Internal Revenue Code:Sec. 3202. Deduction of tax from compensation
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Location in Internal Revenue Code
TITLE 26 - INTERNAL REVENUE CODE
Subtitle C - Employment Taxes
CHAPTER 22 - RAILROAD RETIREMENT TAX ACT
Subchapter A - Tax on Employees
Statute
Sec. 3202. Deduction of tax from compensation
(a) Requirement
The taxes imposed by section 3201 shall be collected by the
employer of the taxpayer by deducting the amount of the taxes from
the compensation of the employee as and when paid. An employer who
is furnished by an employee a written statement of tips (received
in a calendar month) pursuant to section 6053(a) to which paragraph
(3) of section 3231(e) is applicable may deduct an amount
equivalent to such taxes with respect to such tips from any
compensation of the employee (exclusive of tips) under his control,
even though at the time such statement is furnished the total
amount of the tips included in statements furnished to the employer
as having been received by the employee in such calendar month in
the course of his employment by such employer is less than $20.
(b) Indemnification of employer
Every employer required under subsection (a) to deduct the tax
shall be liable for the payment of such tax and shall not be liable
to any person for the amount of any such payment.
(c) Special rule for tips
(1) In the case of tips which constitute compensation, subsection
(a) shall be applicable only to such tips as are included in a
written statement furnished to the employer pursuant to section
6053(a), and only to the extent that collection can be made by the
employer, at or after the time such statement is so furnished and
before the close of the 10th day following the calendar month (or,
if paragraph (3) applies, the 30th day following the quarter) in
which the tips were deemed paid, by deducting the amount of the tax
from such compensation of the employee (excluding tips, but
including funds turned over by the employee to the employer
pursuant to paragraph (2)) as are under control of the employer.
(2) If the taxes imposed by section 3201, with respect to tips
which are included in written statements furnished in any month to
the employer pursuant to section 6053(a), exceed the compensation
of the employee (excluding tips) from which the employer is
required to collect the taxes under paragraph (1), the employee may
furnish to the employer on or before the 10th day of the following
month (or, if paragraph (3) applies, on or before the 30th day of
the following quarter) an amount of money equal to the amount of
the excess.
(3) The Secretary may, under regulations prescribed by him,
authorize employers -
(A) to estimate the amount of tips that will be reported by the
employee pursuant to section 6053(a) in any quarter of the
calendar year,
(B) to determine the amount to be deducted upon each payment of
compensation (exclusive of tips) during such quarter as if the
tips so estimated constituted actual tips so reported, and
(C) to deduct upon any payment of compensation (other than
tips, but including funds turned over by the employee to the
employer pursuant to paragraph (2)) to such employee during such
quarter (and within 30 days thereafter) such amount as may be
necessary to adjust the amount actually deducted upon such
compensation of the employee during the quarter to the amount
required to be deducted in respect of tips included in written
statements furnished to the employer during the quarter.
(4) If the taxes imposed by section 3201 with respect to tips
which constitute compensation exceed the portion of such taxes
which can be collected by the employer from the compensation of the
employee pursuant to paragraph (1) or paragraph (3), such excess
shall be paid by the employee.
(d) Special rule for certain taxable group-term life insurance
benefits
(1) In general
In the case of any payment for group-term life insurance to
which this subsection applies -
(A) subsection (a) shall not apply,
(B) the employer shall separately include on the statement
required under section 6051 -
(i) the portion of the compensation which consists of
payments for group-term life insurance to which this
subsection applies, and
(ii) the amount of the tax imposed by section 3201 on such
payments, and
(C) the tax imposed by section 3201 on such payments shall be
paid by the employee.
(2) Benefits to which subsection applies
This subsection shall apply to any payment for group-term life
insurance to the extent -
(A) such payment constitutes compensation, and
(B) such payment is for coverage for periods during which an
employment relationship no longer exists between the employee
and the employer.
Sources
(Aug. 16, 1954, ch. 736, 68A Stat. 431; Aug. 31, 1954, ch. 1164,
pt. II, Sec. 206(a), 68 Stat. 1040; Pub. L. 86-28, pt. II, Sec.
201(b), May 19, 1959, 73 Stat. 29; Pub. L. 88-133, title II, Sec.
