Internal Revenue Code:Sec. 3231. Definitions
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Contents |
Location in Internal Revenue Code
TITLE 26 - INTERNAL REVENUE CODE
Subtitle C - Employment Taxes
CHAPTER 22 - RAILROAD RETIREMENT TAX ACT
Subchapter D - General Provisions
Statute
Sec. 3231. Definitions
(a) Employer
For purposes of this chapter, the term ''employer'' means any
carrier (as defined in subsection (g)), and any company which is
directly or indirectly owned or controlled by one or more such
carriers or under common control therewith, and which operates any
equipment or facility or performs any service (except trucking
service, casual service, and the casual operation of equipment or
facilities) in connection with the transportation of passengers or
property by railroad, or the receipt, delivery, elevation, transfer
in transit, refrigeration or icing, storage, or handling of
property transported by railroad, and any receiver, trustee, or
other individual or body, judicial or otherwise, when in the
possession of the property or operating all or any part of the
business of any such employer; except that the term ''employer''
shall not include any street, interurban, or suburban electric
railway, unless such railway is operating as a part of a general
steam-railroad system of transportation, but shall not exclude any
part of the general steam-railroad system of transportation now or
hereafter operated by any other motive power. The Surface
Transportation Board is hereby authorized and directed upon request
of the Secretary, or upon complaint of any party interested, to
determine after hearing whether any line operated by electric power
falls within the terms of this exception. The term ''employer''
shall also include railroad associations, traffic associations,
tariff bureaus, demurrage bureaus, weighing and inspection bureaus,
collection agencies and other associations, bureaus, agencies, or
organizations controlled and maintained wholly or principally by
two or more employers as hereinbefore defined and engaged in the
performance of services in connection with or incidental to
railroad transportation; and railway labor organizations, national
in scope, which have been or may be organized in accordance with
the provisions of the Railway Labor Act, as amended (45 U.S.C.,
chapter 8), and their State and National legislative committees and
their general committees and their insurance departments and their
local lodges and divisions, established pursuant to the
constitutions and bylaws of such organizations. The term
''employer'' shall not include any company by reason of its being
engaged in the mining of coal, the supplying of coal to an employer
where delivery is not beyond the mine tipple, and the operation of
equipment or facilities therefor, or in any of such activities.
(b) Employee
For purposes of this chapter, the term ''employee'' means any
individual in the service of one or more employers for
compensation; except that the term ''employee'' shall include an
employee of a local lodge or division defined as an employer in
subsection (a) only if he was in the service of or in the
employment relation to a carrier on or after August 29, 1935. An
individual shall be deemed to have been in the employment relation
to a carrier on August 29, 1935, if -
(1) he was on that date on leave of absence from his
employment, expressly granted to him by the carrier by whom he
was employed, or by a duly authorized representative of such
carrier, and the grant of such leave of absence was established
to the satisfaction of the Railroad Retirement Board before July
1947; or
(2) he was in the service of a carrier after August 29, 1935,
and before January 1946 in each of 6 calendar months, whether or
not consecutive; or
(3) before August 29, 1935, he did not retire and was not
retired or discharged from the service of the last carrier by
whom he was employed or its corporate or operating successor, but
-
(A) solely by reason of his physical or mental disability he
ceased before August 29, 1935, to be in the service of such
carrier and thereafter remained continuously disabled until he
attained age 65 or until August 1945, or
(B) solely for such last stated reason a carrier by whom he
was employed before August 29, 1935, or a carrier who is its
successor did not on or after August 29, 1935, and before
August 1945 call him to return to service, or
(C) if he was so called he was solely for such reason unable
to render service in 6 calendar months as provided in paragraph
(2); or
(4) he was on August 29, 1935, absent from the service of a
carrier by reason of a discharge which, within 1 year after the
effective date thereof, was protested, to an appropriate labor
representative or to the carrier, as wrongful, and which was
followed within 10 years of the effective date thereof by his
reinstatement in good faith to his former service with all his
seniority rights;
except that an individual shall not be deemed to have been on
August 29, 1935, in the employment relation to a carrier if before
that date he was granted a pension or gratuity on the basis of
which a pension was awarded to him pursuant to section 6 of the
Railroad Retirement Act of 1937 (45 U.S.C. 228f), or if during the
last payroll period before August 29, 1935, in which he rendered
service to a carrier he was not in the service of an employer, in
accordance with subsection (d), with respect to any service in such
payroll period, or if he could have been in the employment relation
to an employer only by reason of his having been, either before or
after August 29, 1935, in the service of a local lodge or division
defined as an employer in subsection (a). The term ''employee''
includes an officer of an employer. The term ''employee'' shall
not include any individual while such individual is engaged in the
physical operations consisting of the mining of coal, the
preparation of coal, the handling (other than movement by rail with
standard railroad locomotives) of coal not beyond the mine tipple,
or the loading of coal at the tipple.
(c) Employee representative
For purposes of this chapter, the term ''employee
representative'' means any officer or official representative of a
railway labor organization other than a labor organization included
in the term ''employer'' as defined in subsection (a), who before
or after June 29, 1937, was in the service of an employer as
defined in subsection (a) and who is duly authorized and designated
to represent employees in accordance with the Railway Labor Act (45
U.S.C., chapter 8), as amended, and any individual who is regularly
assigned to or regularly employed by such officer or official
representative in connection with the duties of his office.
