-CITE-
26 USC CHAPTER 24 - COLLECTION OF INCOME TAX AT SOURCE ON
WAGES 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle C - Employment Taxes
CHAPTER 24 - COLLECTION OF INCOME TAX AT SOURCE ON WAGES
-HEAD-
CHAPTER 24 - COLLECTION OF INCOME TAX AT SOURCE ON WAGES
-MISC1-
Sec.
3401. Definitions.
3402. Income tax collected at source.
3403. Liability for tax.
3404. Return and payment by governmental employer.
3405. Special rules for pensions, annuities, and certain
other deferred income.(!1)
3406. Backup withholding.
AMENDMENTS
1983 - Pub. L. 98-67, title I, Secs. 102(a), 104(d)(4), Aug. 5,
1983, 97 Stat. 369, 380, added item 3406 and repealed amendments
made by Pub. L. 97-248. See 1982 Amendment note below.
1982 - Pub. L. 97-248, title III, Secs. 307(b)(4), 308(a), Sept.
3, 1982, 96 Stat. 590, 591, provided that, applicable to payments
of interest, dividends, and patronage dividends paid or credited
after June 30, 1983, the caption of chapter 24 is amended by
striking out "ON WAGES", items for subchapters A and B are added in
analysis, and heading "Subchapter A - Withholding From Wages" is
added. Section 102(a), (b) of Pub. L. 98-67, title I, Aug. 5, 1983,
97 Stat. 369, repealed subtitle A (Secs. 301-308) of title III of
Pub. L. 97-248 as of the close of June 30, 1983, and provided that
the Internal Revenue Code of 1954 [now 1986] [this title] shall be
applied and administered (subject to certain exceptions) as if such
subtitle A (and the amendments made by such subtitle A) had not
been enacted.
-SECREF-
CHAPTER REFERRED TO IN OTHER SECTIONS
This chapter is referred to in sections 31, 274, 280F, 3121,
3231, 3306, 3502, 3507, 3509, 6011, 6013, 6051, 6103, 6302, 6414,
6501, 6513, 6682, 7654, 7872 of this title; title 5 section 5901;
title 10 section 1174; title 42 sections 409, 653a; title 48
section 1421i.
-FOOTNOTE-
(!1) Editorially supplied. Section 3405 added by Pub. L. 97-248
without corresponding amendment of analysis.
-End-
-CITE-
26 USC Sec. 3401 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle C - Employment Taxes
CHAPTER 24 - COLLECTION OF INCOME TAX AT SOURCE ON WAGES
-HEAD-
Sec. 3401. Definitions
-STATUTE-
(a) Wages
For purposes of this chapter, the term "wages" means all
remuneration (other than fees paid to a public official) for
services performed by an employee for his employer, including the
cash value of all remuneration (including benefits) paid in any
medium other than cash; except that such term shall not include
remuneration paid -
(1) for active service performed in a month for which such
employee is entitled to the benefits of section 112 (relating to
certain combat zone compensation of members of the Armed Forces
of the United States) to the extent remuneration for such service
is excludable from gross income under such section; or
(2) for agricultural labor (as defined in section 3121(g))
unless the remuneration paid for such labor is wages (as defined
in section 3121(a)); or
(3) for domestic service in a private home, local college club,
or local chapter of a college fraternity or sorority; or
(4) for service not in the course of the employer's trade or
business performed in any calendar quarter by an employee, unless
the cash remuneration paid for such service is $50 or more and
such service is performed by an individual who is regularly
employed by such employer to perform such service. For purposes
of this paragraph, an individual shall be deemed to be regularly
employed by an employer during a calendar quarter only if -
(A) on each of some 24 days during such quarter such
individual performs for such employer for some portion of the
day service not in the course of the employer's trade or
business; or
(B) such individual was regularly employed (as determined
under subparagraph (A)) by such employer in the performance of
such service during the preceding calendar quarter; or
(5) for services by a citizen or resident of the United States
for a foreign government or an international organization; or
(6) for such services, performed by a nonresident alien
individual, as may be designated by regulations prescribed by the
Secretary; or
[(7) Repealed. Pub. L. 89-809, title I, Sec. 103(k), Nov. 13,
1966, 80 Stat. 1554]
(8)(A) for services for an employer (other than the United
States or any agency thereof) -
(i) performed by a citizen of the United States if, at the
time of the payment of such remuneration, it is reasonable to
believe that such remuneration will be excluded from gross
income under section 911; or
(ii) performed in a foreign country or in a possession of the
United States by such a citizen if, at the time of the payment
of such remuneration, the employer is required by the law of
any foreign country or possession of the United States to
withhold income tax upon such remuneration; or
(B) for services for an employer (other than the United States
