26 U.S.C. § 1401 — Rate of tax

Page 2500 TITLE 26—INTERNAL REVENUE CODE § 1401 2 So in original. Probably should be ‘‘subsection (d)(1),’’. (A) rules for the certification of qualified opportunity funds for the purposes of this section, (B) rules to ensure a qualified opportunity fund has a reasonable period of time to rein- vest the return of capital from investments in qualified opportunity zone stock and qualified opportunity zone partnership inter- ests, and to reinvest proceeds received from the sale or disposition of qualified oppor- tunity zone property, and (C) rules to prevent abuse. (f) Failure of qualified opportunity fund to main- tain investment standard (1) In general If a qualified opportunity fund fails to meet the 90-percent requirement of subsection (c)(1),2 the qualified opportunity fund shall pay a penalty for each month it fails to meet the requirement in an amount equal to the product of— (A) the excess of— (i) the amount equal to 90 percent of its aggregate assets, over (ii) the aggregate amount of qualified op- portunity zone property held by the fund, multiplied by (B) the underpayment rate established under section 6621(a)(2) for such month. (2) Special rule for partnerships In the case that the qualified opportunity fund is a partnership, the penalty imposed by paragraph (1) shall be taken into account pro- portionately as part of the distributive share of each partner of the partnership. (3) Reasonable cause exception No penalty shall be imposed under this sub- section with respect to any failure if it is shown that such failure is due to reasonable cause. (Added Pub. L. 115–97, title I, § 13823(a), Dec. 22, 2017, 131 Stat. 2184.) Statutory Notes and Related Subsidiaries EFFECTIVE DATE Section effective on Dec. 22, 2017, see section 13823(d) of Pub. L. 115–97, set out as an Effective Date of 2017 Amendment note under section 1016 of this title. CHAPTER 2—TAX ON SELF-EMPLOYMENT INCOME Sec. 1401. Rate of tax. 1402. Definitions. 1403. Miscellaneous provisions. § 1401. Rate of tax (a) Old-age, survivors, and disability insurance In addition to other taxes, there shall be im- posed for each taxable year, on the self-employ- ment income of every individual, a tax equal to 12.4 percent of the amount of the self-employ- ment income for such taxable year. (b) Hospital insurance (1) In general In addition to the tax imposed by the pre- ceding subsection, there shall be imposed for each taxable year, on the self-employment in- come of every individual, a tax equal to 2.9 percent of the amount of the self-employment income for such taxable year. (2) Additional tax (A) In general In addition to the tax imposed by para- graph (1) and the preceding subsection, there is hereby imposed on every taxpayer (other than a corporation, estate, or trust) for each taxable year beginning after December 31, 2012, a tax equal to 0.9 percent of the self- employment income for such taxable year which is in excess of— (i) in the case of a joint return, $250,000, (ii) in the case of a married taxpayer (as defined in section 7703) filing a separate re- turn, 1⁄2 of the dollar amount determined under clause (i), and (iii) in any other case, $200,000. (B) Coordination with FICA The amounts under clause (i), (ii), or (iii) (whichever is applicable) of subparagraph (A) shall be reduced (but not below zero) by the amount of wages taken into account in de- termining the tax imposed under section 3121(b)(2) with respect to the taxpayer. (c) Relief from taxes in cases covered by certain international agreements During any period in which there is in effect an agreement entered into pursuant to section 233 of the Social Security Act with any foreign country, the self-employment income of an indi- vidual shall be exempt from the taxes imposed by this section to the extent that such self-em- ployment income is subject under such agree- ment exclusively to the laws applicable to the social security system of such foreign country. (Aug. 16, 1954, ch. 736, 68A Stat. 353; Sept. 1, 1954, ch. 1206, title II, § 208(a), 68 Stat. 1093; Aug. 1, 1956, ch. 836, title II, § 202(a), 70 Stat. 845; Pub. L. 85–840, title IV, § 401(a), Aug. 28, 1958, 72 Stat. 1041; Pub. L. 87–64, title II, § 201(a), June 30, 1961, 75 Stat. 140; Pub. L. 89–97, title I, § 111(c)(4), title III, § 321(a), July 30, 1965, 79 Stat. 342, 394; Pub. L. 90–248, title I, § 109(a)(1), (b)(1), Jan. 2, 1968, 81 Stat. 835, 836; Pub. L. 92–336, title II, § 204 (a)(1), (b)(1), July 1, 1972, 86 Stat. 420, 421; Pub. L. 92–603, title I, § 135(a)(1), (b)(1), Oct. 30, 1972, 86 Stat. 1362, 1363; Pub. L. 93–233, § 6(b)(1), Dec. 31, 1973, 87 Stat. 955; Pub. L. 94–455, title XIX, § 1901(a)(154), Oct. 4, 1976, 90 Stat. 1789; Pub. L. 95–216, title I, § 101(a)(3), (b)(3), title III, § 317(b)(1), Dec. 20, 1977, 91 Stat. 1511, 1512, 1539; Pub. L. 98–21, title I, § 124(a), (b), Apr. 20, 1983, 97 Stat. 89; Pub. L. 101–508, title XI, § 11801(a)(36), (c)(16), Nov. 5, 1990, 104 Stat. 1388–521, 1388–527; Pub. L. 108–203, title IV, § 415, Mar. 2, 2004, 118 Stat. 530; Pub. L. 111–148, title IX, § 9015(b)(1), title X, § 10906(b), Mar. 23, 2010, 124 Stat. 871, 1020; Pub. L. 111–152, title I, § 1402(b)(1)(B), Mar. 30, 2010, 124 Stat. 1063; Pub. L. 113–295, div. A, title II, § 221(a)(89), (90), Dec. 19, 2014, 128 Stat. 4050.) Editorial Notes REFERENCES IN TEXT Section 233 of the Social Security Act, referred to in subsec. (c), is classified to section 433 of Title 42, The Public Health and Welfare. Page 2501 TITLE 26—INTERNAL REVENUE CODE § 1401 AMENDMENTS 2014—Subsec. (a). Pub. L. 113–295, § 221(a)(89), sub- stituted ‘‘12.4 percent of the amount of the self-employ- ment income for such taxable year.’’ for ‘‘the following percent of the amount of the self-employment income for such taxable year: ‘‘In the case of a taxable year Beginning after: And before: Percent: December 31, 1983 ...... January 1, 1988 ...... 11.40 December 31, 1987 ...... January 1, 1990 ...... 12.12 December 31, 1989 ........................................ 12.40’’. Subsec. (b)(1). Pub. L. 113–295, § 221(a)(90), substituted ‘‘2.9 percent of the amount of the self-employment in- come for such taxable year.’’ for ‘‘the following percent of the amount of the self-employment income for such taxable year: ‘‘In the case of a taxable year Beginning after: And before: Percent: December 31, 1983 ...... January 1, 1985 ...... 2.60 December 31, 1984 ...... January 1, 1986 ...... 2.70 December 31, 1985 ........................................ 2.90.’’ 2010—Subsec. (b). Pub. L. 111–148, § 9015(b)(1), des- ignated existing provisions as par. (1), inserted heading, and added par. (2). Subsec. (b)(2)(A). Pub. L. 111–152, § 1402(b)(1)(B)(i), added cl. (ii) and redesignated former cl. (ii) as (iii). Pub. L. 111–148, § 10906(b), substituted ‘‘0.9 percent’’ for ‘‘0.5 percent’’ in introductory provisions. Subsec. (b)(2)(B). Pub. L. 111–152, § 1402(b)(1)(B)(ii), substituted ‘‘under clause (i), (ii), or (iii) (whichever is applicable)’’ for ‘‘under clauses (i) and (ii)’’. 2004—Subsec. (c). Pub. L. 108–203 substituted ‘‘exclu- sively to the laws applicable to’’ for ‘‘to taxes or con- tributions for similar purposes under’’. 1990—Subsecs. (c), (d). Pub. L. 101–508 redesignated subsec. (d) as (c) and struck out former subsec. (c) which provided a credit against self-employment taxes imposed by this section. 