(d) Service
For purposes of this chapter, an individual is in the service of
an employer whether his service is rendered within or without the
United States, if -
(1) he is subject to the continuing authority of the employer
to supervise and direct the manner of rendition of his service,
or he is rendering professional or technical services and is
integrated into the staff of the employer, or he is rendering, on
the property used in the employer's operations, other personal
services the rendition of which is integrated into the employer's
operations, and
(2) he renders such service for compensation;
except that an individual shall be deemed to be in the service of
an employer, other than a local lodge or division or a general
committee of a railway-labor-organization employer, not conducting
the principal part of its business in the United States, only when
he is rendering service to it in the United States; and an
individual shall be deemed to be in the service of such a local
lodge or division only if -
(3) all, or substantially all, the individuals constituting its
membership are employees of an employer conducting the principal
part of its business in the United States; or
(4) the headquarters of such local lodge or division is located
in the United States;
and an individual shall be deemed to be in the service of such a
general committee only if -
(5) he is representing a local lodge or division described in
paragraph (3) or (4) immediately above; or
(6) all, or substantially all, the individuals represented by
it are employees of an employer conducting the principal part of
its business in the United States; or
(7) he acts in the capacity of a general chairman or an
assistant general chairman of a general committee which
represents individuals rendering service in the United States to
an employer, but in such case if his office or headquarters is
not located in the United States and the individuals represented
by such general committee are employees of an employer not
conducting the principal part of its business in the United
States, only such proportion of the remuneration for such service
shall be regarded as compensation as the proportion which the
mileage in the United States under the jurisdiction of such
general committee bears to the total mileage under its
jurisdiction, unless such mileage formula is inapplicable, in
which case such other formula as the Railroad Retirement Board
may have prescribed pursuant to section 1(c) of the Railroad
Retirement Act of 1937 (45 U.S.C. 228a) shall be applicable, and
if the application of such mileage formula, or such other formula
as the Board may prescribe, would result in the compensation of
the individual being less than 10 percent of his remuneration for
such service, no part of such remuneration shall be regarded as
compensation;
Provided however, That an individual not a citizen or resident of
the United States shall not be deemed to be in the service of an
employer when rendering service outside the United States to an
employer who is required under the laws applicable in the place
where the service is rendered to employ therein, in whole or in
part, citizens or residents thereof; and the laws applicable on
August 29, 1935, in the place where the service is rendered shall
be deemed to have been applicable there at all times prior to that
date.
(e) Compensation
For purposes of this chapter -
(1) The term ''compensation'' means any form of money
remuneration paid to an individual for services rendered as an
employee to one or more employers. Such term does not include
(i) the amount of any payment (including any amount paid by an
employer for insurance or annuities, or into a fund, to provide
for any such payment) made to, or on behalf of, an employee or
any of his dependents under a plan or system established by an
employer which makes provision for his employees generally (or
for his employees generally and their dependents) or for a class
or classes of his employees (or for a class or classes of his
employees and their dependents), on account of sickness or
accident disability or medical or hospitalization expenses in
connection with sickness or accident disability or death, except
that this clause does not apply to a payment for group-term life
insurance to the extent that such payment is includible in the
gross income of the employee, (ii) tips (except as is provided
under paragraph (3)), (iii) an amount paid specifically - either
as an advance, as reimbursement or allowance - for traveling or
other bona fide and necessary expenses incurred or reasonably
expected to be incurred in the business of the employer provided
any such payment is identified by the employer either by a
separate payment or by specifically indicating the separate
amounts where both wages and expense reimbursement or allowance
are combined in a single payment, or (iv) any remuneration which
would not (if chapter 21 applied to such remuneration) be treated
as wages (as defined in section 3121(a)) by reason of section
3121(a)(5). Such term does not include remuneration for service
which is performed by a nonresident alien individual for the
period he is temporarily present in the United States as a
nonimmigrant under subparagraph (F), (J), (M), or (Q) of section
101(a)(15) of the Immigration and Nationality Act, as amended,
and which is performed to carry out the purpose specified in
subparagraph (F), (J), (M), or (Q), as the case may be. For the
purpose of determining the amount of taxes under sections 3201
and 3221, compensation earned in the service of a local lodge or
division of a railway-labor-organization employer shall be
disregarded with respect to any calendar month if the amount
thereof is less than $25. Compensation for service as a delegate
to a national or international convention of a railway labor
organization defined as an ''employer'' in subsection (a) of this
section shall be disregarded for purposes of determining the
amount of taxes due pursuant to this chapter if the individual
rendering such service has not previously rendered service, other
than as such a delegate, which may be included in his ''years of
service'' for purposes of the Railroad Retirement Act. Nothing in
the regulations prescribed for purposes of chapter 24 (relating
to wage withholding) which provides an exclusion from ''wages''
as used in such chapter shall be construed to require a similar
exclusion from ''compensation'' in regulations prescribed for
purposes of this chapter.
(2) Application of contribution bases
(A) Compensation in excess of applicable base excluded
(i) In general
The term ''compensation'' does not include that part of
remuneration paid during any calendar year to an individual
by an employer after remuneration equal to the applicable
base has been paid during such calendar year to such
individual by such employer for services rendered as an
employee to such employer.
(ii) Remuneration not treated as compensation excluded
There shall not be taken into account under clause (i)
remuneration which (without regard to clause (i)) is not
treated as compensation under this subsection.
(iii) Hospital insurance taxes
Clause (i) shall not apply to -
(I) so much of the rate applicable under section 3201(a)
or 3221(a) as does not exceed the rate of tax in effect
under section 3101(b), and
(II) so much of the rate applicable under section 3211(a)
as does not exceed the rate of tax in effect under section
1401(b).
(B) Applicable base
(i) Tier 1 taxes
Except as provided in clause (ii), the term ''applicable
base'' means for any calendar year the contribution and
benefit base determined under section 230 of the Social
Security Act for such calendar year.
(ii) Tier 2 taxes, etc.
For purposes of -
(I) the taxes imposed by sections 3201(b), 3211(b), and
3221(b), and
(II) computing average monthly compensation under section
3(j) of the Railroad Retirement Act of 1974 (except with
respect to annuity amounts determined under subsection (a)
or (f)(3) of section 3 of such Act),
clause (2) of the first sentence, and the second sentence, of
subsection (c) of section 230 of the Social Security Act
shall be disregarded.