or any agency thereof) performed by a citizen of the United
States within a possession of the United States (other than
Puerto Rico), if it is reasonable to believe that at least 80
percent of the remuneration to be paid to the employee by such
employer during the calendar year will be for such services; or
(C) for services for an employer (other than the United States
or any agency thereof) performed by a citizen of the United
States within Puerto Rico, if it is reasonable to believe that
during the entire calendar year the employee will be a bona fide
resident of Puerto Rico; or
(D) for services for the United States (or any agency thereof)
performed by a citizen of the United States within a possession
of the United States to the extent the United States (or such
agency) withholds taxes on such remuneration pursuant to an
agreement with such possession; or
(9) for services performed by a duly ordained, commissioned, or
licensed minister of a church in the exercise of his ministry or
by a member of a religious order in the exercise of duties
required by such order; or
(10)(A) for services performed by an individual under the age
of 18 in the delivery or distribution of newspapers or shopping
news, not including delivery or distribution to any point for
subsequent delivery or distribution; or
(B) for services performed by an individual in, and at the time
of, the sale of newspapers or magazines to ultimate consumers,
under an arrangement under which the newspapers or magazines are
to be sold by him at a fixed price, his compensation being based
on the retention of the excess of such price over the amount at
which the newspapers or magazines are charged to him, whether or
not he is guaranteed a minimum amount of compensation for such
services, or is entitled to be credited with the unsold
newspapers or magazines turned back; or
(11) for services not in the course of the employer's trade or
business, to the extent paid in any medium other than cash; or
(12) to, or on behalf of, an employee or his beneficiary -
(A) from or to a trust described in section 401(a) which is
exempt from tax under section 501(a) at the time of such
payment unless such payment is made to an employee of the trust
as remuneration for services rendered as such employee and not
as a beneficiary of the trust; or
(B) under or to an annuity plan which, at the time of such
payment, is a plan described in section 403(a); or
(C) for a payment described in section 402(h)(1) and (2) if,
at the time of such payment, it is reasonable to believe that
the employee will be entitled to an exclusion under such
section for payment; or
(D) under an arrangement to which section 408(p) applies; or
(E) under or to an eligible deferred compensation plan which,
at the time of such payment, is a plan described in section
457(b) which is maintained by an eligible employer described in
section 457(e)(1)(A),(!1) or
(13) pursuant to any provision of law other than section 5(c)
or 6(1) of the Peace Corps Act, for service performed as a
volunteer or volunteer leader within the meaning of such Act; or
(14) in the form of group-term life insurance on the life of an
employee; or
(15) to or on behalf of an employee if (and to the extent that)
at the time of the payment of such remuneration it is reasonable
to believe that a corresponding deduction is allowable under
section 217 (determined without regard to section 274(n)); or
(16)(A) as tips in any medium other than cash;
(B) as cash tips to an employee in any calendar month in the
course of his employment by an employer unless the amount of such
cash tips is $20 or more; (!2)
(17) for service described in section 3121(b)(20); (!2)
(18) for 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, 129, or 134(b)(4); (!2)
(19) for 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, or 132; (!2)
(20) for any medical care reimbursement made to or for the
benefit of an employee under a self-insured medical reimbursement
plan (within the meaning of section 105(h)(6)); (!2)
(21) for 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); or
(22) 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).
(b) Payroll period
For purposes of this chapter, the term "payroll period" means a
period for which a payment of wages is ordinarily made to the
employee by his employer, and the term "miscellaneous payroll
period" means a payroll period other than a daily, weekly,
biweekly, semimonthly, monthly, quarterly, semiannual or annual
payroll period.
(c) Employee
For purposes of this chapter, the term "employee" includes an
officer, employee, or elected official of the United States, a
State, or any political subdivision thereof, or the District of
Columbia, or any agency or instrumentality of any one or more of
the foregoing. The term "employee" also includes an officer of a
corporation.
