Executive Order 10407—Withholding of State or Territorial Income Taxes by Federal Agencies

By virtue of the authority vested in me by section 1 of the act of July 17, 1952, 66 Stat. 765, section 301 of title 3 of the United State Code (as added by section 10 of the act of October 31, 1951, 65 Stat. 712), and as President of the United States, I hereby prescribe the following regulations governing agreements to be entered into between the Secretary of the Treasury and any State or Territory, pursuant to the provisions of the said act of July 17, 1952, with respect to the withholding of State or Territorial income taxes from the compensation of employees of the United States: 1. Such an agreement shall be entered into by the Secretary of the Treasury within 120 days of the receipt of a request therefore by the Secretary from the Governor or any of the proper official of any State or Territory, where (a) the law of such State or Territory provides for the collection of a tax by imposing upon employers generally the duty of withholding sums from the compensation of employees and making returns of such sums to the authorities of such State or Territory, and (b) the duty to withhold is imposed generally with respect to the compensation of employees who are residents such State or Territory: Provided, that each such agreement shall be consistent with the provisions of the said act of July 17, 1952, and of rules and regulations issued thereunder, and shall be subject to any amendments of any of such provisions, including amendments occurring after the effective date of any such agreement. 2. Each such agreement (a) shall provide that the head of each agency of the United States shall comply with the requirements of such law of the State or Territory concerned with respect to employees of such agency who are subject to such tax and whose regular place of federal employment is within the State or Territory with which such agreement is entered into, (b) shall specify when the withholding of tax shall commence, and (c) shall provide for procedures for the withholding, the filing of the returns, and the payment of the tax to the State or Territory which conform, in so far as practicable, to the usual fiscal practices of agencies of the United States. 3. No such agreement shall apply with respect to compensation for service as a member of the Armed Forces of the United States, or (b) shall require collection by agencies of the United State of delinquent tax liabilities of federal employees. 4. The head of each agency shall designate, or provide for the designation of the officers or employees whose duty is shall be to withhold taxes, file required returns, and direct the payment of such taxes with held, in accordance with the terms of agreements entered into between the Secretary of the Treasury and the State or Territories. 5. Nothing in this order, or in rules or regulations issued hereunder, or in any agreement entered into pursuant thereto, shall be deemed to consent to the application of any provision of law of any State or Territory which has the effect of imposing more burdensome requirements upon the United States than it imposes upon other employers, or which has the effect of subjecting the United States or any of its officers or employees to any penalty or liability. 6. As used in this order - (a) The term "agency" means each department, commission, authority, administration, board, or other independent establishment of the Government of the United States, including any wholly-owned instrumentality of the United States, but such term does not include governments of the possessions or units of the legislative or judicial branches of the United States except to the extent that any such units may by specific statutory provision be subject to laws relating generally to the executive branch of the Government; (b) The term "Armed Force of the Untied States" includes all regular and reserve components of the Army, the Navy, the Air Force, the Marine Corps, and the Coast Guard. (c) The term "employees" as applied to employees of the United States includes officers and means individuals appointed by a federal officer and engaged in the performance of federal functions in an agency as defined in paragraph (a) above, under authority of an act of Congress of an Executive order, who in the performance of their duties are supervised and directed by a federal officer, but the term does not include retired personnel, pensioners, annuitants, or similar beneficiaries of the federal government, whether their status is civilian or in the Armed Forces of the United States, who are not performing active service, or persons receiving remuneration for services on a contract-fee basis. (d) The term "regular place of federal employment" means the place where an employee actually performs his services irrespective of his residence, except when such services are performed in a travel or temporary duty status, in which case his "regular place of federal employment" will be the place to which he will normally be expected to proceed for the purpose of performing further services in connection with his federal employment on the termination of travel or temporary duty status. (e) I hereby delegate to the Secretary of the Treasury authority to prescribe such rules and regulations not inconsistent herewith as may be necessary further to effectuate the provisions of the act of July 17, 1952, or of this order. HARRY S. TRUMAN THE WHITE HOUSE, November 6, 1952