(C) Successor employers
For purposes of this paragraph, the second sentence of
section 3121(a)(1) (relating to successor employers) shall
apply, except that -
(i) the term ''services'' shall be substituted for
''employment'' each place it appears,
(ii) the term ''compensation'' shall be substituted for
''remuneration (other than remuneration referred to in the
succeeding paragraphs of this subsection)'' each place it
appears, and
(iii) the terms ''employer'', ''services'', and
''compensation'' shall have the meanings given such terms by
this section.
(3) Solely for purposes of the taxes imposed by section 3201
and other provisions of this chapter insofar as they relate to
such taxes, the term ''compensation'' also includes cash tips
received by an employee in any calendar month in the course of
his employment by an employer unless the amount of such cash tips
is less than $20.
(4)(A) For purposes of applying sections 3201(a), 3211(a), and
3221(a), in the case of payments made to an employee or any of
his dependents on account of sickness or accident disability,
clause (i) of the second sentence of paragraph (1) shall exclude
from the term ''compensation'' only -
(i) payments which are received under a workmen's
compensation law, and
(ii) benefits received under the Railroad Retirement Act of
1974.
(B) Notwithstanding any other provision of law, for purposes of
the sections specified in subparagraph (A), the term
''compensation'' shall include benefits paid under section 2(a)
of the Railroad Unemployment Insurance Act for days of sickness,
except to the extent that such sickness (as determined in
accordance with standards prescribed by the Railroad Retirement
Board) is the result of on-the-job injury.
(C) Under regulations prescribed by the Secretary,
subparagraphs (A) and (B) shall not apply to payments made after
the expiration of a 6-month period comparable to the 6-month
period described in section 3121(a)(4).
(D) Except as otherwise provided in regulations prescribed by
the Secretary, any third party which makes a payment included in
compensation solely by reason of subparagraph (A) or (B) shall be
treated for purposes of this chapter as the employer with respect
to such compensation.
(5) The term ''compensation'' shall not include any benefit
provided to or on behalf of an employee if at the time such
benefit is provided it is reasonable to believe that the employee
will be able to exclude such benefit from income under section
74(c), 117, 108(f)(4), or 132.
(6) The term ''compensation'' shall not include any payment
made, or benefit furnished, to or for the benefit of an employee
if at the time of such payment or such furnishing it is
reasonable to believe that the employee will be able to exclude
such payment or benefit from income under section 127.
(7) The term ''compensation'' shall not include any
contribution, payment, or service provided by an employer which
may be excluded from the gross income of an employee, his spouse,
or his dependents, under the provisions of section 120 (relating
to amounts received under qualified group legal services plans).
(8) Treatment of certain deferred compensation and salary
reduction arrangements
(A) Certain employer contributions treated as compensation
Nothing in any paragraph of this subsection (other than
paragraph (2)) shall exclude from the term ''compensation'' any
amount described in subparagraph (A) or (B) of section
3121(v)(1).
(B) Treatment of certain nonqualified deferred compensation
The rules of section 3121(v)(2) which apply for purposes of
chapter 21 shall also apply for purposes of this chapter.
(9) Meals and lodging
The term ''compensation'' shall not include the value of meals
or lodging furnished by or on behalf of the employer if at the
time of such furnishing it is reasonable to believe that the
employee will be able to exclude such items from income under
section 119.
(10) Archer MSA contributions
The term ''compensation'' shall not include any payment made to
or for the benefit of an employee if at the time of such payment
it is reasonable to believe that the employee will be able to
exclude such payment from income under section 106(b).
(11) Health savings account contributions.--The term
compensation' shall not include any payment made to or for the
benefit of an employee if at the time of such payment it is
reasonable to believe that the employee will be able to exclude
such payment from income under section 106(d).
(12) Qualified stock options.--The term `compensation'
shall not include any remuneration on account of--
(A) a transfer of a share of stock to any
individual pursuant to an exercise of an incentive stock
option (as defined in section 422(b)) or under an
employee stock purchase plan (as defined in section 423(b)),
or
(B) any disposition by the individual of such stock.
(f) Company
For purposes of this chapter, the term ''company'' includes
corporations, associations, and joint-stock companies.
(g) Carrier
For purposes of this chapter, the term ''carrier'' means a rail
carrier subject to part A of subtitle IV of title 49.
(h) Tips constituting compensation, time deemed paid
For purposes of this chapter, tips which constitute compensation
for purposes of the taxes imposed by section 3201 shall be deemed
to be paid at the time a written statement including such tips is
furnished to the employer pursuant to section 6053(a) or (if no
statement including such tips is so furnished) at the time
received.
(i) Concurrent employment by 2 or more employers
For purposes of this chapter, if 2 or more related corporations
which are employers concurrently employ the same individual and
compensate such individual through a common paymaster which is 1 of
such corporations, each such corporation shall be considered to
have paid as remuneration to such individual only the amounts
actually disbursed by it to such individual and shall not be
considered to have paid as remuneration to such individual amounts
actually disbursed to such individual by another of such
corporations.
Sources
(Aug. 16, 1954, ch. 736, 68A Stat. 434; Aug. 31, 1954, ch. 1164,
pt. II, Sec. 206(b), 68 Stat. 1040; Pub. L. 89-212, Sec. 2(b),
Sept. 29, 1965, 79 Stat. 859; Pub. L. 90-624, Sec. 1, Oct. 22,
1968, 82 Stat. 1316; Pub. L. 94-92, title II, Sec. 203(b), Aug. 9,
1975, 89 Stat. 465; Pub. L. 94-93, title II, Sec. 204-206, Aug. 9,
1975, 89 Stat. 466; Pub. L. 94-455, title XIX, Sec. 1903(a)(10),
1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1808, 1834; Pub. L. 94-547,
Sec. 4(b), Oct. 18, 1976, 90 Stat. 2526; Pub. L. 95-473, Sec.
2(a)(2)(G), Oct. 17, 1978, 92 Stat. 1465; Pub. L. 97-34, title VII,
Sec. 741(d)(2), 743(a)-(c), Aug. 13, 1981, 95 Stat. 347, 348; Pub.