(d) Employer
For purposes of this chapter, the term "employer" means the
person for whom an individual performs or performed any service, of
whatever nature, as the employee of such person, except that -
(1) if the person for whom the individual performs or performed
the services does not have control of the payment of the wages
for such services, the term "employer" (except for purposes of
subsection (a)) means the person having control of the payment of
such wages, and
(2) in the case of a person paying wages on behalf of a
nonresident alien individual, foreign partnership, or foreign
corporation, not engaged in trade or business within the United
States, the term "employer" (except for purposes of subsection
(a)) means such person.
(e) Number of withholding exemptions claimed
For purposes of this chapter, the term "number of withholding
exemptions claimed" means the number of withholding exemptions
claimed in a withholding exemption certificate in effect under
section 3402(f), or in effect under the corresponding section of
prior law, except that if no such certificate is in effect, the
number of withholding exemptions claimed shall be considered to be
zero.
(f) Tips
For purposes of subsection (a), the term "wages" includes tips
received by an employee in the course of his employment. Such wages
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.
[(g) Repealed. Pub. L. 101-140, title II, Sec. 203(a)(2), Nov. 8,
1989, 103 Stat. 830]
(h) Crew leader rules to apply
Rules similar to the rules of section 3121(o) shall apply for
purposes of this chapter.
-SOURCE-
(Aug. 16, 1954, ch. 736, 68A Stat. 455; Aug. 9, 1955, ch. 681, 69
Stat. 616; Pub. L. 87-256, Sec. 110(g)(1), Sept. 21, 1961, 75 Stat.
537; Pub. L. 87-293, title II, Sec. 201(c), Sept. 22, 1961, 75
Stat. 625; Pub. L. 87-792, Sec. 7(l), Oct. 10, 1962, 76 Stat. 830;
Pub. L. 88-272, title II, Secs. 204(b), 213(c), Feb. 26, 1964, 78
Stat. 36, 52; Pub. L. 89-97, title III, Sec. 313(d)(1), (2), July
30, 1965, 79 Stat. 383, 384; Pub. L. 89-809, title I, Sec. 103(k),
Nov. 13, 1966, 80 Stat. 1554; Pub. L. 92-279, Sec. 2, Apr. 26,
1972, 86 Stat. 125; Pub. L. 93-406, title II, Sec. 2002(g)(7),
Sept. 2, 1974, 88 Stat. 970; Pub. L. 94-455, title XII, Sec.
1207(e)(1)(C), title XV, Sec. 1501(b)(7), title XIX, Secs. 1903(c),
1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1707, 1736, 1810, 1834; Pub.
L. 95-600, title I, Sec. 164(b)(1), Nov. 6, 1978, 92 Stat. 2813;
Pub. L. 95-615, Sec. 207(a), Nov. 8, 1978, 92 Stat. 3108; Pub. L.
96-222, title I, Sec. 103(a)(13)(A), Apr. 1, 1980, 94 Stat. 213;
Pub. L. 97-34, title I, Secs. 112(b)(5), 124(e)(2)(A), title III,
Sec. 311(h)(6), Aug. 13, 1981, 95 Stat. 195, 200, 282; Pub. L.
97-448, title I, Sec. 103(c)(12)(B), Jan. 12, 1983, 96 Stat. 2377;
Pub. L. 98-369, div. A, title IV, Sec. 491(d)(38), title V, Sec.
531(d)(4), July 18, 1984, 98 Stat. 851, 885; Pub. L. 99-514, title
I, Sec. 122(e)(4), title XII, Sec. 1272(c), Oct. 22, 1986, 100
Stat. 2112, 2594; Pub. L. 100-647, title I, Secs.
1001(g)(4)(B)(iii), 1011(f)(9), 1011B(a)(22)(D), (33), Nov. 10,
1988, 102 Stat. 3352, 3463, 3486, 3488; Pub. L. 101-140, title II,
Sec. 203(a)(2), Nov. 8, 1989, 103 Stat. 830; Pub. L. 101-239, title
VII, Sec. 7631(a), (b), Dec. 19, 1989, 103 Stat. 2378; Pub. L.
101-508, title XI, Sec. 11703(f)(1), Nov. 5, 1990, 104 Stat.
1388-517; Pub. L. 104-117, Sec. 1(c), Mar. 20, 1996, 110 Stat. 828;
Pub. L. 104-188, title I, Secs. 1421(b)(8)(D), 1704(t)(4)(C), Aug.