1983—Subsec. (a). Pub. L. 98–21, § 124(a), amended sub- sec. (a) generally, substituting a table for former pars. (1) to (7) which had imposed a tax on the self-employ- ment income of every individual (1) in the case of any taxable year beginning before Jan. 1, 1978, to be equal to 7.0 percent of the amount of the self-employment in- come for such taxable year; (2) in the case of any tax- able year beginning after Dec. 31, 1977, and before Jan. 1, 1979, to be equal to 7.10 percent of the amount of the self-employment income for such taxable year; (3) in the case of any taxable year beginning after Dec. 31, 1978, and before Jan. 1, 1981, to be equal to 7.05 percent of the amount of the self-employment income for such taxable year; (4) in the case of any taxable year begin- ning after Dec. 31, 1980, and before Jan. 1, 1982, to be equal to 8.00 percent of the amount of the self-employ- ment income for such taxable year; (5) in the case of any taxable year beginning after Dec. 31, 1981, and be- fore Jan. 1, 1985, to be equal to 8.05 percent of the amount of the self-employment income for such tax- able year; (6) in the case of any taxable year beginning after Dec. 31, 1984, and before Jan. 1, 1990, to be equal to 8.55 percent of the amount of the self-employment income for such taxable year; and (7) in the case of any taxable year beginning after Dec. 31, 1989, to be equal to 9.30 percent of the amount of the self-employment income for such taxable year. Subsec. (b). Pub. L. 98–21, § 124(a), amended subsec. (b) generally, substituting a table for former pars. (1) to (6) which had imposed a tax on the self-employment in- come of every individual (1) in the case of any taxable year beginning after Dec. 31, 1973, and before Jan. 1, 1978, to be equal to 0.90 percent of the amount of the self-employment income for such taxable year; (2) in the case of any taxable year beginning after Dec. 31, 1977, and before Jan. 1, 1979, to be equal to 1.00 percent of the amount of the self-employment income for such taxable year; (3) in the case of any taxable year begin- ning after Dec. 31, 1978, and before Jan. 1, 1981, to be equal to 1.05 percent of the amount of the self-employ- ment income for such taxable year; (4) in the case of any taxable year beginning after Dec. 31, 1980, and be- fore Jan. 1, 1985, to be equal to 1.30 percent of the amount of the self-employment income for such tax- able year; (5) in the case of any taxable year beginning after Dec. 31, 1984, and before Jan. 1, 1986, to be equal to 1.35 percent of the amount of the self-employment income for such taxable year; and (6) in the case of any taxable year beginning after Dec. 31, 1985, to be equal to 1.45 percent of the amount of the self-employment income for such taxable year. Subsecs. (c), (d). Pub. L. 98–21, § 124(b), added subsec. (c) and redesignated former subsec. (c) as (d). 1977—Subsec. (a). Pub. L. 95–216, § 101(a)(3), sub- stituted provisions calling for a graduated increase in the tax from 7.0 percent for taxable years beginning be- fore Jan. 1, 1978, to 9.30 percent for taxable years begin- ning after Dec. 31, 1989, for provisions under which the tax had been set at 7.0 percent without any increase in the rate in future years. Subsec. (b). Pub. L. 95–216, § 101(b)(3), substituted ‘‘after December 31, 1977, and before January 1, 1979’’ for ‘‘after December 31, 1977, and before January 1, 1981’’ and ‘‘1.00 percent’’ for ‘‘1.10 percent’’ in par. (2), substituted ‘‘after December 31, 1978, and before Janu- ary 1, 1981’’ for ‘‘after December 31, 1980, and before January 1, 1986’’ and ‘‘1.05 percent’’ for ‘‘1.35 percent’’ in par. (3), substituted ‘‘after December 31, 1980, and be- fore January 1, 1985’’ for ‘‘after December 31, 1985’’ and ‘‘1.30 percent’’ for ‘‘1.50 percent’’ in par. (4), and added pars. (5) and (6). Subsec. (c). Pub. L. 95–216, § 317(b)(1), added subsec. (c). 1976—Subsec. (a). Pub. L. 94–455, § 1901(a)(154)(A), among other changes, substituted provisions relating to a uniform tax rate of 7 percent on self-employment income of every individual for provisions relating to varied tax rate of 5.8 percent of the amount of self-em- ployment income for any taxable year beginning after Dec. 31, 1967, and before Jan. 1, 1969, 6.3 percent for any taxable year beginning after Dec. 31, 1968, and before Jan. 1, 1971, 6.9 percent for any taxable year beginning after Dec. 31, 1970, and before Jan. 1, 1973, and 7.0 per- cent for any taxable year beginning after Dec. 31, 1972. Subsec. (b). Pub. L. 94–455, § 1901(a)(154)(B), redesig- nated pars. (3) to (6) as (1) to (4). Former pars. (1) and (2), which related to a 6 percent tax rate on self-em- ployment income for any taxable year beginning after Dec. 31, 1967, and before Jan. 1, 1974, and 1 percent tax rate on self-employment income for any taxable year beginning after Dec. 31, 1972, and before Jan. 1, 1974, were struck out. 1973—Subsec. (b)(2). Pub. L. 93–233 substituted ‘‘1974’’ for ‘‘1978’’. Subsec. (b)(3). Pub. L. 93–233 substituted ‘‘1973’’ and ‘‘1978’’ for ‘‘1977’’ and ‘‘1981’’ and decreased the rate of tax from 1.25 percent to 0.90 percent. Subsec. (b)(4). Pub. L. 93–233 substituted ‘‘1977’’ and ‘‘1981’’ for ‘‘1980’’ and ‘‘1986’’ and decreased the rate of tax from 1.35 percent to 1.10 percent. Subsec. (b)(5). Pub. L. 93–233 substituted ‘‘beginning after December 31, 1980, and before January 1, 1986’’ for ‘‘beginning after December 31, 1985’’ and decreased the rate of tax from 1.45 percent to 1.35 percent. Subsec. (b)(6). Pub. L. 93–233 added par. (6). 1972—Subsec. (a)(3). Pub. L. 92–603, § 135(a)(1)(A), sub- stituted ‘‘1973’’ for ‘‘1978’’. Subsec. (a)(4). Pub. L. 92–603, § 135(a)(1)(B), substituted provisions that in the case of taxable years beginning after Dec. 31, 1972, the tax shall be equal to 7.0 percent of the amount of the self-employment income for such taxable year, for provisions that in the case of taxable years beginning after Dec. 31, 1977, and before Jan. 1, 2011, the tax shall be equal to 6.7 percent of the amount of the self-employment income for such taxable year. Subsec. (a)(5). Pub. L. 92–603, § 135(a)(1)(B), struck out par. (5) which provided that in the case of taxable years beginning after Dec. 31, 2010, the tax shall be equal to Page 2502 TITLE 26—INTERNAL REVENUE CODE § 1401 7.0 percent of the amount of the self-employment in- come for the taxable year. Subsec. (a)(3) to (5). Pub. L. 92–336, § 204(a)(1), sub- stituted ‘‘January 1, 1978’’ for ‘‘January 1, 1973’’ and struck out ‘‘and’’ after ‘‘such taxable year’’ in par. (3), extended from any taxable year beginning after Decem- ber 31, 1972 to any taxable year beginning after Decem- ber 31, 1977, and before January 1, 2011, and decreased from 7.0 percent to 6.7 percent the provisions relating to the tax on self-employment income in par. (4), and added par. (5). Subsec. (b)(2). Pub. L. 92–603, § 135(b)(1), increased the rate of tax from 0.9 percent to 1.0 percent. Subsec. (b)(3). Pub. L. 92–603, § 135(b)(1), substituted ‘‘1981’’ for ‘‘1986’’ and ‘‘1.25’’ for ‘‘1.0’’. Subsec. (b)(4). Pub. L. 92–603, § 135(b)(1), substituted ‘‘1980’’ for ‘‘1985’’, ‘‘1986’’ for ‘‘1993’’, and ‘‘1.35’’ for ‘‘1.1’’. Subsec. (b)(5). Pub. L. 92–603, § 135(b)(1), substituted ‘‘1985’’ for ‘‘1992’’ and ‘‘1.45’’ for ‘‘1.2’’. Subsec. (b)(2) to (5). Pub. L. 92–336, § 204(b)(1), sub- stituted ‘‘1978’’ for ‘‘1976’’ and ‘‘0.9’’ for ‘‘0.65’’ in subsec. (b)(2), ‘‘1977’’ for ‘‘1975’’, ‘‘1986’’ for ‘‘1980’’ and ‘‘1.0’’ for ‘‘0.70’’ in par. (3), ‘‘1985’’ for ‘‘1979’’, ‘‘1993’’ for ‘‘1987’’ and ‘‘1.1’’ for ‘‘0.80’’ in par. (4), and ‘‘1992’’ for ‘‘1986’’ and ‘‘1.2’’ for ‘‘0.90’’ in par. (5). 1968—Subsecs. (a)(1) to (4). Pub. L. 90–248, § 109(a)(1), substituted ‘‘December 31, 1967’’ and ‘‘January 1, 1969’’ for ‘‘December 31, 1965’’ and ‘‘January 1, 1967’’ in par. (1), ‘‘December 31, 1968’’, ‘‘January 1, 1971’’ and ‘‘6.3’’ for ‘‘December 31, 1966’’, ‘‘January 1, 1969’’, and ‘‘5.9’’ in par. (2), and ‘‘December 31, 1970’’ and ‘‘6.9’’ for ‘‘Decem- ber 31, 1968’’ and ‘‘6.6’’ in par. (3), and reenacted par. (4) without change. Subsec. (b)(1) to (5). Pub. L. 90–248, § 109(b)(1), struck out par. (1) provision for rate of 0.35 percent of amount of self-employment income for any taxable year begin- ning after Dec. 31, 1965, and before Jan. 1, 1967, redesig- nated former pars. (2) to (6) as (1) to (5), substituted ‘‘December 31, 1967’’ for ‘‘December 31, 1966’’ in such par. (1) and increased the rate by 0.10 percent to 0.60, 0.65, 0.70, 0.80, and 0.90 in pars. (1) to (5), respectively. 