L. 97-123, Sec. 3(c), Dec. 29, 1981, 95 Stat. 1662; Pub. L. 98-76,
title II, Sec. 225(a)(1), (3), (b), (c)(1)(C), (6)-(8), Aug. 12,
1983, 97 Stat. 424, 425; Pub. L. 98-369, div. A, title V, Sec.
531(d)(2), July 18, 1984, 98 Stat. 884; Pub. L. 98-611, Sec. 1(f),
Oct. 31, 1984, 98 Stat. 3178; Pub. L. 98-612, Sec. 1(c), Oct. 31,
1984, 98 Stat. 3181; Pub. L. 99-514, title I, Sec. 122(e)(2), title
XVIII, Sec. 1899A(41), Oct. 22, 1986, 100 Stat. 2112, 2960; Pub. L.
100-647, title I, Sec. 1001(d)(2)(C)(ii), 1011B(a)(22)(B), Nov. 10,
1988, 102 Stat. 3351, 3486; Pub. L. 101-140, title II, Sec.
203(a)(2), Nov. 8, 1989, 103 Stat. 830; Pub. L. 101-239, title X,
Sec. 10205(a), 10206(a), (b), 10207(a), (b), Dec. 19, 1989, 103
Stat. 2474-2476; Pub. L. 101-508, title XI, Sec. 11331(c),
11704(a)(19), Nov. 5, 1990, 104 Stat. 1388-468, 1388-519; Pub. L.
103-66, title XIII, Sec. 13207(c), Aug. 10, 1993, 107 Stat. 468;
Pub. L. 103-296, title III, Sec. 320(a)(1)(D), Aug. 15, 1994, 108
Stat. 1535; Pub. L. 104-88, title III, Sec. 304(d), Dec. 29, 1995,
109 Stat. 944; Pub. L. 104-191, title III, Sec. 301(c)(2)(A), Aug.
21, 1996, 110 Stat. 2049; Pub. L. 106-554, Sec. 1(a)(7) (title II,
Sec. 202(b)(5)), Dec. 21, 2000, 114 Stat. 2763, 2763A-629; Pub. L.
107-90, title II, Sec. 204(e)(3), (4), Dec. 21, 2001, 115 Stat.
893.)
References in Text
REFERENCES IN TEXT
The Railway Labor Act, referred to in subsecs. (a) and (c), is
act May 20, 1926, ch. 347, 44 Stat. 577, as amended, which is
classified principally to chapter 8 (Sec. 151 et seq.) of Title 45,
Railroads. For complete classification of this Act to the Code, see
section 151 of Title 45 and Tables.
Sections 1 and 6 of the Railroad Retirement Act of 1937, referred
to in subsecs. (b) and (d)(7), were classified to sections 228a and
228f of Title 45. The subject matter of sections 228a and 228f is
covered by sections 231 and 231o of Title 45.
Section 230 of the Social Security Act, referred to in subsec.
(e)(2)(B), is classified to section 430 of Title 42, The Public
Health and Welfare.
Section 3(a), (f)(3), (j) of the Railroad Retirement Act of 1974,
referred to in subsec. (e)(2)(B)(ii)(II), is classified to section
231b(a), (f)(3), (j) of Title 45, Railroads.
The Railroad Retirement Act of 1974, referred to in subsec.
(e)(4)(A)(ii), is act Aug. 29, 1935, ch. 812, as amended generally
by Pub. L. 93-445, title I, Sec. 101, Oct. 16, 1974, 88 Stat. 1305,
which is classified generally to subchapter IV (Sec. 231 et seq.)
of chapter 9 of Title 45. For further details and complete
classification of this Act to the Code, see Codification note set
out preceding section 231 of Title 45, section 231t of Title 45,
and Tables.
Section 101(a)(15) of the Immigration and Nationality Act,
referred to in subsec. (e)(1), is classified to section 1101(a)(15)
of Title 8, Aliens and Nationality.
Section 2(a) of the Railroad Unemployment Insurance Act, referred
to in subsec. (e)(4)(B), is classified to section 352(a) of Title
45, Railroads.
Miscellaneous
AMENDMENTS
2004 - Pub. L. 108-357, Sec 251(a)(2). Subsection (e) of section
3231 is amended by adding at the end the following new paragraph:
(12) Qualified stock options.--The term `compensation'
shall not include any remuneration on account of--
(A) a transfer of a share of stock to any
individual pursuant to an exercise of an incentive stock
option (as defined in section 422(b)) or under an
employee stock purchase plan (as defined in section
423(b)), or
(B) any disposition by the individual of such stock.
2004 - Pub. L. 108-357, Sec 251(a)(2). Subsection (e)(5) is amended
by inserting ``108(f)(4),'' after ``74(c),''
2003 - Subsec.1201(d)(2), Pub. L. 108-173, amended Sec.
3231((e) by adding (11) for Health Savings Accounts.
2001 - Subsec. (e)(2)(A)(iii)(II). Pub. L. 107-90, Sec.
204(e)(3), substituted ''3211(a)'' for ''3211(a)(1)''.
Subsec. (e)(2)(B)(ii)(I). Pub. L. 107-90, Sec. 204(e)(4),
substituted ''3211(b)'' for ''3211(a)(2)''.
Subsec. (e)(4)(A). Pub. L. 107-90, Sec. 204(e)(3), substituted
''3211(a)'' for ''3211(a)(1)''.
2000 - Subsec. (e)(10). Pub. L. 106-554 substituted ''Archer
MSA'' for ''Medical savings account'' in heading.
1996 - Subsec. (e)(10). Pub. L. 104-191 added par. (10).
1995 - Subsec. (a). Pub. L. 104-88, Sec. 304(d)(1), substituted
''Surface Transportation Board'' for ''Interstate Commerce
Commission''.
Subsec. (g). Pub. L. 104-88, Sec. 304(d)(2), substituted ''a rail
carrier subject to part A of subtitle IV'' for ''an express
carrier, sleeping car carrier, or rail carrier providing
transportation subject to subchapter I of chapter 105''.