20, 1996, 110 Stat. 1798, 1887; Pub. L. 104-191, title III, Sec.
301(c)(2)(C), Aug. 21, 1996, 110 Stat. 2049; Pub. L. 105-206, title
VI, Sec. 6023(14), (15), July 22, 1998, 112 Stat. 825; Pub. L.
107-16, title VI, Sec. 641(a)(1)(D)(i), June 7, 2001, 115 Stat.
119; Pub. L. 108-121, title I, Sec. 106(b)(4), Nov. 11, 2003, 117
Stat. 1339; Pub. L. 108-173, title XII, Sec. 1201(d)(2)(C), Dec. 8,
2003, 117 Stat. 2477.)
-STATAMEND-
AMENDMENT OF SECTION
For termination of amendment by section 901 of Pub. L. 107-16,
see Effective and Termination Dates of 2001 Amendment note below.
-REFTEXT-
REFERENCES IN TEXT
Sections 5(c) and 6(1) of the Peace Corps Act, referred to in
subsec. (a)(13), are classified to sections 2504(c) and 2505(1),
respectively, of Title 22, Foreign Relations and Intercourse.
-MISC1-
AMENDMENTS
2003 - Subsec. (a)(18). Pub. L. 108-121 substituted ", 129, or
134(b)(4)" for "or 129".
Subsec. (a)(22). Pub. L. 108-173 added par. (22).
2001 - Subsec. (a)(12)(E). Pub. L. 107-16, Secs. 641(a)(1)(D)(i),
901, temporarily added subpar. (E). See Effective and Termination
Dates of 2001 Amendment note below.
1998 - Subsec. (a)(19), (21). Pub. L. 105-206 inserted "for"
after par. designation.
1996 - Subsec. (a)(1). Pub. L. 104-188, Sec. 1704(t)(4)(C),
substituted "combat zone compensation" for "combat pay".
Pub. L. 104-117 inserted before semicolon "to the extent
remuneration for such service is excludable from gross income under
such section".
Subsec. (a)(12)(D). Pub. L. 104-188, Sec. 1421(b)(8)(D), added
subpar. (D).
Subsec. (a)(21). Pub. L. 104-191 added par. (21).
1990 - Subsec. (a)(20). Pub. L. 101-508 added par. (20).
1989 - Subsec. (a)(2). Pub. L. 101-239, Sec. 7631(a), amended
par. (2) generally. Prior to amendment, par. (2) read as follows:
"for agricultural labor (as defined in section 3121(g)); or".
Subsec. (g). Pub. L. 101-140 amended this section to read as if
amendments by Pub. L. 100-647, Sec. 1011B(a)(22)(D), had not been
enacted, see 1988 Amendment note below.
Subsec. (h). Pub. L. 101-239, Sec. 7631(b), added subsec. (h).
1988 - Subsec. (a)(12)(C). Pub. L. 100-647, Sec. 1011(f)(9),
substituted "section 402(h)(1) and (2)" for "section 219" and "an
exclusion" for "a deduction".
Subsec. (a)(15). Pub. L. 100-647, Sec. 1001(g)(4)(B)(iii),
inserted "(determined without regard to section 274(n))" after
"section 217".
Subsec. (a)(19), (20). Pub. L. 100-647, Sec. 1011B(a)(33),
redesignated par. (20) as (19) and struck out former par. (19)
which excluded medical care reimbursement made to or for benefit of
employee under self-insured medical reimbursement plan.
Subsec. (g). Pub. L. 100-647, Sec. 1011B(a)(22)(D), added subsec.
(g) relating to benefits provided under certain employee benefit
plans.
1986 - Subsec. (a)(8)(D). Pub. L. 99-514, Sec. 1272(c), added
subpar. (D).
Subsec. (a)(20). Pub. L. 99-514, Sec. 122(e)(4), inserted
reference to section 74(c).
1984 - Subsec. (a). Pub. L. 98-369, Sec. 531(d)(4)(A), inserted
"(including benefits)" in introductory provisions.
Subsec. (a)(12). Pub. L. 98-369, Sec. 491(d)(38), struck out
subpar. (C) which provided: "under or to a bond purchase plan
which, at the time of such payment, is a qualified bond purchase
plan described in section 405(a);" and redesignated subpar. (D) as
(C).