202, Oct. 5, 1963,77 Stat. 221; Pub. L. 89-212, Sec. 2(a), 4, Sept.
29, 1965, 79 Stat. 858, 861; Pub. L. 89-700, title III, Sec.
301(iii), (v), Oct. 30, 1966, 80 Stat. 1088; Pub. L. 93-69, title
I, Sec. 102(b), July 10, 1973, 87 Stat. 162; Pub. L. 94-455, title
XIX, Sec. 1903(a)(7), 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1807,
1834; Pub. L. 98-76, title II, Sec. 225(a)(2), (c)(1)(A), (B),
(2)-(5), Aug. 12, 1983, 97 Stat. 425; Pub. L. 101-508, title V,
Sec. 5124(b), Nov. 5, 1990, 104 Stat. 1388-285.)
Miscellaneous
AMENDMENTS
1990 - Subsec. (d). Pub. L. 101-508 added subsec. (d).
1983 - Subsec. (a). Pub. L. 98-76, Sec. 225(a)(2), (c)(1)(A),
(2), substituted ''taxes imposed by section 3201'' for ''tax
imposed by section 3201'', substituted ''the amount of the taxes''
for ''the amount of the tax'', and ''such taxes'' for ''such tax'',
and struck out provisions that if an employee was paid compensation
by more than one employer for services rendered during any calendar
month and the aggregate of such compensation was in excess of an
amount equal to one-twelfth of the current maximum annual taxable
''wages'' as defined in section 3121 for any month, the tax to be
deducted by each employer other than a subordinate unit of a
national railway-labor-organization employer from the compensation
paid by him to the employee with respect to such month would be
that proportion of the tax with respect to such compensation paid
by all such employers which the compensation paid by him to the
employee for services rendered during such month bears to the total
compensation paid by all such employers to such employee for
services rendered during such month; and that in the event that the
compensation so paid by such employers to the employee for services
rendered during such month was less than an amount equal to
one-twelfth of the current maximum annual taxable ''wages'' as
defined in section 3121 for any month, each subordinate unit of a
national railway-labor-organization employer would deduct such
proportion of any additional tax as the compensation paid by such
employer to such employee for services rendered during such month
bears to the total compensation paid by all such employers to such
employee for services rendered during such month.
Subsec. (c)(2). Pub. L. 98-76, Sec. 225(c)(1)(B), (3), (5),
substituted ''taxes imposed by section 3201'' for ''tax imposed by
section 3201'', ''the taxes under paragraph (1)'' for ''the tax
under paragraph (1)'', and ''exceed'' for ''exceeds''.
Subsec. (c)(4). Pub. L. 98-76, Sec. 225(c)(1)(B), (4), (5),
substituted ''taxes imposed by section 3201'' for ''tax imposed by
section 3201'', ''such taxes'' for ''such tax'', and ''exceed'' for
''exceeds''.
1976 - Subsec. (a). Pub. L. 94-455, Sec. 1903(a)(7)(A), struck
out provisions relating to the September 30, 1973, qualification on
the applicability of provisions of this subsection and ''of the
Internal Revenue Code of 1954'' before ''for any month'' wherever
appearing.
Subsec. (b). Pub. L. 94-455, Sec. 1903(a)(7)(B), struck out
''made'' after ''to deduct the tax shall be''.
Subsec. (c)(3). Pub. L. 94-455, Sec. 1906(b)(13)(A), struck out
''or his delegate'' after ''Secretary''.
1973 - Subsec. (a). Pub. L. 93-69, in second sentence reading
''If an employee . . .'', substituted ''1973'' for ''1965''
wherever appearing, struck out ''(i) $450, or (ii)'' before ''an
amount equal to'' in two places, and struck out '', whichever is
greater,'' after ''Internal Revenue Code of 1954'' in two places.
1966 - Subsec. (a). Pub. L. 89-700 substituted ''after September
30, 1965'' for ''after the month in which this provision was
amended in 1959'' in six places, and ''(i) $450, or (ii) an amount
equal to one-twelfth of the current maximum annual taxable 'wages'
as defined in section 3121 of the Internal Revenue Code of 1954,
whichever is greater, for any month after September 30, 1965'' for
''$400 for any calendar month before the calendar month next
following the month in which this provision was amended in 1963, or
$450 for any calendar month after the month in which this provision
was so amended and before the calendar month next following the
calendar month in which this provision was amended in 1965, or (i)
$450, or (ii) an amount equal to one-twelfth of the current maximum
annual taxable 'wages' as defined in section 3121 of the Internal
Revenue Code of 1954, whichever is greater, for any month after the
month in which this provision was so amended'' in two places.