1994 - Subsec. (e)(1). Pub. L. 103-296 substituted ''(J), (M), or
(Q)'' for ''(J), or (M)'' in two places.
1993 - Subsec. (e)(2)(A)(iii). Pub. L. 103-66, Sec. 13207(c)(1),
added cl. (iii).
Subsec. (e)(2)(B)(i). Pub. L. 103-66, Sec. 13207(c)(2), amended
heading and text of cl. (i) generally. Prior to amendment, text
read as follows:
''(I) In general. - Except as provided in subclause (II) of this
clause and in clause (ii), the term 'applicable base' means for any
calendar year the contribution and benefit base determined under
section 230 of the Social Security Act for such calendar year.
''(II) Hospital insurance taxes. - For purposes of applying so
much of the rate applicable under section 3201(a) or 3221(a) (as
the case may be) as does not exceed the rate of tax in effect under
section 3101(b), and for purposes of applying so much of the rate
of tax applicable under section 3211(a)(1) as does not exceed the
rate of tax in effect under section 1401(b), the term 'applicable
base' means for any calendar year the applicable contribution base
determined under section 3121(x)(2) for such calendar year.''
1990 - Subsec. (e)(2)(B)(i). Pub. L. 101-508, Sec. 11331(c),
amended cl. (i) generally. Prior to amendment, cl. (i) read as
follows: ''Except as provided in clause (ii), the term 'applicable
base' means for any calendar year the contribution and benefit base
determined under section 230 of the Social Security Act for such
calendar year.''
Subsec. (e)(8) to (10). Pub. L. 101-508, Sec. 11704(a)(19),
redesignated pars. (9) and (10) as (8) and (9), respectively.
1989 - Subsec. (e)(1). Pub. L. 101-239, Sec. 10207(b), inserted
at end ''Nothing in the regulations prescribed for purposes of
chapter 24 (relating to wage withholding) which provides an
exclusion from 'wages' as used in such chapter shall be construed
to require a similar exclusion from 'compensation' in regulations
prescribed for purposes of this chapter.''
Pub. L. 101-239, Sec. 10206(a), substituted ''(iii)'' for ''or
(iii)'' and inserted '', or (iv) any remuneration which would not
(if chapter 21 applied to such remuneration) be treated as wages
(as defined in section 3121(a)) by reason of section 3121(a)(5)''.
Pub. L. 101-239, Sec. 10205(a), inserted ''or death, except that
this clause does not apply to a payment for group-term life
insurance to the extent that such payment is includible in the
gross income of the employee'' before '', (ii) tips''.
Subsec. (e)(8). Pub. L. 101-140 amended subsec. (e) to read as if
amendments by Pub. L. 100-647, Sec. 1011B(a)(22)(B), had not been
enacted, see 1988 Amendment note below.
Subsec. (e)(9). Pub. L. 101-239, Sec. 10206(b), added par. (9).
Subsec. (e)(10). Pub. L. 101-239, Sec. 10207(a), added par. (10).
1988 - Subsec. (e)(1). Pub. L. 100-647, Sec. 1001(d)(2)(C)(ii),
substituted ''(F), (J), or (M)'' for ''(F) or (J)'' in two places.
Subsec. (e)(8). Pub. L. 100-647, Sec. 1011B(a)(22)(B), added par.
(8).
1986 - Subsec. (e)(5). Pub. L. 99-514, Sec. 122(e)(2), inserted
reference to section 74(c).
Subsec. (e)(6), (7). Pub. L. 99-514, Sec. 1899A(41), redesignated
par. (6), relating to amounts excludable under section 120, as (7).
1984 - Subsec. (e)(5). Pub. L. 98-369, Sec. 531(d)(2), added par.
(5).
Subsec. (e)(6). Pub. L. 98-611 added par. (6) relating to amounts
excludable under section 127.
Pub. L. 98-612 added par. (6) relating to amounts excludable
under section 120.
1983 - Subsec. (e)(1). Pub. L. 98-76, Sec. 225(a)(3), struck out
provisions that compensation which was paid in one calendar month
but which would be payable in a prior or subsequent taxable month
but for the fact prescribed date of payment would fall on a
Saturday, Sunday or legal holiday would be deemed to have been paid
in such prior or subsequent taxable month and that compensation
which was earned during the period for which the Secretary would
require a return of taxes under this chapter to be made and which
was payable during the calendar month following such period would
be deemed to have been paid during such period only.
Subsec. (e)(2). Pub. L. 98-76, Sec. 225(a)(1), amended par. (2)
generally, substituting provisions which exclude compensation in
excess of applicable base, which define ''applicable base'', and
which provide for the applicability of successor employer
provisions to this paragraph, for provisions that a payment made by
an employer to an individual through the employer's payroll would
be presumed, in the absence of evidence to the contrary, to be
compensation for service rendered by such individual as an employee
of the employer in the period with respect to which the payment was
made, that an employee receiving retroactive wage payments would be
deemed to be paid compensation in the period during which such
compensation was earned only upon a written request by such
employee, made within six months following the payment, and a
showing that such compensation was earned during a period other
than the period in which it was paid, that an employee would be
deemed to be paid ''for time lost'' the amount he was paid by an
employer with respect to an identifiable period of absence from the
active service of the employer, including absence on account of
personal injury, and the amount he was paid by the employer for
loss of earnings resulting from his displacement to a less
remunerative position or occupation, and that if a payment was made
by an employer with respect to a personal injury and included pay
for time lost, the total payment would be deemed to be paid for
time lost unless, at the time of payment, a part of such payment
was specifically apportioned to factors other than time lost, in
which event only such part of the payment as was not so apportioned
would be deemed to be paid for time lost.
Subsec. (e)(3). Pub. L. 98-76, Sec. 225(c)(1)(C), (6),
substituted ''taxes imposed by section 3201'' for ''tax imposed by
section 3201'', and ''such taxes'' for ''such tax''.