Subsec. (a)(20). Pub. L. 98-369, Sec. 531(d)(4)(B), added par.
(20).
1983 - Subsec. (a)(12)(D). Pub. L. 97-448 substituted "section
219" for "section 219(a)".
1981 - Subsec. (a)(12)(D). Pub. L. 97-34, Sec. 311(h)(6),
substituted "section 219(a)" for "section 219(a) or 220(a)".
Subsec. (a)(18). Pub. L. 97-34, Sec. 124(e)(2)(A), substituted
"section 127 or 129" for "section 127".
Pub. L. 97-34, Sec. 112(b)(5), redesignated par. (19) as (18).
Former par. (18), relating to remuneration paid to or on behalf of
an employee if (and to the extent that) at the time of the payment
of such remuneration it was reasonable to believe that a
corresponding deduction was allowable under section 913 (relating
to deduction for certain expenses of living abroad), was struck
out.
Subsec. (a)(19), (20). Pub. L. 97-34, Sec. 112(b)(5),
redesignated par. (20) as (19). Former par. (19) redesignated (18).
1980 - Subsec. (a)(18) to (20). Pub. L. 96-222 redesignated par.
(18), added by Pub. L. 95-600, as (19), in par. (19) as so
redesignated, substituted "section 127; or" for "section 124.", and
added par. (20).
1978 - Subsec. (a)(18). Pub. L. 95-615 added par. (18) relating
to payments or benefits excludable from income under section 124.
Pub. L. 95-600 added par. (18) relating to remuneration for which
a corresponding deduction is allowable under section 913.
1976 - Subsec. (a)(6). Pub. L. 94-455, Sec. 1906(b)(13)(A),
struck out "or his delegate" after "Secretary".
Subsec. (a)(12)(D). Pub. L. 94-455, Sec. 1501(b)(7), inserted "or
220(a)" after "section 219(a)".
Subsec. (a)(17). Pub. L. 94-455, Sec. 1207(e)(1)(C), added par.
(17).
Subsec. (c). Pub. L. 94-455, Sec. 1903(c), struck out "Territory"
after "a State".
1974 - Subsec. (a)(12)(D). Pub. L. 93-406 added subpar. (D).
1972 - Subsec. (a)(1). Pub. L. 92-279 struck out "as a member of
the Armed Forces of the United States" after "active service",
substituted "employee" for "member", and parenthetical text
"(relating to certain combat pay of members of the Armed Forces of
the United States)".
1966 - Subsec. (a)(6), (7). Pub. L. 89-809, Sec. 103(k), struck
out par. (6) dealing with services performed by nonresident alien
individuals other than residents of contiguous countries who enter
and leave the United States at frequent intervals, residents of
Puerto Rico if such services are performed as an employee of the
United States or any agency thereof, or individuals temporarily
present in the United States as nonimmigrants under certain
conditions, redesignated par. (7) as (6), and in par (6) as so
redesignated, struck out "who is a resident of a contiguous country
and who enters and leaves the United States at frequent intervals"
after "nonresident alien individual".
1965 - Subsec. (a)(16). Pub. L. 89-97, Sec. 313(d)(2), added par.
(16).
Subsec. (f). Pub. L. 89-97, Sec. 313(d)(1), added subsec. (f).
1964 - Subsec. (a)(14). Pub. L. 88-272, Sec. 204(b), added par.
(14).
Subsec. (a)(15). Pub. L. 88-272, Sec. 213(c), added par. (15).
1962 - Subsec. (a)(12)(B), (C). Pub. L. 87-792 substituted "is a
plan described in section 403(a)" for "meets the requirements of
section 401(a)(3), (4), (5), and (6)", in subpar. (B), and added
subpar. (C).
1961 - Subsec. (a)(6)(C). Pub. L. 87-256 added subpar. (C).
Subsec. (a)(13). Pub. L. 87-293 added par. (13).
1955 - Subsec. (a). Act Aug. 9, 1955, excluded from definition of
wages, remuneration paid for services performed in a possession of
the United States by a United States citizen if the employer is
required by the law of the possession to withhold income tax on the
remuneration.
EFFECTIVE DATE OF 2003 AMENDMENTS
Amendment by Pub. L. 108-173 applicable to taxable years
beginning after Dec. 31, 2003, see section 1201(k) of Pub. L.