1965—Pub. L. 89–97, § 321(a), divided the total tax im- posed under the entire section for each taxable year upon the self-employment income for such taxable year into two separate taxes by dividing the section into subsecs. (a) and (b), with subsec. (a) reflecting the tax for old-age, survivors, and disability insurance and sub- sec. (b) reflecting a separate tax for hospital insurance; reduced from 6.2 percent to 6.15 percent the rate of total tax imposed under the entire section for taxable years beginning after Dec. 31, 1965, and before Jan. 1, 1967 (resulting from a tax of 5.8 percent under subsec. (a) and 0.35 percent under subsec. (b)), increased from 6.2 percent to 6.4 percent the rate for taxable years be- ginning after Dec. 31, 1966, and before Jan. 1, 1968 (re- sulting from a tax of 5.9 percent under subsec. (a) and 0.50 percent under subsec. (b)), reduced from 6.9 percent to 6.4 percent the rate for taxable years beginning after Dec. 31, 1967, and before Jan. 1, 1969 (resulting from a tax of 5.9 percent under subsec. (a) and 0.50 percent under subsec. (b)), increased from 6.9 percent to 7.1 per- cent the rate for taxable years beginning after Dec. 31, 1968, and before Jan. 1, 1973 (resulting from a tax of 6.6 percent under subsec. (a) and 0.50 percent under subsec. (b)), from 6.9 percent to 7.55 percent the rate for taxable years beginning after Dec. 31, 1972, and before Jan. 1, 1976 (resulting from a tax of 7.0 percent under subsec. (a) and 0.55 percent under subsec. (b)), from 6.9 percent to 7.60 percent the rate for taxable years beginning after Dec. 31, 1975, and before Jan. 1, 1980 (resulting from a tax of 7.0 percent under subsec. (a) and 0.60 per- cent under subsec. (b)), from 6.9 percent to 7.70 percent the rate for taxable years beginning after Dec. 31, 1979, and before Jan. 1, 1987 (resulting from a tax of 7.0 per- cent under subsec. (a) and 0.70 percent under subsec. (b)), and from 6.9 percent to 7.80 percent the rate for taxable years beginning after Dec. 31, 1986 (resulting from a tax of 7.0 percent under subsec. (a) and 0.80 per- cent under subsec. (b)), and provided that the exclusion of employee representatives by section 1402(c)(3) should not apply for purposes of the tax imposed by subsec. (b). Subsec. (b). Pub. L. 89–97, § 111(c)(4), struck out provi- sion that for purposes of the tax imposed by this sub- section, the exclusion of employee representatives by section 1402(c)(3) shall not apply. 1961—Pub. L. 87–64 increased the rate of tax for tax- able years beginning after Dec. 31, 1961, and before Jan. 1, 1963, from 41⁄2 to 4.7 percent, taxable years beginning after Dec. 31, 1962, and before Jan. 1, 1966, from 51⁄4 to 5.4 percent, taxable years beginning after Dec. 31, 1965, and before Jan. 1, 1968, from 6 to 6.2 percent, taxable year beginning after Dec. 31, 1967, and before Jan. 1, 1969, from 6 to 6.9 percent, and taxable years beginning after Dec. 31, 1968, from 63⁄4 to 6.9 percent. 1958—Pub. L. 85–840 increased the rate of tax by sub- stituting provisions imposing a tax of 33⁄4 percent for taxable years beginning after Dec. 31, 1958, 41⁄2 percent for years beginning after Dec. 31, 1959, 51⁄4 percent for years beginning after Dec. 31, 1962, 6 percent for years beginning after Dec. 31, 1965, and 63⁄4 percent for years beginning after Dec. 31, 1968, for provisions which im- posed a tax of 33⁄8 percent for taxable years beginning after Dec. 31, 1956, 41⁄8 percent for years beginning after Dec. 31, 1959, 47⁄8 percent for years beginning after Dec. 31, 1964, 55⁄8 percent for years beginning after Dec. 31, 1969, and 63⁄8 percent for years beginning after Dec. 31, 1974. 1956—Act Aug. 1, 1956, increased the rate of tax for all taxable years beginning after Dec. 31, 1956, by three- eighths percent. 1954—Act Sept. 1, 1954, increased the 47⁄8 percent rate of tax on self-employment income for taxable years be- ginning after Dec. 31, 1969, to 51⁄4 percent for taxable years beginning after Dec. 31, 1969, and before Jan. 1, 1975, and 6 percent for taxable years beginning after Dec. 31, 1974. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2014 AMENDMENT Amendment by Pub. L. 113–295 effective Dec. 19, 2014, subject to a savings provision, see section 221(b) of Pub. L. 113–295, set out as a note under section 1 of this title. EFFECTIVE DATE OF 2010 AMENDMENT Pub. L. 111–152, title I, § 1402(b)(3), Mar. 30, 2010, 124 Stat. 1063, provided that: ‘‘The amendments made by this subsection [amending this section and sections 3101 and 6654 of this title] shall apply with respect to remu- neration received, and taxable years beginning after, December 31, 2012.’’ Amendment by section 9015(b)(1) of Pub. L. 111–148 ap- plicable with respect to remuneration received, and taxable years beginning, after Dec. 31, 2012, see section 9015(c) of Pub. L. 111–148, set out as a note under section 164 of this title. Pub. L. 111–148, title X, § 10906(c), Mar. 23, 2010, 124 Stat. 1020, provided that: ‘‘The amendments made by this section [amending this section and section 3101 of this title] shall apply with respect to remuneration re- ceived, and taxable years beginning, after December 31, 2012.’’ EFFECTIVE DATE OF 1983 AMENDMENT Pub. L. 98–21, title I, § 124(d), Apr. 20, 1983, 97 Stat. 91, provided that: ‘‘(1) IN GENERAL.—Except as provided in paragraph (2), the amendments made by this section [amending this section, sections 32, 164, 275, 401, and 1402 of this title, and section 411 of Title 42, The Public Health and Wel- fare] shall apply to taxable years beginning after De- cember 31, 1983. ‘‘(2) SUBSECTION (c).—The amendments made by sub- section (c) [amending sections 32, 164, 275, 401, and 1402 of this title and section 411 of Title 42] shall apply to taxable years beginning after December 31, 1989.’’ EFFECTIVE DATE OF 1977 AMENDMENT Pub. L. 95–216, title I, § 104, Dec. 20, 1977, 91 Stat. 1514, provided that: ‘‘The amendments made by this title Page 2503 TITLE 26—INTERNAL REVENUE CODE § 1401 [amending this section, sections 3101 and 3111 of this title, and sections 401, 415, and 430 of Title 42, The Pub- lic Health and Welfare] shall apply with respect to re- muneration paid or received, and taxable years begin- ning, after 1977.’’ EFFECTIVE DATE OF 1976 AMENDMENT Amendment by Pub. L. 94–455 effective for taxable years beginning after Dec. 31, 1976, see section 1901(d) set out as a note under section 2 of this title. EFFECTIVE DATE OF 1973 AMENDMENT Pub. L. 93–233, § 6(c), Dec. 31, 1973, 87 Stat. 955, pro- vided that: ‘‘The amendment made by subsection (b)(1) [amending this section] shall apply only with respect to taxable years beginning after December 31, 1973. The re- maining amendments made by this section [amending sections 3101 and 3111 of this title] shall apply only with respect to remuneration paid after December 31, 1973.’’ EFFECTIVE DATE OF 1972 AMENDMENT Pub. L. 92–603, title I, § 135(c), Oct. 30, 1972, 86 Stat. 1364, provided that: ‘‘The amendments made by sub- sections (a)(1) and (b)(1) [amending this section] shall apply only with respect to taxable years beginning after December 31, 1972. The remaining amendments made by this section [amending sections 3101 and 3111 of this title] shall apply only with respect to remunera- tion paid after December 31, 1972.’’ Pub. L. 92–336, title II, § 204(c), Oct. 30, 1972, 86 Stat. 1377, provided that: ‘‘The amendments made by sub- sections (a)(1) and (b)(1) [amending this section] shall apply only with respect to taxable years beginning after December 31, 1972. The remaining amendments made by this section [amending sections 3101 and 3111 of this title] shall apply only with respect to remunera- tion paid after December 31, 1972.’’ EFFECTIVE DATE OF 1968 AMENDMENT Pub. L. 90–248, title I, § 109(c), Jan. 2, 1968, 81 Stat. 837, provided that: ‘‘The amendments made by subsections (a)(1) and (b)(1) [amending this section] shall apply only with respect to taxable years beginning after December 31, 1967. The remaining amendments made by this sec- tion [amending sections 3101 and 3111 of this title] shall apply only with respect to remuneration paid after De- cember 31, 1967.’’ EFFECTIVE DATE OF 1965 AMENDMENT Amendment by section 111(c)(4) of Pub. L. 89–97 appli- cable to calendar year 1966 or to any subsequent cal- endar year but only if by October 1 immediately pre- ceding such calendar year the Railroad Retirement Tax Act [section 3201 et seq. of this title] provides for a maximum amount of monthly compensation taxable under such Act during all months of such calendar year equal to one-twelfth of maximum wages which Federal Insurance Contributions Act [section 3101 et seq. of this title] provides may be counted for such calendar year, see section 111(e) of Pub. L. 89–97, set out as an Effec- tive Date note under section 1395i–1 of Title 42, The Public Health and Welfare. Pub. L. 89–97, title III, § 321(d), July 30, 1965, 79 Stat. 396, provided that: ‘‘The amendments made by sub- section (a) [amending this section] shall apply only with respect to taxable years beginning after December 31, 1965. The amendments made by subsections (b) and (c) [amending sections 3101 and 3111 of this title] shall apply only with respect to remuneration paid after De- cember 31, 1965.’’ EFFECTIVE DATE OF 1961 AMENDMENT Pub. L. 87–64, title II, § 201(d), June 30, 1961, 75 Stat. 141, provided that: ‘‘The amendment made by sub- section (a) [amending this section] shall apply with re- spect to taxable years beginning after December 31, 1961. The amendments made by subsections (b) and (c) [amending sections 3101 and 3111 of this title] shall apply with respect to remuneration paid after Decem- ber 31, 1961.’’ EFFECTIVE DATE OF 1958 AMENDMENT Pub. L. 85–840, title IV, § 401(d), Aug. 28, 1958, 72 Stat. 1042, provided that: ‘‘The amendment made by sub- section (a) [amending this section] shall apply with re- spect to taxable years beginning after December 31, 1958. The amendments made by subsections (b) and (c) [amending sections 3101 and 3111 of this title] shall apply with respect to remuneration paid after Decem- ber 31, 1958.’’ EFFECTIVE DATE OF 1956 AMENDMENT Act Aug. 1, 1956, ch. 836, title II, § 202(d), 70 Stat. 846, provided that: ‘‘The amendment made by subsection (a) [amending this section] shall apply with respect to tax- able years beginning after December 31, 1956. The amendments made by subsections (b) and (c) [amending sections 3101 and 3111 of this title] shall apply with re- spect to remuneration paid after December 31, 1956.’’ SAVINGS PROVISION For provisions that nothing in amendment by Pub. L. 101–508 be construed to affect treatment of certain transactions occurring, property acquired, or items of income, loss, deduction, or credit taken into account prior to Nov. 5, 1990, for purposes of determining liabil- ity for tax for periods ending after Nov. 5, 1990, see sec- tion 11821(b) of Pub. L. 101–508, set out as a note under section 45K of this title. CREDIT FOR SICK LEAVE FOR CERTAIN SELF-EMPLOYED INDIVIDUALS Pub. L. 117–2, title IX, § 9642, Mar. 11, 2021, 135 Stat. 171, provided that: ‘‘(a) IN GENERAL.—In the case of an eligible self-em- ployed individual, there shall be allowed as a credit against the tax imposed by chapter 1 of the Internal Revenue Code of 1986 for any taxable year an amount equal to the qualified sick leave equivalent amount with respect to the individual. ‘‘(b) ELIGIBLE SELF-EMPLOYED INDIVIDUAL.—For pur- poses of this section— ‘‘(1) IN GENERAL.—The term ‘eligible self-employed individual’ means an individual who— ‘‘(A) regularly carries on any trade or business within the meaning of section 1402 of the Internal Revenue Code of 1986, and ‘‘(B) would be entitled to receive paid leave dur- ing the taxable year pursuant to the Emergency Paid Sick Leave Act [div. E (§ 5101 et seq.) of Pub. L. 116–127, 29 U.S.C. 2601 note] if— ‘‘(i) the individual were an employee of an em- ployer (other than himself or herself), and ‘‘(ii) such Act applied after March 31, 2021. ‘‘(2) RULES OF APPLICATION.—For purposes of para- graph (1)(B), in determining whether an individual would be entitled to receive paid leave under the Emergency Paid Sick Leave Act, such Act shall be applied— ‘‘(A) by inserting ‘, the employee is seeking or awaiting the results of a diagnostic test for, or a medical diagnosis of, COVID–19 and such employee has been exposed to COVID–19 or is unable to work pending the results of such test or diagnosis, or the employee is obtaining immunization related to COVID–19 or recovering from any injury, disability, illness, or condition related to such immunization’ after ‘medical diagnosis’ in section 5102(a)(3) of such Act, and ‘‘(B) by applying section 5102(b)(1) of such Act separately with respect to each taxable year. ‘‘(c) QUALIFIED SICK LEAVE EQUIVALENT AMOUNT.—For purposes of this section— ‘‘(1) IN GENERAL.—The term ‘qualified sick leave equivalent amount’ means, with respect to any eligi- ble self-employed individual, an amount equal to— ‘‘(A) the number of days during the taxable year (but not more than 10) that the individual is unable Page 2504 TITLE 26—INTERNAL REVENUE CODE § 1401 to perform services in any trade or business re- ferred to in section 1402 of the Internal Revenue Code of 1986 for a reason with respect to which such individual would be entitled to receive sick leave as described in subsection (b), multiplied by ‘‘(B) the lesser of— ‘‘(i) $200 ($511 in the case of any day of paid sick time described in paragraph (1), (2), or (3) of sec- tion 5102(a) of the Emergency Paid Sick Leave Act, applied with the modification described in subsection (b)(2)(A)) of this section, or ‘‘(ii) 67 percent (100 percent in the case of any day of paid sick time described in paragraph (1), (2), or (3) of section 5102(a) of the Emergency Paid Sick Leave Act ) of the average daily self-employ- ment income of the individual for the taxable year. ‘‘(2) AVERAGE DAILY SELF-EMPLOYMENT INCOME.—For purposes of this subsection, the term ‘average daily self-employment income’ means an amount equal to— ‘‘(A) the net earnings from self-employment of the individual for the taxable year, divided by ‘‘(B) 260. ‘‘(3) ELECTION TO USE PRIOR YEAR NET EARNINGS FROM SELF-EMPLOYMENT INCOME.—In the case of an in- dividual who elects (at such time and in such manner as the Secretary may provide) the application of this paragraph, paragraph (2)(A) shall be applied by sub- stituting ‘the prior taxable year’ for ‘the taxable year’. ‘‘(4) ELECTION TO NOT TAKE DAYS INTO ACCOUNT.— Any day shall not be taken into account under para- graph (1)(A) if the eligible self-employed individual elects (at such time and in such manner as the Sec- retary may prescribe) to not take such day into ac- count for purposes of such paragraph. ‘‘(d) CREDIT REFUNDABLE.— ‘‘(1) IN GENERAL.—The credit determined under this section shall be treated as a credit allowed to the tax- payer under subpart C of part IV of subchapter A of chapter 1 of such Code. ‘‘(2) TREATMENT OF PAYMENTS.—For purposes of sec- tion 1324 of title 31, United States Code, any refund due from the credit determined under this section shall be treated in the same manner as a refund due from a credit provision referred to in subsection (b)(2) of such section. ‘‘(e) SPECIAL RULES.— ‘‘(1) DOCUMENTATION.—No credit shall be allowed under this section unless the individual maintains such documentation as the Secretary may prescribe to establish such individual as an eligible self-em- ployed individual. ‘‘(2) DENIAL OF DOUBLE BENEFIT.—In the case of an individual who receives wages (as defined in section 3121(a) of the Internal Revenue Code of 1986) or com- pensation (as defined in section 3231(e) of such Code) paid by an employer which are required to be paid by reason of the Emergency Paid Sick Leave Act, the qualified sick leave equivalent amount otherwise de- termined under subsection (c) of this section shall be reduced (but not below zero) to the extent that the sum of the amount described in such subsection and in section 3131(b)(1) of such Code exceeds $2,000 ($5,110 in the case of any day any portion of which is paid sick time described in paragraph (1), (2), or (3) of sec- tion 5102(a) of the Emergency Paid Sick Leave Act). ‘‘(f) APPLICATION OF SECTION.—Only days occurring during the period beginning on April 1, 2021, and ending on September 30, 2021, may be taken into account under subsection (c)(1)(A). ‘‘(g) APPLICATION OF CREDIT IN CERTAIN POSSES- SIONS.— ‘‘(1) PAYMENTS TO POSSESSIONS WITH MIRROR CODE TAX SYSTEMS.—The Secretary shall pay to each pos- session of the United States which has a mirror code tax system amounts equal to the loss (if any) to that possession by reason of the application of the provi- sions of this section. Such amounts shall be deter- mined by the Secretary based on information pro- vided by the government of the respective possession. ‘‘(2) PAYMENTS TO OTHER POSSESSIONS.