F) service described in section 3121 (b)(20);”. (C) Section 3401(a)(defining wages for purposes of withholding) is amended by striking out the period at the, end of paragraph (16) and inserting in lieu thereof “; or”, and by adding after paragraph (16) the following new paragraph: “(17) for service described in section 3121(b)(20)” (2) Conforming amendments.— (A) Section 210(a) of the Social Security Act is amended by striking out “or” at the end of paragraph’ (18), by striking out the period at the end of paragraph (19) and inserting in lieu thereof “; or,” and by adding after paragraph (19) the following new paragraph: “(20) Service performed by an individual on a boat engaged in catching fish or other forms of aquatic animal life under an arrangement with the owner or operator of such boat pursuant to which— “(A) such individual does not receive any cash remuneration (other than as provided in subparagraph (B)), “(B) such individual receives a share of the boat’s (or the boats’ in the case of a fishing operation involving more than one boat) catch of fish or other forms of aquatic animal life or a share of the proceeds from the sale of such catch, and “(C) the amount of such individual’s share depends on the amount of the boat’s (or bouts’ in the case, of a fishing operation involving more than one boat) catch of fish or other forms of aquatic animal life, but only if the operating crew of such boat (or each boat, from which the individual receives a share in the case of a fishing operation involving more than one boat) is normally made up of fewer than 10 individuals.” (B) Section 211(c)(2) of such Act is amended by striking out “and” at the end of subparagraph (D), by striking out the semicolon at the end of subparagraph (E), and inserting in lieu thereof “, and” and by adding after subparagraph (E) the following new paragraph: “(F) service described in section 210(a)(20);”. (3) Reporting requirement.— (A) Subpart B of part HI of subchapter A of chapter 61 (relating to information concerning transactions with other 90 STAT. 1708persons) is amended by adding at the end thereof the following new section: “SEC. 6050A. REPORTING REQUIREMENTS OF CERTAIN FISHING BOAT OPERATORS. “(a) Reports.— The operator of a boat on which one or more individuals, during a calendar year, perform services described in section 3121(b)(20) shall submit to the Secretary (at such time, and in such manner and form, as the Secretary shall by regulations prescribe) information respecting— “(1) the identity of each individual performing such services; “(2) the percentage of each such individual’s share of the catches of fish or other forms of aquatic animal life, and the percentage of the operator’s share of such catches; “(3) if such individual receives his share in kind, the type and weight of such share, together with such other information as the Secretary may prescribe by regulations reasonably necessary to determine the value of such share; and “(4) if such individual receives a share of the proceeds of such catches, the amount so received, “(b) Written Statement.— Every person making a return under subsection (a) shall furnish to each person whose name is set forth in such return a written statement showing the information relating to such person contained in such return. The written statement required under the preceding sentence shall be furnished to the person on or before January 31 of the year following the calendar year for which the return under subsection (a) was made.” (B) Section 6652(b) (relating to failure to file certain information returns) is amended by inserting after “withheld),” the following: “in the ease of each failure to make a return required by section 60o0A(a) (relating to reporting requirements of certain fishing boat operators),”. (C) Section 6652(h) is further amended by inserting after “tips),” the following: “or section 6050A(b) (relating to statements furnished by certain fishing boat operators),”. (f) Effective Dates.— (1) Subsection(a).— The amendments made by subsection (a) shall apply to wages withheld after the 120-day period following any request for an agreement after the date of the enactment of this Act. (2) Subsections(b) and(c).— The amendments made by subsections (b) and (c) shall apply to wages withheld after the 120day period following the date of the enactment of this Act. (3) Subsection(d).— The amendments made by subsection (d) shall apply to payments of winnings made after the 90th day after the date of the enactment of this Act. (4) Subsection (e).— (A) The amendments made by paragraphs (1)(A) and (2)(A) of subsection (c) shall apply to services performed after December 31, 1971. The amendments made by paragraphs (1)(B), (1)(C),and (2)(B) of such subsection shall apply to taxable veal’s ending after December 31, 1971. The amendments made by paragraph (3) of such subsection shall apply to calendar years beginning after the date of the enactment of this Act. (B) Notwithstanding subparagraph (A), if the owner or operator of any boat treated a share of the boat’s catch of fish 90 STAT. 1709or other aquatic animal life (or a share of the proceeds therefrom) received by an individual after December 31, 1971, and before the date of the enactment of this Act for services performed by such individual after December 31, 1971, on such boat as being subject to the tax under chapter 21 of the Internal Revenue Code of 1954, then the amendments made by paragraphs (1)(A) and (B) and (2) of subsection (e) shall not apply with respect to such services performed by such individual (and the share of the catch, or proceeds therefrom, received by him for such services).