Subsec. (e)(4)(A). Pub. L. 98-76, Sec. 225(c)(7), substituted
''3201(a), 3211(a)(1), and 3221(a)'' for ''3201(b) and 3221(b) (and
so much of section 3211(a) as relates to the rates of the taxes
imposed by sections 3101 and 3111)''.
Subsec. (h). Pub. L. 98-76, Sec. 225(c)(8), substituted ''taxes
imposed by section 3201'' for ''tax imposed under section 3201'',
and struck out ''; and tips so deemed to be paid in any month shall
be deemed paid for services rendered in such month'' after ''time
received''.
Subsec. (i). Pub. L. 98-76, Sec. 225(b), added subsec. (i).
1981 - Subsec. (e)(1). Pub. L. 97-34, Sec. 743(a), inserted after
third sentence provision that ''Compensation which is paid in one
calendar month but which would be payable in a prior or subsequent
taxable month but for the fact that prescribed date of payment
would fall on a Saturday, Sunday or legal holiday shall be deemed
to have been paid in such prior or subsequent taxable month.''
Pub. L. 97-34, Sec. 741(d)(2), struck out cl. (iii) exclusion
from term ''compensation'' the voluntary payment by an employer,
without deduction from the remuneration of the employee, of the tax
imposed on such employee by section 3201, redesignated as cl. (iii)
provisions formerly designated (iv).
Subsec. (e)(2). Pub. L. 97-34, Sec. 743(b), (c), inserted first
sentence respecting presumption of a payment through the employer's
payroll as being compensation for services rendered as an employee
in the period with respect to which payment is made, and in second
sentence following ''an employee'' inserted ''receiving retroactive
wage payments''.
Subsec. (e)(4). Pub. L. 97-123 added par. (4).
1978 - Subsec. (g). Pub. L. 95-473 substituted ''express carrier,
sleeping car carrier, or rail carrier providing transportation
subject to subchapter I of chapter 105 of title 49'' for ''express
company, sleeping-car company, or carrier by railroad, subject to
part I of the Interstate Commerce Act (49 U.S.C., chapter 1)''.
1976 - Subsec. (a). Pub. L. 94-455, Sec. 1903(a)(10)(A),
1906(b)(13)(A), struck out ''44 Stat. 577;'' before ''45 U.S.C.,
chapter 8'' and ''or his delegate'' after ''Secretary'',
respectively.
Subsec. (b). Pub. L. 94-455, Sec. 1903(a)(10)(B), struck out in
provisions following par. (4) ''50 Stat. 312;'' before ''45 U.S.C.
228f''.
Subsec. (c). Pub. L. 94-455, Sec. 1903(a)(10)(C), struck out ''44
Stat. 577;'' before ''45 U.S.C. chapter 8''.
Subsec. (d)(7). Pub. L. 94-455, Sec. 1903(a)(10)(D), struck out
''50 Stat. 308;'' before ''45 U.S.C. 228a''.
Subsec. (e)(1). Pub. L. 94-547 provided that ''compensation'' not
include amount of any payment (including any amount paid by an
employer for insurance or annuities, or into a fund, to provide for
any such payment) made to, or on behalf of, an employee or any of
his dependents under a plan or system established by an employer
which makes provision for his employees generally (or for his
employees generally and their dependents) or for a class or classes
of his employees (or for a class or classes of his employees and
their dependents), on account of sickness or accident disability or
medical or hospitalization expenses in connection with sickness or
accident disability, or an amount paid specifically - either as an
advance, as reimbursement or allowance - for traveling or other
bona fide and necessary expenses incurred or reasonably expected to
be incurred in the business of the employer provided any such
payment is identified by the employer either by a separate payment
or by specifically indicating the separate amounts where both wages
and expense reimbursement or allowance are combined in a single
payment.
Pub. L. 94-455, Sec. 1906(b)(13)(A), struck out ''or his
delegate'' after ''Secretary''.
1975 - Subsec. (e)(1). Pub. L. 94-93, Sec. 204, substituted
''paid to an individual for services rendered as an employee to one
or more employers'' for ''earned by an individual for services
rendered as an employee to one or more employers, or as an employee
representative, including remuneration paid for time lost as an
employee, but remuneration paid for time lost shall be deemed
earned in the month in which such time is lost''.
Pub. L. 94-92 increased from $3 to $25 amount of compensation
earned in the service of a local lodge or division of a
railway-labor-organization employer to be disregarded with respect
to any calendar month in the determination of amount of taxes under
sections 3201 and 3221.
Subsec. (e)(2). Pub. L. 94-93, Sec. 205, 206, substituted
provision that an employee shall be deemed to be paid compensation
in the period during which such compensation is earned only upon a
written request by such employee, made within six months following
the payment, and a showing that such compensation was earned during
a period other than the period in which it was paid for provision
that a payment made by an employer to an individual through the
employer's payroll shall be presumed, in the absence of evidence to
the contrary, to be compensation for service rendered by such
individual as an employee of the employer in the period with
respect to which payment is made.
1968 - Subsec. (e)(1). Pub. L. 90-624 inserted provision
excluding remuneration for service performed by nonresident alien
individuals temporarily in the United States as participants in a
cultural exchange or training program.
1965 - Subsec. (e)(1). Pub. L. 89-212, Sec. 2(b)(1), inserted
''(except as is provided under paragraph (3))''.
Subsec. (e)(3). Pub. L. 89-212, Sec. 2(b)(2), added par. (3).
Subsec. (h). Pub. L. 89-212, Sec. 2(b)(3), added subsec. (h).
1954 - Subsec. (e)(1). Act Aug. 31, 1954, excluded from taxation
compensation, for service as a delegate to a national or
international convention of a railway labor organization, of any
person who has no other previous creditable service.
EFFECTIVE DATE OF 2001 AMENDMENT
Amendment by Pub. L. 107-90 applicable to calendar years
beginning after Dec. 31, 2001, see section 204(f) of Pub. L.
107-90, set out as an Effective and Termination Dates of 2001
Amendments note under section 24 of this title.