—The Sec- retary shall pay to each possession of the United States which does not have a mirror code tax system amounts estimated by the Secretary as being equal to the aggregate benefits (if any) that would have been provided to residents of such possession by rea- son of the provisions of this section if a mirror code tax system had been in effect in such possession. The preceding sentence shall not apply unless the respec- tive possession has a plan, which has been approved by the Secretary, under which such possession will promptly distribute such payments to its residents. ‘‘(3) MIRROR CODE TAX SYSTEM.—For purposes of this section, the term ‘mirror code tax system’ means, with respect to any possession of the United States, the income tax system of such possession if the in- come tax liability of the residents of such possession under such system is determined by reference to the income tax laws of the United States as if such pos- session were the United States. ‘‘(4) TREATMENT OF PAYMENTS.—For purposes of sec- tion 1324 of title 31, United States Code, the payments under this subsection shall be treated in the same manner as a refund due from a credit provision re- ferred to in subsection (b)(2) of such section. ‘‘(h) REGULATIONS.—The Secretary shall prescribe such regulations or other guidance as may be necessary to carry out the purposes of this section, including— ‘‘(1) regulations or other guidance to effectuate the purposes of this section, and ‘‘(2) regulations or other guidance to minimize compliance and record-keeping burdens under this section.’’ Pub. L. 116–127, div. G, § 7002, Mar. 18, 2020, 134 Stat. 212, as amended by Pub. L. 116–260, div. N, title II, §§ 286(a), (b)(2), 287(a), Dec. 27, 2020, 134 Stat. 1989–1991, provided that: ‘‘(a) CREDIT AGAINST SELF-EMPLOYMENT TAX.—In the case of an eligible self-employed individual, there shall be allowed as a credit against the tax imposed by sub- title A of the Internal Revenue Code of 1986 for any tax- able year an amount equal to the qualified sick leave equivalent amount with respect to the individual. ‘‘(b) ELIGIBLE SELF-EMPLOYED INDIVIDUAL.—For pur- poses of this section, the term ‘eligible self-employed individual’ means an individual who— ‘‘(1) regularly carries on any trade or business with- in the meaning of section 1402 of such Code, and ‘‘(2) either— ‘‘(A) would be entitled to receive paid leave dur- ing the taxable year pursuant to the Emergency Paid Sick Leave Act [div. E (§ 5101 et seq.) of Pub. L. 116–127, 29 U.S.C. 2601 note] if the individual were an employee of an employer (other than himself or herself), or ‘‘(B) would be so entitled if— ‘‘(i) such Act were applied by substituting ‘March 31, 2021’ for ‘December 31, 2020’ in section 5109 thereof, and ‘‘(ii) the individual were an employee of an em- ployer (other than himself or herself). ‘‘(c) QUALIFIED SICK LEAVE EQUIVALENT AMOUNT.—For purposes of this section— ‘‘(1) IN GENERAL.—The term ‘qualified sick leave equivalent amount’ means, with respect to any eligi- ble self-employed individual, an amount equal to— ‘‘(A) the number of days during the taxable year (but not more than the applicable number of days) that the individual is unable to perform services in any trade or business referred to in section 1402 of such Code for a reason with respect to which such individual would be entitled to receive sick leave as described in subsection (b), multiplied by ‘‘(B) the lesser of— ‘‘(i) $200 ($511 in the case of any day of paid sick time described in paragraph (1), (2), or (3) of sec- tion 5102(a) of the Emergency Paid Sick Leave Act [29 U.S.C. 2601 note]), or Page 2505 TITLE 26—INTERNAL REVENUE CODE § 1401 ‘‘(ii) 67 percent (100 percent in the case of any day of paid sick time described in paragraph (1), (2), or (3) of section 5102(a) of the Emergency Paid Sick Leave Act) of the average daily self-employ- ment income of the individual for the taxable year. ‘‘(2) AVERAGE DAILY SELF-EMPLOYMENT INCOME.—For purposes of this subsection, the term ‘average daily self-employment income’ means an amount equal to— ‘‘(A) the net earnings from self-employment of the individual for the taxable year, divided by ‘‘(B) 260. ‘‘(3) APPLICABLE NUMBER OF DAYS.—For purposes of this subsection, the term ‘applicable number of days’ means, with respect to any taxable year, the excess (if any) of 10 days over the number of days taken into account under paragraph (1)(A) in all preceding tax- able years. ‘‘(4) ELECTION TO USE PRIOR YEAR NET EARNINGS FROM SELF-EMPLOYMENT INCOME.—In the case of an in- dividual who elects (at such time and in such manner as the Secretary, or the Secretary’s delegate, may provide) the application of this paragraph, paragraph (2)(A) shall be applied by substituting ‘the prior tax- able year’ for ‘the taxable year’. ‘‘(d) SPECIAL RULES.— ‘‘(1) CREDIT REFUNDABLE.— ‘‘(A) IN GENERAL.—The credit determined under this section shall be treated as a credit allowed to the taxpayer under subpart C of part IV of sub- chapter A of chapter 1 of such Code. ‘‘(B) TREATMENT OF PAYMENTS.—For purposes of section 1324 of title 31, United States Code, any re- fund due from the credit determined under this sec- tion shall be treated in the same manner as a re- fund due from a credit provision referred to in sub- section (b)(2) of such section. ‘‘(2) DOCUMENTATION.—No credit shall be allowed under this section unless the individual maintains such documentation as the Secretary of the Treasury (or the Secretary’s delegate) may prescribe to estab- lish such individual as an eligible self-employed indi- vidual. ‘‘(3) DENIAL OF DOUBLE BENEFIT.—In the case of an individual who receives wages (as defined in section 3121(a) of the Internal Revenue Code of 1986) or com- pensation (as defined in section 3231(e) of the Internal Revenue Code [of 1986]) paid by an employer which are required to be paid by reason of the Emergency Paid Sick Leave Act, the qualified sick leave equiva- lent amount otherwise determined under subsection (c) shall be reduced (but not below zero) to the extent that the sum of the amount described in such sub- section and in section 7001(b)(1) [26 U.S.C. 3111 note] exceeds $2,000 ($5,110 in the case of any day any por- tion of which is paid sick time described in paragraph (1), (2), or (3) of section 5102(a) of the Emergency Paid Sick Leave Act). ‘‘(4) CERTAIN TERMS.—Any term used in this section which is also used in chapter 2 of the Internal Rev- enue Code of 1986 shall have the same meaning as when used in such chapter. ‘‘(e) APPLICATION OF SECTION.—Only days occurring during the period beginning on a date selected by the Secretary of the Treasury (or the Secretary’s delegate) which is during the 15-day period beginning on the date of the enactment of this Act [Mar. 18, 2020], and ending on March 31, 2021, may be taken into account under subsection (c)(1)(A). ‘‘(f) APPLICATION OF CREDIT IN CERTAIN POSSES- SIONS.— ‘‘(1) PAYMENTS TO POSSESSIONS WITH MIRROR CODE TAX SYSTEMS.—The Secretary of the Treasury (or the Secretary’s delegate) shall pay to each possession of the United States which has a mirror code tax system amounts equal to the loss (if any) to that possession by reason of the application of the provisions of this section. Such amounts shall be determined by the Secretary of the Treasury (or the Secretary’s dele- gate) based on information provided by the govern- ment of the respective possession. ‘‘(2) PAYMENTS TO OTHER POSSESSIONS.—The Sec- retary of the Treasury (or the Secretary’s delegate) shall pay to each possession of the United States which does not have a mirror code tax system amounts estimated by the Secretary of the Treasury (or the Secretary’s delegate) as being equal to the ag- gregate benefits (if any) that would have been pro- vided to residents of such possession by reason of the provisions of this section if a mirror code tax system had been in effect in such possession. The preceding sentence shall not apply unless the respective posses- sion has a plan, which has been approved by the Sec- retary of the Treasury (or the Secretary’s delegate), under which such possession will promptly distribute such payments to its residents. ‘‘(3) MIRROR CODE TAX SYSTEM.