1965 - Subsec. (a). Pub. L. 89-212, Sec. 2(a)(1), 4, inserted
sentence permitting an employer who is furnished by an employee a
written statement of tips pursuant to section 6053(a) to which par.
(3) of section 3231(e) is applicable to deduct an amount equivalent
to such tax with respect to such tips from any compensation of the
employee under his control, even though at the time such statement
is furnished the total amount of the tips included in statements
furnished to the employer as having been received by the employee
in such calendar month in the course of his employment by such
employer is less than $20, and inserted ''and before the calendar
month next following the calendar month in which this provision was
amended in 1965, or (i) $450, or (ii) an amount equal to
one-twelfth of the current maximum annual taxable 'wages' as
defined in section 3121, whichever is greater, for any month after
the month in which this provision was so amended'' in two places.
Subsec. (c). Pub. L. 89-212, Sec. 2(a)(2), added subsec. (c).
1963 - Subsec. (a). Pub. L. 88-133 limited existing taxable
compensation base of $400 to any calendar month before Nov. 1963
and increased such base to $450 for any calendar month after Oct.
1963.
1959 - Subsec. (a). Pub. L. 86-28 substituted ''after the month
in which this provision was amended in 1959'' for ''after 1954''
and for ''after December 31, 1954'' in five places, and ''$400''
for ''$350'' in two places.
1954 - Subsec. (a). Act Aug. 31, 1954, substituted ''$350'' for
''$300'' wherever appearing.
EFFECTIVE DATE OF 1990 AMENDMENT
Amendment by Pub. L. 101-508 applicable to coverage provided
after Dec. 31, 1990, see section 5124(c) of Pub. L. 101-508, set
out as a note under section 3102 of this title.
EFFECTIVE DATE OF 1983 AMENDMENT
Amendment by Pub. L. 98-76 applicable to remuneration paid after
Dec. 31, 1984, see section 227(a) of Pub. L. 98-76, set out as a
note under section 3201 of this title.
EFFECTIVE DATE OF 1976 AMENDMENT
Amendment by section 1903(a)(7) of Pub. L. 94-455 applicable with
respect to compensation paid for services rendered after Dec. 31,
1976, see section 1903(d) of Pub. L. 94-455, set out as a note
under section 3201 of this title.
EFFECTIVE DATE OF 1973 AMENDMENT
Amendment by Pub. L. 93-69 effective Oct. 1, 1973, and applicable
only with respect to compensation paid for services rendered on or
after Oct. 1, 1973; and applicable to railway labor organization
covered by a private supplemental pension plan as of Oct. 1, 1973,
and subject to a moratorium agreed to on or before Mar. 8, 1973,
for changes in pay rates, on the earlier of (1) date of expiration
of such moratorium, or (2) date as of which the railway labor
organization through collective bargaining agreement makes
amendment applicable, see section 109(b) of Pub. L. 93-69, set out
as a note under section 3201 of this title.
EFFECTIVE DATE OF 1965 AMENDMENT
Amendment by section 2(a) of Pub. L. 89-212 effective only with
respect to tips received after 1965, and amendment by section 4 of
Pub. L. 89-212 effective only with respect to calendar months after
the month in which Pub. L. 89-212 is enacted, see section 6 of Pub.
L. 89-212, set out as a note under section 3201 of this title.
EFFECTIVE DATE OF 1959 AMENDMENT
Amendment by Pub. L. 86-28 effective, except as otherwise
provided, first day of calendar month next following May 1959, see
section 202 of Pub. L. 86-28, set out as a note under section 3201
of this title.
EFFECTIVE DATE OF 1954 AMENDMENT
Amendment by act Aug. 31, 1954, effective as if enacted as a part
of the Internal Revenue Code of 1986 (formerly I.R.C. 1954), see
section 407 of act Aug. 31, 1954, as amended, set out as a note
under section 3201 of this title.
References
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 3402, 3505, 6053 of this
title.