EFFECTIVE DATE OF 1996 AMENDMENT
Amendment by Pub. L. 104-191 applicable to taxable years
beginning after Dec. 31, 1996, see section 301(j) of Pub. L.
104-191, set out as a note under section 62 of this title.
EFFECTIVE DATE OF 1995 AMENDMENT
Amendment by Pub. L. 104-88 effective Jan. 1, 1996, see section 2
of Pub. L. 104-88, set out as an Effective Date note under section
701 of Title 49, Transportation.
EFFECTIVE DATE OF 1994 AMENDMENT
Amendment by Pub. L. 103-296 effective with calendar quarter
following Aug. 15, 1994, see section 320(c) of Pub. L. 103-296, set
out as a note under section 871 of this title.
EFFECTIVE DATE OF 1993 AMENDMENT
Amendment by Pub. L. 103-66 applicable to 1994 and later calendar
years, see section 13207(e) of Pub. L. 103-66, set out as a note
under section 1402 of this title.
EFFECTIVE DATE OF 1990 AMENDMENT
Amendment by section 11331(c) of Pub. L. 101-508 applicable to
1991 and later calendar years, see section 11331(e) of Pub. L.
101-508, set out as a note under section 1402 of this title.
EFFECTIVE DATE OF 1989 AMENDMENTS
Section 10205(b) of Pub. L. 101-239 provided that:
''(1) In general. - Except as provided in paragraph (2), the
amendment made by subsection (a) (amending this section) shall
apply to -
''(A) group-term life insurance coverage in effect after
December 31, 1989, and
''(B) remuneration paid before January 1, 1990, which the
employer treated as compensation when paid.
''(2) Exception. - The amendment made by subsection (a) shall not
apply with respect to payments by the employer (or a successor of
such employer) for group-term life insurance for such employer's
former employees who separated from employment with the employer on
or before December 31, 1989, to the extent that such payments are
not for coverage for any such employee for any period for which
such employee is employed by such employer (or a successor of such
employer) after the date of such separation.
''(3) Benefit determinations to take into account remuneration on
which tax paid. - The term 'compensation' as defined in section
1(h) of the Railroad Retirement Act of 1974 (45 U.S.C. 231(h))
includes any remuneration which is included in the term
'compensation' as defined in section 3231(e)(1) of the Internal
Revenue Code of 1986 by reason of the amendment made by subsection
(a).''
Section 10206(c) of Pub. L. 101-239 provided that:
''(1) Subsection (a). - The amendment made by subsection (a)
(amending this section) shall apply to remuneration paid after
December 31, 1989.
''(2) Subsection (b). - Except as otherwise provided in this
subsection -
''(A) In general. - The amendment made by subsection (b)
(amending this section) shall apply to -
''(i) remuneration paid after December 31, 1989, and
''(ii) remuneration paid before January 1, 1990, which the
employer treated as compensation when paid.
''(B) Benefit determinations to take into account remuneration
on which tax paid. - The term 'compensation' as defined in
section 1(h) of the Railroad Retirement Act of 1974 (45 U.S.C.
231(h)) includes any remuneration which is included in the term
'compensation' as defined in section 3231(e)(1) of the Internal
Revenue Code of 1986 by reason of the amendment made by
subsection (b).
''(3) Special rule for certain payments. - For purposes of
applying the amendment made by subsection (b) to remuneration paid
after December 31, 1989, which would have been taken into account
before January 1, 1990, if such amendments had applied to periods
before January 1, 1990, such remuneration shall be taken into
account when paid (or, at the election of the payor, at the time
which would be appropriate if such amendments had applied).
''(4) Exception for certain 401(k) contributions. - The amendment
made by subsection (b) shall not apply to employer contributions
made during 1990 and attributable to services performed during 1989
under a qualified cash or deferred arrangement (as defined in
section 401(k) of the Internal Revenue Code of 1986) if, under the
terms of the arrangement as in effect on June 15, 1989 -
''(A) the employee makes an election with respect to such
contributions before January 1, 1990, and
''(B) the employer identifies the amount of such contribution
before January 1, 1990.
''(5) Special rule with respect to nonqualified deferred
compensation plans. - In the case of an agreement in existence on
June 15, 1989, between a nonqualified deferred compensation plan
(as defined in section 3121(v)(2)(C) of such Code) and an
individual, the amendment made by subsection (b) shall apply with
respect to services performed by the individual after December 31,
1989. The preceding sentence shall not apply in the case of a plan
to which section 457(a) of such Code applies.''
Section 10207(c) of Pub. L. 101-239 provided that: ''The
amendments made by this section (amending this section) shall apply
to remuneration paid after December 31, 1989.''
Amendment by Pub. L. 101-140 effective as if included in section
1151 of Pub. L. 99-514, see section 203(c) of Pub. L. 101-140, set
out as a note under section 79 of this title.
EFFECTIVE DATE OF 1988 AMENDMENT
Amendment by section 1001(d)(2)(C)(ii) of Pub. L. 100-647
effective, except as otherwise provided, as if included in the
provision of the Tax Reform Act of 1986, Pub. L. 99-514, to which
such amendment relates, see section 1019(a) of Pub. L. 100-647, set
out as a note under section 1 of this title.
Amendment by section 1011B(a)(22)(B) of Pub. L. 100-647 not
applicable to any individual who separated from service with the
employer before Jan. 1, 1989, see section 1011B(a)(22)(F) of Pub.
L. 100-647, set out as a note under section 3121 of this title.
EFFECTIVE DATE OF 1986 AMENDMENT
Amendment by section 122(e)(2) of Pub. L. 99-514 applicable to
prizes and awards granted after Dec. 31, 1986, see section 151(c)
of Pub. L. 99-514, set out as a note under section 1 of this title.
EFFECTIVE DATE OF 1984 AMENDMENTS
Section 1(d)(3) of Pub. L. 98-612 provided that: ''The amendment
made by subsection (c) (amending this section) shall apply to
remuneration paid after December 31, 1984.''