108-173, set out as a note under section 62 of this title.
Amendment by Pub. L. 108-121 applicable to taxable years
beginning after Dec. 31, 2002, see section 106(c) of Pub. L.
108-121, set out as a note under section 134 of this title.
EFFECTIVE AND TERMINATION DATES OF 2001 AMENDMENT
Amendment by Pub. L. 107-16 applicable to distributions after
Dec. 31, 2001, see section 641(f)(1) of Pub. L. 107-16, set out as
a note under section 402 of this title.
Amendment by Pub. L. 107-16 inapplicable to taxable, plan, or
limitation years beginning after Dec. 31, 2010, and the Internal
Revenue Code of 1986 to be applied and administered to such years
as if such amendment had never been enacted, see section 901 of
Pub. L. 107-16, set out as a note under section 1 of this title.
EFFECTIVE DATE OF 1996 AMENDMENTS
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.
Amendment by section 1421(b)(8)(D) of Pub. L. 104-188 applicable
to taxable years beginning after Dec. 31, 1996, see section 1421(e)
of Pub. L. 104-188, set out as a note under section 72 of this
title.
Amendment by Pub. L. 104-117 applicable to remuneration paid
after Mar. 20, 1996, see section 1(e) of Pub. L. 104-117, set out
in a Treatment of Certain Individuals Performing Services in
Certain Hazardous Duty Areas; Effective Date note under section 112
of this title.
EFFECTIVE DATE OF 1990 AMENDMENT
Section 11703(f)(2) of Pub. L. 101-508 provided that: "The
amendment made by paragraph (1) [amending this section] shall apply
as if included in the amendments made by section 1151 of the Tax
Reform Act of 1986 [Pub. L. 99-514, see Effective Date of 1986
Amendment note set out under section 79 of this title] but shall
not apply to any amount paid before the date of the enactment of
this Act [Nov. 5, 1990] which the employer treated as wages for
purposes of chapter 24 of the Internal Revenue Code of 1986 when
paid."
EFFECTIVE DATE OF 1989 AMENDMENTS
Section 7631(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 sections 1001(g)(4)(B)(iii), 1011(f)(9), and
1011B(a)(33) 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)(D) 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)(4) 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.
Amendment by section 1272(c) of Pub. L. 99-514 applicable to
taxable years beginning after Dec. 31, 1986, with certain
exceptions and qualifications, see section 1277 of Pub. L. 99-514,
set out as a note under section 931 of this title.
EFFECTIVE DATE OF 1984 AMENDMENT
Amendment by section 491(d)(38) of Pub. L. 98-369 applicable to
obligations issued after Dec. 31, 1983, see section 491(f)(1) of
Pub. L. 98-369, set out as a note under section 62 of this title.
Amendment by section 531(d)(4) of 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. 97-448 effective, except as otherwise
provided, as if it had been included in the provision of the
Economic Recovery Tax Act of 1981, Pub. L. 97-34, to which such
amendment relates, see section 109 of Pub. L. 97-448, set out as a
note under section 1 of this title.
EFFECTIVE DATE OF 1981 AMENDMENT
Amendment by section 112(b)(5) of Pub. L. 97-34 applicable with
respect to taxable years beginning after Dec. 31, 1981, see section
115 of Pub. L. 97-34, set out as a note under section 911 of this
title.
Amendment by section 124(e)(2)(A) of Pub. L. 97-34 applicable to
remuneration paid after Dec. 31, 1981, see section 124(f)(2) of
Pub. L. 97-34, set out as a note under section 21 of this title.
Amendment by section 311(h)(6) of Pub. L. 97-34 applicable to
taxable years beginning after Dec. 31, 1981, see section 311(i)(1)
of Pub. L. 97-34, set out as a note under section 219 of this
title.
EFFECTIVE DATE OF 1980 AMENDMENT
Amendment by Pub. L. 96-222 effective, except as otherwise
provided, as if it had been included in the provisions of the
Revenue Act of 1978, Pub. L. 95-600, to which such amendment
relates, see section 201 of Pub. L. 96-222, set out as a note under
section 32 of this title.
EFFECTIVE DATE OF 1978 AMENDMENTS
Amendment by Pub. L. 95-615 applicable to remuneration paid after
Nov. 8, 1978, but with taxpayers allowed to elect not to have the
amendment apply with respect to any taxable year beginning after
Dec. 31, 1977, and before Jan. 1, 1979, see section 209(b), (c) of
Pub. L. 95-615, set out as a note under section 911 of this title.