—For purposes of this section, the term ‘mirror code tax system’ means, with respect to any possession of the United States, the income tax system of such possession if the in- come tax liability of the residents of such possession under such system is determined by reference to the income tax laws of the United States as if such pos- session were the United States. ‘‘(4) TREATMENT OF PAYMENTS.—For purposes of sec- tion 1324 of title 31, United States Code, the payments under this section shall be treated in the same man- ner as a refund due from a credit provision referred to in subsection (b)(2) of such section. ‘‘(g) REGULATIONS.—The Secretary of the Treasury (or the Secretary’s delegate) shall prescribe such regula- tions or other guidance as may be necessary to carry out the purposes of this section, including— ‘‘(1) regulations or other guidance to effectuate the purposes of this Act [div. G of Pub. L. 116–127, enact- ing provisions set out as notes under this section and section 3111 of this title], and ‘‘(2) regulations or other guidance to minimize compliance and record-keeping burdens under this section.’’ [Pub. L. 116–260, div. N, title II, § 286(c), Dec. 27, 2020, 134 Stat. 1991, provided that: ‘‘The amendments made by this section [amending section 7002 of Pub. L. 116–127, set out above, section 7004 of Pub. L. 116–127, set out below, and sections 7001, 7003, and 7005 of Pub. L. 116–127, set out as notes under section 3111 of this title] shall take effect as if included in the provisions of the Families First Coronavirus Response Act [Pub. L. 116–127] to which they relate.’’] [Pub. L. 116–260, div. N, title II, § 287(c), Dec. 27, 2020, 134 Stat. 1991, provided that: ‘‘The amendments made by this section [amending section 7002 of Pub. L. 116–127, set out above, and section 7004 of Pub. L. 116–127, set out below] shall take effect as if included in the provisions of the Families First Coronavirus Re- sponse Act [Pub. L. 116–127] to which they relate.’’] CREDIT FOR FAMILY LEAVE FOR CERTAIN SELF- EMPLOYED INDIVIDUALS Pub. L. 117–2, title IX, § 9643, Mar. 11, 2021, 135 Stat. 174, provided that: ‘‘(a) IN GENERAL.—In the case of an eligible self-em- ployed individual, there shall be allowed as a credit against the tax imposed by chapter 1 of the Internal Revenue Code of 1986 for any taxable year an amount equal to 100 percent of the qualified family leave equiv- alent amount with respect to the individual. ‘‘(b) ELIGIBLE SELF-EMPLOYED INDIVIDUAL.—For pur- poses of this section— ‘‘(1) IN GENERAL.—The term ‘eligible self-employed individual’ means an individual who— ‘‘(A) regularly carries on any trade or business within the meaning of section 1402 of the Internal Revenue Code of 1986, and ‘‘(B) would be entitled to receive paid leave dur- ing the taxable year pursuant to the Emergency Family and Medical Leave Expansion Act [div. C of Pub. L. 116–127, see Short Title of 2020 Amendment note set out under section 2601 of Title 29, Labor] if— Page 2506 TITLE 26—INTERNAL REVENUE CODE § 1401 ‘‘(i) the individual were an employee of an em- ployer (other than himself or herself), ‘‘(ii) section 102(a)(1)(F) of the Family and Med- ical Leave Act of 1993 [29 U.S.C. 2612(a)(1)(F)] ap- plied after March 31, 2021. ‘‘(2) RULES OF APPLICATION.—For purposes of para- graph (1)(B), in determining whether an individual would be entitled to receive paid leave under the Emergency Family and Medical Leave Act— ‘‘(A) section 110(a)(2)(A) of the Family and Med- ical Leave Act of 1993 [29 U.S.C. 2620(a)(2)(A)] shall be applied by inserting ‘or any reason for leave de- scribed in section 5102(a) of the Families First Coronavirus Response Act, or the employee is seek- ing or awaiting the results of a diagnostic test for, or a medical diagnosis of, COVID–19 and such em- ployee has been exposed to COVID–19 or is unable to work pending the results of such test or diagnosis, or the employee is obtaining immunization related to COVID–19 or recovering from any injury, dis- ability, illness, or condition related to such immu- nization’ after ‘public health emergency’, and ‘‘(B) section 110(b) of such Act shall be applied— ‘‘(i) without regard to paragraph (1) thereof, and ‘‘(ii) by striking ‘after taking leave after such section for 10 days’ in paragraph (2)(A) thereof. ‘‘(c) QUALIFIED FAMILY LEAVE EQUIVALENT AMOUNT.— For purposes of this section— ‘‘(1) IN GENERAL.—The term ‘qualified family leave equivalent amount’ means, with respect to any eligi- ble self-employed individual, an amount equal to the product of— ‘‘(A) the number of days (not to exceed 60) during the taxable year that the individual is unable to perform services in any trade or business referred to in section 1402 of the Internal Revenue Code of 1986 for a reason with respect to which such indi- vidual would be entitled to receive paid leave as de- scribed in subsection (b) of this section, multiplied by ‘‘(B) the lesser of— ‘‘(i) 67 percent of the average daily self-employ- ment income of the individual for the taxable year, or ‘‘(ii) $200. ‘‘(2) AVERAGE DAILY SELF-EMPLOYMENT INCOME.—For purposes of this subsection, the term ‘average daily self-employment income’ means an amount equal to— ‘‘(A) the net earnings from self-employment in- come of the individual for the taxable year, divided by ‘‘(B) 260. ‘‘(3) ELECTION TO USE PRIOR YEAR NET EARNINGS FROM SELF-EMPLOYMENT INCOME.—In the case of an in- dividual who elects (at such time and in such manner as the Secretary may provide) the application of this paragraph, paragraph (2)(A) shall be applied by sub- stituting ‘the prior taxable year’ for ‘the taxable year’. ‘‘(4) COORDINATION WITH CREDIT FOR SICK LEAVE.— Any day taken into account in determining the quali- fied sick leave equivalent amount with respect to any eligible-self employed individual under section 9642 [set out above] shall not be take [sic] into account in determining the qualified family leave equivalent amount with respect to such individual under this section. ‘‘(d) CREDIT REFUNDABLE.— ‘‘(1) IN GENERAL.—The credit determined under this section shall be treated as a credit allowed to the tax- payer under subpart C of part IV of subchapter A of chapter 1 of such Code. ‘‘(2) TREATMENT OF PAYMENTS.—For purposes of sec- tion 1324 of title 31, United States Code, any refund due from the credit determined under this section shall be treated in the same manner as a refund due from a credit provision referred to in subsection (b)(2) of such section. ‘‘(e) SPECIAL RULES.— ‘‘(1) DOCUMENTATION.—No credit shall be allowed under this section unless the individual maintains such documentation as the Secretary may prescribe to establish such individual as an eligible self-em- ployed individual. ‘‘(2) DENIAL OF DOUBLE BENEFIT.—In the case of an individual who receives wages (as defined in section 3121(a) of the Internal Revenue Code of 1986) or com- pensation (as defined in section 3231(e) of such Code) paid by an employer which are required to be paid by reason of the Emergency Family and Medical Leave Expansion Act, the qualified family leave equivalent amount otherwise described in subsection (c) of this section shall be reduced (but not below zero) to the extent that the sum of the amount described in such subsection and in section 3132(b)(1) of such Code ex- ceeds $12,000. ‘‘(3) REFERENCES TO EMERGENCY FAMILY AND MED- ICAL LEAVE EXPANSION ACT.—Any reference in this section to the Emergency Family and Medical Leave Expansion Act shall be treated as including a ref- erence to the amendments made by such Act. ‘‘(f) APPLICATION OF SECTION.—Only days occurring during the period beginning on April 1, 2021 and ending on September 30, 2021, may be taken into account under subsection (c)(1)(A). ‘‘(g) APPLICATION OF CREDIT IN CERTAIN POSSES- SIONS.— ‘‘(1) PAYMENTS TO POSSESSIONS WITH MIRROR CODE TAX SYSTEMS.—The Secretary shall pay to each pos- session of the United States which has a mirror code tax system amounts equal to the loss (if any) to that possession by reason of the application of the provi- sions of this section. Such amounts shall be deter- mined by the Secretary based on information pro- vided by the government of the respective possession. ‘‘(2) PAYMENTS TO OTHER POSSESSIONS.