26 U.S.C. § 3102 — Deduction of tax from wages

Page 2680 TITLE 26—INTERNAL REVENUE CODE § 3102 such taxes are attributable to this section (or the amendments made by this section) [amending sections 3121 and 3231 of this title and section 409 of Title 42, The Public Health and Welfare, and enacting provisions set out as notes under section 3121 of this title] and that such failure is due to reasonable cause and not to will- ful neglect.’’ REFERENCES TO SOCIAL SECURITY ACT Act Sept. 1, 1954, ch. 1206, title IV, § 402, 68 Stat. 1098, as amended by act Oct. 22, 1986, Pub. L. 99–514, § 2, 100 Stat. 2095, provided that: ‘‘References in the Internal Revenue Code of 1939 [former Title 26, Internal Revenue Code], the Internal Revenue Code of 1986 [formerly I.R.C. 1954], the Railroad Retirement Act of 1937, as amended [section 231 et seq. of Title 45, Railroads], or any other law of the United States to any section or subdivision of a section of the Social Security Act [sec- tion 301 et seq. of Title 42, The Public Health and Wel- fare] redesignated by this Act shall be deemed to refer to such section or subdivision of a section as so redesig- nated.’’ § 3102. Deduction of tax from wages (a) Requirement The tax imposed by section 3101 shall be col- lected by the employer of the taxpayer, by de- ducting the amount of the tax from the wages as and when paid. An employer who in any cal- endar year pays to an employee cash remunera- tion to which paragraph (7)(B) of section 3121(a) is applicable may deduct an amount equivalent to such tax from any such payment of remunera- tion, even though at the time of payment the total amount of such remuneration paid to the employee by the employer in the calendar year is less than the applicable dollar threshold (as defined in section 3121(x)) for such year; and an employer who in any calendar year pays to an employee cash remuneration to which paragraph (7)(C) or (10) of section 3121(a) is applicable may deduct an amount equivalent to such tax from any such payment of remuneration, even though at the time of payment the total amount of such remuneration paid to the employee by the em- ployer in the calendar year is less than $100; and an employer who in any calendar year pays to an employee cash remuneration to which para- graph (8)(B) of section 3121(a) is applicable may deduct an amount equivalent to such tax from any such payment of remuneration, even though at the time of payment the total amount of such remuneration paid to the employee by the em- ployer in the calendar year is less than $150; and an employer who is furnished by an employee a written statement of tips (received in a calendar month) pursuant to section 6053(a) to which paragraph (12)(B) of section 3121(a) is applicable may deduct an amount equivalent to such tax with respect to such tips from any wages of the employee (exclusive of tips) under his control, even though at the time such statement is fur- nished the total amount of the tips included in statements furnished to the employer as having been received by the employee in such calendar month in the course of his employment by such employer is less than $20. (b) Indemnification of employer Every employer required so to deduct the tax shall be liable for the payment of such tax, and shall be indemnified against the claims and de- mands of any person for the amount of any such payment made by such employer. (c) Special rule for tips (1) In the case of tips which constitute wages, subsection (a) shall be applicable only to such tips as are included in a written statement fur- nished to the employer pursuant to section 6053(a), and only to the extent that collection can be made by the employer, at or after the time such statement is so furnished and before the close of the 10th day following the calendar month (or, if paragraph (3) applies, the 30th day following the year) in which the tips were deemed paid, by deducting the amount of the tax from such wages of the employee (excluding tips, but including funds turned over by the em- ployee to the employer pursuant to paragraph (2)) as are under control of the employer. (2) If the tax imposed by section 3101, with re- spect to tips which are included in written statements furnished in any month to the em- ployer pursuant to section 6053(a), exceeds the wages of the employee (excluding tips) from which the employer is required to collect the tax under paragraph (1), the employee may fur- nish to the employer on or before the 10th day of the following month (or, if paragraph (3) ap- plies, on or before the 30th day of the following year) an amount of money equal to the amount of the excess. (3) The Secretary may, under regulations pre- scribed by him, authorize employers— (A) to estimate the amount of tips that will be reported by the employee pursuant to sec- tion 6053(a) in any calendar year, (B) to determine the amount to be deducted upon each payment of wages (exclusive of tips) during such year as if the tips so estimated constituted the actual tips so reported, and (C) to deduct upon any payment of wages (other than tips, but including funds turned over by the employee to the employer pursu- ant to paragraph (2)) to such employee during such year (and within 30 days thereafter) such amount as may be necessary to adjust the amount actually deducted upon such wages of the employee during the year to the amount required to be deducted in respect of tips in- cluded in written statements furnished to the employer during the year. (4) If the tax imposed by section 3101 with re- spect to tips which constitute wages exceeds the portion of such tax which can be collected by the employer from the wages of the employee pursuant to paragraph (1) or paragraph (3), such excess shall be paid by the employee. (d) Special rule for certain taxable group-term life insurance benefits (1) In general In the case of any payment for group-term life insurance to which this subsection ap- plies— (A) subsection (a) shall not apply, (B) the employer shall separately include on the statement required under section 6051— (i) the portion of the wages which con- sists of payments for group-term life in- surance to which this subsection applies, and (ii) the amount of the tax imposed by section 3101 on such payments, and Page 2681 TITLE 26—INTERNAL REVENUE CODE § 3102 (C) the tax imposed by section 3101 on such payments shall be paid by the employee. (2) Benefits to which subsection applies This subsection shall apply to any payment for group-term life insurance to the extent— (A) such payment constitutes wages, and (B) such payment is for coverage for peri- ods during which an employment relation- ship no longer exists between the employee and the employer. (e) Special rule for certain transferred Federal employees In the case of any payments of wages for serv- ice performed in the employ of an international organization pursuant to a transfer to which the provisions of section 3121(y) are applicable— (1) subsection (a) shall not apply, (2) the head of the Federal agency from which the transfer was made shall separately include on the statement required under sec- tion 6051— (A) the amount determined to be the amount of the wages for such service, and (B) the amount of the tax imposed by sec- tion 3101 on such payments, and (3) the tax imposed by section 3101 on such payments shall be paid by the employee. (f) Special rules for additional tax (1) In general In the case of any tax imposed by section 3101(b)(2), subsection (a) shall only apply to the extent to which the taxpayer receives wages from the employer in excess of $200,000, and the employer may disregard the amount of wages received by such taxpayer’s spouse. (2) Collection of amounts not withheld To the extent that the amount of any tax imposed by section 3101(b)(2) is not collected by the employer, such tax shall be paid by the employee. (3) Tax paid by recipient If an employer, in violation of this chapter, fails to deduct and withhold the tax imposed by section 3101(b)(2) and thereafter the tax is paid by the employee, the tax so required to be deducted and withheld shall not be collected from the employer, but this paragraph shall in no case relieve the employer from liability for any penalties or additions to tax otherwise ap- plicable in respect of such failure to deduct and withhold. (Aug. 16, 1954, ch. 736, 68A Stat. 415; Sept. 1, 1954, ch. 1206, title II, § 205A, 68 Stat. 1093; Aug. 1, 1956, ch. 836, title II, § 201(h)(3), 70 Stat. 841; Pub. L. 89–97, title III, § 313(c)(1), (2), July 30, 1965, 79 Stat. 382, 383; Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub. L. 95–216, title III, § 355(a), (b), Dec. 20, 1977, 91 Stat. 1555; Pub. L. 101–508, title V, § 5124(a), Nov. 5, 1990, 104 Stat. 1388–284; Pub. L. 103–296, title III, § 319(a)(3), Aug. 15, 1994, 108 Stat. 1534; Pub. L. 103–387, § 2(a)(1)(D), Oct. 22, 1994, 108 Stat. 4072; Pub. L. 108–203, title IV, § 424(b), Mar. 2, 2004, 118 Stat. 536; Pub. L. 111–148, title IX, § 9015(a)(2), Mar. 23, 2010, 124 Stat. 871.) Editorial Notes AMENDMENTS 2010—Subsec. (f). Pub. L. 111–148 added subsec. (f). 