Amendment by Pub. L. 98-611 applicable to remuneration paid after
Dec. 31, 1984, see section 1(g)(3) of Pub. L. 98-611, set out as a
note under section 127 of this title.
Amendment by Pub. L. 98-369 effective Jan. 1, 1985, see section
531(h) of Pub. L. 98-369, set out as an Effective Date note under
section 132 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 1981 AMENDMENTS
Amendment by Pub. L. 97-123 applicable to remuneration paid after
Dec. 31, 1981, except as otherwise provided, see section 3(g) of
Pub. L. 97-123, set out as a note under section 3121 of this title.
Amendment by section 741(d)(2) of Pub. L. 97-34 applicable to
compensation paid for services rendered after Sept. 30, 1981, see
section 741(e) of Pub. L. 97-34, set out as a note under section
3201 of this title.
Section 743(d) of Pub. L. 97-34 provided that: ''The amendments
made by this section (amending this section) shall apply for
taxable years beginning after December 31, 1981.''
EFFECTIVE DATE OF 1976 AMENDMENT
Section 4(c)(2) of Pub. L. 94-547 provided that: ''The amendments
made by subsection (b) of this section (amending this section)
shall apply with respect to taxable years ending after December 31,
1953: Provided, however, That any taxes paid under the Railroad
Retirement Tax Act (this chapter) prior to the date on which this
Act is enacted (Oct. 18, 1976) shall not be affected or adjusted by
reason of the amendments made by such subsection (b) except to the
extent that the applicable period of limitation for the assessment
of tax and the filing of a claim for credit or refund has not
expired prior to the date on which this Act is enacted. If the
applicable period of limitation for the filing of a claim for
credit or refund would expire within the six-month period following
the date on which this Act is enacted, the applicable period for
the filing of such a claim for credit or refund shall be extended
to include such six-month period.''
EFFECTIVE DATE OF 1975 AMENDMENTS
Amendment by sections 204 and 205 of Pub. L. 94-93 applicable for
taxable years ending on or after Aug. 9, 1975, and for taxable
years ending before Aug. 9, 1975, as to which the period for
assessment and collection of tax or the filing of a claim for
credit or refund has not expired on Aug. 9, 1975, and amendment by
section 206 of Pub. L. 94-93 applicable for taxable years beginning
on or after Aug. 9, 1975: Provided, however, That with respect to
payment made prior to Aug. 9, 1975, the employee may file a written
request under section 206 of Pub. L. 94-93 within six months after
Aug. 9, 1975, see section 207 of Pub. L. 94-93, set out as a note
under section 3201 of this title.
Amendment by Pub. L. 94-92 effective Jan. 1, 1975, and applicable
only with respect to compensation paid for services rendered on or
after Jan. 1, 1975, see section 203(c) of Pub. L. 94-92, set out as
a note under section 1402 of this title.
EFFECTIVE DATE OF 1968 AMENDMENT
Section 4(a) of Pub. L. 90-624, as amended by Pub. L. 99-514,
Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
''(1) The amendments made by the first two sections of this Act
(amending this section and section 228a of Title 45, Railroads)
shall apply with respect to service performed after December 31,
1961.
''(2) Notwithstanding the expiration before the date of the
enactment of this Act (Oct. 22, 1968) or within 6 months after such
date of the period for filing claim for credit or refund, claim for
credit or refund of any overpayment of any tax imposed by chapter
22 of the Internal Revenue Code of 1986 (formerly I.R.C. 1954, 26
U.S.C. 3201 et seq.) attributable to the amendment made by the
first section of this Act (amending this section) may be filed at
any time within one year after such date of enactment.
''(3) Any credit or refund of an overpayment of the tax imposed
by section 3201 or 3211 of the Internal Revenue Code of 1986 which
is attributable to the amendment made by the first section of this
Act shall be appropriately adjusted for any lump-sum payment which
has been made under section 5(f)(2) of the Railroad Retirement Act
of 1937 (section 228e(f)(2) of Title 45) before the date of the
allowance of such credit or the making of such refund.''
EFFECTIVE DATE OF 1965 AMENDMENT
Amendment by Pub. L. 89-212 effective only with respect to tips
received after 1965, see section 6 of Pub. L. 89-212, 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.
REGULATIONS
For provisions requiring that the regulations prescribed under
subsec. (e)(4) of this section prescribe procedures under which, if
(with respect to any employee) the third party promptly (A)
withholds the employee portion of the taxes involved, (B) deposits
such portion under section 6302 of such Code, and (C) notifies the
employer of the amount of the wages or compensation involved, the
employer (and not the third party) shall be liable for the employer
portion of the taxes involved and for meeting the requirements of
section 6051 of this title (relating to receipts for employees)
with respect to the wages or compensation involved, see section
3(d) of Pub. L. 97-123, set out as a note under section 3121 of
this title.
EXCLUSION FROM WAGES AND COMPENSATION OF REFUNDS REQUIRED FROM
EMPLOYERS TO COMPENSATE FOR DUPLICATION OF MEDICARE BENEFITS BY
HEALTH CARE BENEFITS PROVIDED BY EMPLOYERS
For purposes of this chapter, the term ''compensation'' shall not
include the amount of any refund required under section 421 of Pub.
L. 100-360, 42 U.S.C. 1395b note, see section 10202 of Pub. L.
101-239, set out as a note under section 1395b of Title 42, The
Public Health and Welfare.
PAYMENTS UNDER STATE TEMPORARY DISABILITY LAW TO BE TREATED AS
REMUNERATION FOR SERVICE
For purposes of applying subsec. (e) of this section with respect
to subsec. (e)(4) of this section, payments under a State temporary
disability law to be treated as remuneration for service, see
section 3(e) of Pub. L. 97-123, set out as a note under section
3121 of this title.
References
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 1402, 3121, 3201, 3202,
3211, 3212, 3221, 6053, 6413, 6652 of this title; title 42 sections
410, 411; title 45 section 351.