—The Sec- retary shall pay to each possession of the United States which does not have a mirror code tax system amounts estimated by the Secretary as being equal to the aggregate benefits (if any) that would have been provided to residents of such possession by rea- son of the provisions of this section if a mirror code tax system had been in effect in such possession. The preceding sentence shall not apply unless the respec- tive possession has a plan, which has been approved by the Secretary, under which such possession will promptly distribute such payments to its residents. ‘‘(3) MIRROR CODE TAX SYSTEM.—For purposes of this section, the term ‘mirror code tax system’ means, with respect to any possession of the United States, the income tax system of such possession if the in- come tax liability of the residents of such possession under such system is determined by reference to the income tax laws of the United States as if such pos- session were the United States. ‘‘(4) TREATMENT OF PAYMENTS.—For purposes of sec- tion 1324 of title 31, United States Code, the payments under this subsection shall be treated in the same manner as a refund due from a credit provision re- ferred to in subsection (b)(2) of such section. ‘‘(h) REGULATIONS.—The Secretary shall prescribe such regulations or other guidance as may be necessary to carry out the purposes of this section, including— ‘‘(1) regulations or other guidance to prevent the avoidance of the purposes of this section, and ‘‘(2) regulations or other guidance to minimize compliance and record-keeping burdens under this section.’’ Pub. L. 116–127, div. G, § 7004, Mar. 18, 2020, 134 Stat. 217, as amended by Pub. L. 116–260, div. N, title II, §§ 286(a), (b)(4), 287(b), Dec. 27, 2020, 134 Stat. 1989, 1991, provided that: ‘‘(a) CREDIT AGAINST SELF-EMPLOYMENT TAX.—In the case of an eligible self-employed individual, there shall be allowed as a credit against the tax imposed by sub- title A of the Internal Revenue Code of 1986 for any tax- able year an amount equal to 100 percent of the quali- fied family leave equivalent amount with respect to the individual. Page 2507 TITLE 26—INTERNAL REVENUE CODE § 1401 ‘‘(b) ELIGIBLE SELF-EMPLOYED INDIVIDUAL.—For pur- poses of this section, the term ‘eligible self-employed individual’ means an individual who— ‘‘(1) regularly carries on any trade or business with- in the meaning of section 1402 of such Code, and ‘‘(2) either— ‘‘(A) would be entitled to receive paid leave dur- ing the taxable year pursuant to the Emergency Family and Medical Leave Expansion Act [div. C of Pub. L. 116–127, see Short Title of 2020 Amendment note set out under section 2601 of Title 29, Labor] if the individual were an employee of an employer (other than himself or herself), or ‘‘(B) would be so entitled if— ‘‘(i) section 102(a)(1)(F) of the Family and Med- ical Leave Act of 1993 [29 U.S.C. 2612(a)(1)(F)], as amended by the Emergency Family and Medical Leave Expansion Act, were applied by sub- stituting ‘March 31, 2021’ for ‘December 31, 2020’, and ‘‘(ii) the individual were an employee of an em- ployer (other than himself or herself). ‘‘(c) QUALIFIED FAMILY LEAVE EQUIVALENT AMOUNT.— For purposes of this section— ‘‘(1) IN GENERAL.—The term ‘qualified family leave equivalent amount’ means, with respect to any eligi- ble self-employed individual, an amount equal to the product of— ‘‘(A) the number of days (not to exceed 50) during the taxable year that the individual is unable to perform services in any trade or business referred to in section 1402 of such Code for a reason with re- spect to which such individual would be entitled to receive paid leave as described in subsection (b), multiplied by ‘‘(B) the lesser of— ‘‘(i) 67 percent of the average daily self-employ- ment income of the individual for the taxable year, or ‘‘(ii) $200. ‘‘(2) AVERAGE DAILY SELF-EMPLOYMENT INCOME.—For purposes of this subsection, the term ‘average daily self-employment income’ means an amount equal to— ‘‘(A) the net earnings from self-employment in- come of the individual for the taxable year, divided by ‘‘(B) 260. ‘‘(4) [(3)] ELECTION TO USE PRIOR YEAR NET EARNINGS FROM SELF-EMPLOYMENT INCOME.—In the case of an in- dividual who elects (at such time and in such manner as the Secretary, or the Secretary’s delegate, may provide) the application of this paragraph, paragraph (2)(A) shall be applied by substituting ‘the prior tax- able year’ for ‘the taxable year’. ‘‘(d) SPECIAL RULES.— ‘‘(1) CREDIT REFUNDABLE.— ‘‘(A) IN GENERAL.—The credit determined under this section shall be treated as a credit allowed to the taxpayer under subpart C of part IV of sub- chapter A of chapter 1 of such Code. ‘‘(B) TREATMENT OF PAYMENTS.—For purposes of section 1324 of title 31, United States Code, any re- fund due from the credit determined under this sec- tion shall be treated in the same manner as a re- fund due from a credit provision referred to in sub- section (b)(2) of such section. ‘‘(2) DOCUMENTATION.—No credit shall be allowed under this section unless the individual maintains such documentation as the Secretary of the Treasury (or the Secretary’s delegate) may prescribe to estab- lish such individual as an eligible self-employed indi- vidual. ‘‘(3) DENIAL OF DOUBLE BENEFIT.—In the case of an individual who receives wages (as defined in section 3121(a) of the Internal Revenue Code of 1986) or com- pensation (as defined in section 3231(e) of the Internal Revenue Code [of 1986]) paid by an employer which are required to be paid by reason of the Emergency Family and Medical Leave Expansion Act, the quali- fied family leave equivalent amount otherwise de- scribed in subsection (c) shall be reduced (but not below zero) to the extent that the sum of the amount described in such subsection and in section 7003(b)(1) [26 U.S.C. 3111 note] exceeds $10,000. ‘‘(4) CERTAIN TERMS.—Any term used in this section which is also used in chapter 2 of the Internal Rev- enue Code of 1986 shall have the same meaning as when used in such chapter. ‘‘(5) REFERENCES TO EMERGENCY FAMILY AND MED- ICAL LEAVE EXPANSION ACT.—Any reference in this section to the Emergency Family and Medical Leave Expansion Act shall be treated as including a ref- erence to the amendments made by such Act. ‘‘(e) APPLICATION OF SECTION.—Only days occurring during the period beginning on a date selected by the Secretary of the Treasury (or the Secretary’s delegate) which is during the 15-day period beginning on the date of the enactment of this Act [Mar. 18, 2020], and ending on March 31, 2021, may be taken into account under subsection (c)(1)(A). ‘‘(f) APPLICATION OF CREDIT IN CERTAIN POSSES- SIONS.— ‘‘(1) PAYMENTS TO POSSESSIONS WITH MIRROR CODE TAX SYSTEMS.—The Secretary of the Treasury (or the Secretary’s delegate) shall pay to each possession of the United States which has a mirror code tax system amounts equal to the loss (if any) to that possession by reason of the application of the provisions of this section. Such amounts shall be determined by the Secretary of the Treasury (or the Secretary’s dele- gate) based on information provided by the govern- ment of the respective possession. ‘‘(2) PAYMENTS TO OTHER POSSESSIONS.—The Sec- retary of the Treasury (or the Secretary’s delegate) shall pay to each possession of the United States which does not have a mirror code tax system amounts estimated by the Secretary of the Treasury (or the Secretary’s delegate) as being equal to the ag- gregate benefits (if any) that would have been pro- vided to residents of such possession by reason of the provisions of this section if a mirror code tax system had been in effect in such possession. The preceding sentence shall not apply unless the respective posses- sion has a plan, which has been approved by the Sec- retary of the Treasury (or the Secretary’s delegate), under which such possession will promptly distribute such payments to its residents. ‘‘(3) MIRROR CODE TAX SYSTEM.—For purposes of this section, the term ‘mirror code tax system’ means, with respect to any possession of the United States, the income tax system of such possession if the in- come tax liability of the residents of such possession under such system is determined by reference to the income tax laws of the United States as if such pos- session were the United States. ‘‘(4) TREATMENT OF PAYMENTS.