2004—Subsec. (a). Pub. L. 108–203 struck out ‘‘and the employee has not performed agricultural labor for the employer on 20 days or more in the calendar year for cash remuneration computed on a time basis’’ after ‘‘less than $150’’. 1994—Subsec. (a). Pub. L. 103–387 in second sentence substituted ‘‘An employer who in any calendar year’’ for ‘‘An employer who in any calendar quarter’’ and ‘‘remuneration paid to the employee by the employer in the calendar year is less than the applicable dollar threshold (as defined in section 3121(x)) for such year’’ for ‘‘remuneration paid to the employee by the em- ployer in the calendar quarter is less than $50’’. Subsec. (e). Pub. L. 103–296 added subsec. (e). 1990—Subsec. (d). Pub. L. 101–508 added subsec. (d). 1977—Subsec. (a). Pub. L. 95–216, § 355(a), substituted ‘‘cash remuneration to which paragraph (7)(B) of sec- tion 3121(a) is applicable’’ for ‘‘cash remuneration to which paragraph (7)(B) or (C) or (10) of section 3121(a) is applicable’’ and inserted ‘‘and an employer who in any calendar year pays to an employee cash remuneration to which paragraph (7)(C) or (10) of section 3121(a) is ap- plicable may deduct an amount equivalent to such tax from any such payment of remuneration, even though at the time of payment the total amount of such remu- neration paid to the employee by the employer in the calendar year is less than $100;’’. Subsec. (c)(1), (2). Pub. L. 95–216, § 355(b)(1), sub- stituted ‘‘year’’ for ‘‘quarter’’ wherever appearing. Subsec. (c)(3)(A). Pub. L. 95–216, § 355(b)(2)(A), sub- stituted ‘‘in any calendar year’’ for ‘‘in any quarter of the calendar year’’. Subsec. (c)(3)(B), (C). Pub. L. 95–216, § 355(b)(2)(B), sub- stituted ‘‘year’’ for ‘‘quarter’’ wherever appearing. 1976—Subsec. (c)(3). Pub. L. 94–455 struck out ‘‘or his delegate’’ after ‘‘Secretary’’. 1965—Subsec. (a). Pub. L. 89–97, § 313(c)(2), inserted provisions at end of second sentence allowing a deduc- tion from any wages of an employee of an amount equivalent to the tax on tips when an employer is fur- nished with a written statement of tips received by an employee. Subsec. (c). Pub. L. 89–97, § 313(c)(1), added subsec. (c). 1956—Subsec. (a). Act Aug. 1, 1956, substituted ‘‘$150 and the employee has not performed agricultural labor for the employer on 20 days or more in the calendar year for cash remuneration computed on a time basis’’ for ‘‘$100’’. 1954—Subsec. (a). Act Sept. 1, 1954, inserted last sen- tence permitting in certain instances an employer to deduct employee tax even though payment to employee is less than $50 for calendar quarter or $100 for calendar year. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2010 AMENDMENT Amendment by Pub. L. 111–148 applicable with re- spect to remuneration received, and taxable years be- ginning, after Dec. 31, 2012, see section 9015(c) of Pub. L. 111–148, set out as a note under section 164 of this title. EFFECTIVE DATE OF 1994 AMENDMENTS Pub. L. 103–387, § 2(a)(3), Oct. 22, 1994, 108 Stat. 4072, provided that: ‘‘(A) IN GENERAL.—Except as provided in subpara- graph (B), the amendments made by this subsection [amending this section, section 3121 of this title, and sections 409 and 410 of Title 42, The Public Health and Welfare] shall apply to remuneration paid after Decem- ber 31, 1993. ‘‘(B) EXCLUDED EMPLOYMENT.—The amendments made by paragraphs (1)(C) and (2)(B) [amending section 3121 of this title and section 410 of Title 42] shall apply to services performed after December 31, 1994.’’ Page 2682 TITLE 26—INTERNAL REVENUE CODE § 3111 Amendment by Pub. L. 103–296 applicable with re- spect to service performed after calendar quarter fol- lowing calendar quarter in which Aug. 15, 1994, occurs, see section 319(c) of Pub. L. 103–296, set out as a note under section 1402 of this title. EFFECTIVE DATE OF 1990 AMENDMENT Pub. L. 101–508, title V, § 5124(c), Nov. 5, 1990, 104 Stat. 1388–285, provided that: ‘‘The amendments made by this section [amending this section and section 3202 of this title] shall apply to coverage provided after December 31, 1990.’’ EFFECTIVE DATE OF 1977 AMENDMENT Pub. L. 95–216, title III, § 355(c), Dec. 20, 1977, 91 Stat. 1555, provided that: ‘‘The amendments made by this section [amending this section] shall apply with re- spect to remuneration paid and to tips received after December 31, 1977.’’ EFFECTIVE DATE OF 1965 AMENDMENT Amendment by Pub. L. 89–97 applicable only with re- spect to tips received by employees after 1965, see sec- tion 313(f) of Pub. L. 89–97, set out as an Effective Date note under section 6053 of this title. NO LOSS OF SOCIAL SECURITY COVERAGE FOR 1994; CONTINUATION OF W–2 FILING REQUIREMENT Pub. L. 103–387, § 2(a)(4), Oct. 22, 1994, 108 Stat. 4072, provided that: ‘‘Notwithstanding the amendments made by this subsection [amending this section, sec- tion 3121 of this title, and sections 409 and 410 of Title 42, The Public Health and Welfare], if the wages (as de- fined in section 3121(a) of the Internal Revenue Code of 1986) paid during 1994 to an employee for domestic serv- ice in a private home of the employer are less than $1,000— ‘‘(A) the employer shall file any return or state- ment required under section 6051 of such Code with respect to such wages (determined without regard to such amendments), and ‘‘(B) the employee shall be entitled to credit under section 209 of the Social Security Act [42 U.S.C. 409] with respect to any such wages required to be in- cluded on any such return or statement.’’ Subchapter B—Tax on Employers Sec. 3111. Rate of tax. 3112. Instrumentalities of the United States. [3113. Repealed.] Editorial Notes AMENDMENTS 1976—Pub. L. 94–455, title XIX, § 1903(b), Oct. 4, 1976, 90 Stat. 1810, struck out item 3113 ‘‘District of Columbia credit unions’’. 1956—Act Aug. 1, 1956, ch. 836, title II, § 201(a)(2), 70 Stat. 839, added item 3113. § 3111. Rate of tax (a) Old-age, survivors, and disability insurance In addition to other taxes, there is hereby im- posed on every employer an excise tax, with re- spect to having individuals in his employ, equal to 6.2 percent of the wages (as defined in section 3121(a)) paid by the employer with respect to employment (as defined in section 3121(b)). (b) Hospital insurance In addition to the tax imposed by the pre- ceding subsection, there is hereby imposed on every employer an excise tax, with respect to having individuals in his employ, equal to 1.45 percent of the wages (as defined in section 3121(a)) paid by the employer with respect to employment (as defined in section 3121(b)). (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, wages received by or paid to an indi- vidual shall be exempt from the taxes imposed by this section to the extent that such wages are subject under such agreement exclusively to the laws applicable to the social security system of such foreign country. [(d) Repealed. Pub. L. 115–141, div. U, title IV, § 401(b)(34), Mar. 23, 2018, 132 Stat. 1204] (e) Credit for employment of qualified veterans (1) In general If a qualified tax-exempt organization hires a qualified veteran with respect to whom a credit would be allowable under section 38 by reason of section 51 if the organization were not a qualified tax-exempt organization, then there shall be allowed as a credit against the tax imposed by subsection (a) on wages paid with respect to employment of all employees of the organization during the applicable pe- riod an amount equal to the credit determined under section 51 (after application of the modi- fications under paragraph (3)) with respect to wages paid to such qualified veteran during such period. (2) Overall limitation The aggregate amount allowed as a credit under this subsection for all qualified veterans for any period with respect to which tax is im- posed under subsection (a) shall not exceed the amount of the tax imposed by subsection (a) on wages paid with respect to employment of all employees of the organization during such period. (3) Modifications For purposes of paragraph (1), section 51 shall be applied— (A) by substituting ‘‘26 percent’’ for ‘‘40 percent’’ in subsection (a) thereof, (B) by substituting ‘‘16.25 percent’’ for ‘‘25 percent’’ in subsection (i)(3)(A) thereof, and (C) by only taking into account wages paid to a qualified veteran for services in further- ance of the activities related to the purpose or function constituting the basis of the or- ganization’s exemption under section 501. (4) Applicable period The term ‘‘applicable period’’ means, with respect to any qualified veteran, the 1-year pe- riod beginning with the day such qualified vet- eran begins work for the organization. (5) Definitions For purposes of this subsection— (A) the term ‘‘qualified tax-exempt organi- zation’’ means an employer that is an orga- nization described in section 501(c) and ex- empt from taxation under section 501(a), and (B) the term ‘‘qualified veteran’’ has the meaning given such term by section 51(d)(3).