—For purposes of sec- tion 1324 of title 31, United States Code, the payments under this section shall be treated in the same man- ner as a refund due from a credit provision referred to in subsection (b)(2) of such section. ‘‘(e) REGULATIONS.—The Secretary of the Treasury (or the Secretary’s delegate) shall prescribe such regula- tions or other guidance as may be necessary to carry out the purposes of this section, including— ‘‘(1) regulations or other guidance to prevent the avoidance of the purposes of this Act [div. G of Pub. L. 116–127, enacting provisions set out as notes under this section and section 3111 of this title], and ‘‘(2) regulations or other guidance to minimize compliance and record-keeping burdens under this section.’’ TEMPORARY EMPLOYEE PAYROLL TAX CUT Pub. L. 111–312, title VI, § 601, Dec. 17, 2010, 124 Stat. 3309, as amended by Pub. L. 112–78, title I, § 101(a)–(d), Dec. 23, 2011, 125 Stat. 1281, 1282; Pub. L. 112–96, title I, § 1001(a), (b), Feb. 22, 2012, 126 Stat. 158, provided that: ‘‘(a) IN GENERAL.—Notwithstanding any other provi- sion of law— Page 2508 TITLE 26—INTERNAL REVENUE CODE § 1402 ‘‘(1) with respect to any taxable year which begins in the payroll tax holiday period, the rate of tax under section 1401(a) of the Internal Revenue Code of 1986 shall be 10.40 percent, and ‘‘(2) with respect to remuneration received during the payroll tax holiday period, the rate of tax under 3101(a) of such Code shall be 4.2 percent (including for purposes of determining the applicable percentage under sections 3201(a) and 3211(a)(1) [probably means 3211(a)] of such Code). ‘‘(b) COORDINATION WITH DEDUCTIONS FOR EMPLOY- MENT TAXES.— ‘‘(1) DEDUCTION IN COMPUTING NET EARNINGS FROM SELF-EMPLOYMENT.—For purposes of applying section 1402(a)(12) of the Internal Revenue Code of 1986, the rate of tax imposed by subsection 1401(a) of such Code shall be determined without regard to the reduction in such rate under this section. ‘‘(2) INDIVIDUAL DEDUCTION.—In the case of the taxes imposed by section 1401 of such Code for any taxable year which begins in the payroll tax holiday period, the deduction under section 164(f) of such Code with respect to such taxes shall be equal to the sum of— ‘‘(A) 59.6 percent of the portion of such taxes at- tributable to the tax imposed by section 1401(a) of such Code (determined after the application of this section), plus ‘‘(B) one-half of the portion of such taxes attrib- utable to the tax imposed by section 1401(b) of such Code. ‘‘(c) PAYROLL TAX HOLIDAY PERIOD.—The term ‘pay- roll tax holiday period’ means calendar years 2011 and 2012. ‘‘(d) EMPLOYER NOTIFICATION.—The Secretary of the Treasury shall notify employers of the payroll tax holi- day period in any manner the Secretary deems appro- priate. ‘‘(e) TRANSFERS OF FUNDS.— ‘‘(1) TRANSFERS TO FEDERAL OLD-AGE AND SURVIVORS INSURANCE TRUST FUND.—There are hereby appro- priated to the Federal Old-Age and Survivors Trust Fund and the Federal Disability Insurance Trust Fund established under section 201 of the Social Secu- rity Act (42 U.S.C. 401) amounts equal to the reduc- tion in revenues to the Treasury by reason of the ap- plication of subsection (a). Amounts appropriated by the preceding sentence shall be transferred from the general fund at such times and in such manner as to replicate to the extent possible the transfers which would have occurred to such Trust Fund had such amendments not been enacted. ‘‘(2) TRANSFERS TO SOCIAL SECURITY EQUIVALENT BENEFIT ACCOUNT.—There are hereby appropriated to the Social Security Equivalent Benefit Account es- tablished under section 15A(a) of the Railroad Retire- ment Act of 1974 (45 U.S.C. 231n–1(a)) amounts equal to the reduction in revenues to the Treasury by rea- son of the application of subsection (a)(2). Amounts appropriated by the preceding sentence shall be transferred from the general fund at such times and in such manner as to replicate to the extent possible the transfers which would have occurred to such Ac- count had such amendments not been enacted. ‘‘(3) COORDINATION WITH OTHER FEDERAL LAWS.—For purposes of applying any provision of Federal law other than the provisions of the Internal Revenue Code of 1986, the rate of tax in effect under section 3101(a) of such Code shall be determined without re- gard to the reduction in such rate under this sec- tion.’’ [Pub. L. 112–96, title I, § 1001(c), Feb. 22, 2012, 126 Stat. 159, provided that: ‘‘The amendments made by this sec- tion [amending section 601 of Pub. L. 111–312, set out above] shall apply to remuneration received, and tax- able years beginning, after December 31, 2011.’’] [Pub. L. 112–78, title I, § 101(e), Dec. 23, 2011, 125 Stat. 1282, provided that: [‘‘(1) IN GENERAL.—Except as provided in paragraph (2), the amendments made by this section [amending section 601 of Pub. L. 111–312, set out above] shall apply to remuneration received, and taxable years beginning, after December 31, 2011. [‘‘(2) TECHNICAL AMENDMENTS.—The amendments made by subsection (d) [amending section 601(b)(2) of Pub. L. 111–312, set out above] shall take effect as if in- cluded in the enactment of section 601 of the Tax Re- lief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 [Pub. L. 111–312].’’] LAND DIVERTED UNDER 1983 PAYMENT-IN-KIND PROGRAM Land diverted from production of agricultural com- modities under a 1983 payment-in-kind program to be treated, for purposes of this chapter, as used during the 1983 crop year by qualified taxpayers in the active con- duct of the trade or business of farming, with qualified taxpayers who materially participate in the diversion and devotion to conservation uses under a 1983 pay- ment-in-kind program to be treated as materially par- ticipating in the operation of such land during the 1983 crop year, see section 3 of Pub. L. 98–4, set out as a note under section 61 of this title. DEDUCTION BY OR CREDIT AGAINST INDIVIDUAL INCOME TAX FOR TAXES PAID INTO FOREIGN SOCIAL SECURITY SYSTEM PURSUANT TO INTERNATIONAL AGREEMENT Pub. L. 95–216, title III, § 317(b)(4), Dec. 20, 1977, 91 Stat. 1540, provided that: ‘‘Notwithstanding any other provision of law, taxes paid by any individual to any foreign country with respect to any period of employ- ment or self-employment which is covered under the social security system of such foreign country in ac- cordance with the terms of an agreement entered into pursuant to section 233 of the Social Security Act [sec- tion 433 of Title 42, The Public Health and Welfare] shall not, under the income tax laws of the United States, be deductible by, or creditable against the in- come tax of, any such individual.’’ § 1402. Definitions (a) Net earnings from self-employment The term ‘‘net earnings from self-employ- ment’’ means the gross income derived by an in- dividual from any trade or business carried on by such individual, less the deductions allowed by this subtitle which are attributable to such trade or business, plus his distributive share (whether or not distributed) of income or loss described in section 702(a)(8) from any trade or business carried on by a partnership of which he is a member; except that in computing such gross income and deductions and such distribu- tive share of partnership ordinary income or loss— (1) there shall be excluded rentals from real estate and from personal property leased with the real estate (including such rentals paid in crop shares, and including payments under section 1233(a)(2) of the Food Security Act of 1985 (16 U.S.C. 3833(a)(2)) to individuals receiv- ing benefits under section 202 or 223 of the So- cial Security Act) together with the deduc- tions attributable thereto, unless such rentals are received in the course of a trade or busi- ness as a real estate dealer; except that the preceding provisions of this paragraph shall not apply to any income derived by the owner or tenant of land if (A) such income is derived under an arrangement, between the owner or tenant and another individual, which provides that such other individual shall produce agri- cultural or horticultural commodities (includ- ing livestock, bees, poultry, and fur-bearing animals and wildlife) on such land, and that