Amendment by Pub. L. 95-600 applicable with respect to taxable
years beginning after Dec. 31, 1978, see section 164(d) of Pub. L.
95-600, set out as a note under section 127 of this title.
EFFECTIVE DATE OF 1976 AMENDMENT
Amendment by section 1501(b)(7) of Pub. L. 94-455 effective for
taxable years beginning after Dec. 31, 1976, see section 1501(d) of
Pub. L. 94-455, set out as a note under section 62 of this title.
EFFECTIVE DATE OF 1974 AMENDMENT
Amendment by Pub. L. 93-406 effective on Jan. 1, 1975, see
section 2002(i)(2) of Pub. L. 93-406, set out as an Effective Date
note under section 4973 of this title.
EFFECTIVE DATE OF 1972 AMENDMENT
Section 3(b) of Pub. L. 92-279 provided that: "The amendments
made by section 2 [amending this section] shall apply to wages paid
on or after the first day of the first calendar month which begins
more than 30 days after the date of the enactment of this Act [Apr.
26, 1972]."
EFFECTIVE DATE OF 1966 AMENDMENT
Amendment by Pub. L. 89-809 applicable with respect to
remuneration paid after Dec. 31, 1966, see section 103(n)(4) of
Pub. L. 89-809, set out as a note under section 871 of this title.
EFFECTIVE DATE OF 1965 AMENDMENT
Amendment by section 313(d)(1), (2) of Pub. L. 89-97 applicable
only with respect to tips received by employees after 1965, see
section 313(f) of Pub. L. 89-97, set out as a note under section
6053 of this title.
EFFECTIVE DATE OF 1964 AMENDMENT
Amendment by section 204(b) of Pub. L. 88-272 applicable to
remuneration paid after Dec. 31, 1963, in the form of group-term
life insurance provided after such date, see section 204(d) of Pub.
L. 88-272, set out as an Effective Date note under section 79 of
this title.
Amendment by section 213(c) of Pub. L. 88-272 applicable to
remuneration paid after the seventh day following Feb. 26, 1964,
see section 213(d) of Pub. L. 88-272, set out as a note under
section 62 of this title.
EFFECTIVE DATE OF 1962 AMENDMENT
Amendment by Pub. L. 87-792 applicable to taxable years beginning
after Dec. 31, 1962, see section 8 of Pub. L. 87-792, set out as a
note under section 22 of this title.
EFFECTIVE DATE OF 1961 AMENDMENTS
Amendment by Pub. L. 87-293 applicable with respect to
remuneration paid after Sept. 22, 1961, see section 201(d) of Pub.
L. 87-293, set out as a note under section 912 of this title.
Section 110(h)(4) of Pub. L. 87-256 provided that: "The
amendments made by subsection (g) of this section [amending this
section and section 3402 of this title] shall apply with respect to
wages paid after December 31, 1961."
SHORT TITLE OF 1966 AMENDMENT
Pub. L. 89-368, Sec. 1, Mar. 15, 1966, 80 Stat. 38, provided
that: "This Act [enacting sections 276 and 6682 of this title and
section 428 of Title 42, The Public Health and Welfare, amending
sections 1402, 1403, 3402, 4061, 4251, 4253, 6015, 6154, 6211,
6412, 6654, 7205, and 7701 of this title and section 1202 of Title
19, Customs Duties, and enacting provisions set out as notes under
sections 276, 3402, 4061, 4251, 6154, and 6654 of this title and
section 428 of Title 42] may be cited as the 'Tax Adjustment Act of
1966'."
REPEALS; AMENDMENTS AND APPLICATION OF AMENDMENTS UNAFFECTED
Section 201(c) of Pub. L. 87-293, cited as a credit to this
section, was repealed by Pub. L. 89-572, Sec. 5(a), Sept. 13, 1966,
80 Stat. 765. Such repeal not deemed to affect amendments to this
section contained in such provisions, and continuation in full
force and effect until modified by appropriate authority of all
determinations, authorization, regulations, orders, contracts,
agreements, and other actions issued, undertaken, or entered into
under authority of the repealed provisions, see section 5(b) of
Pub. L. 89-572, set out as a note under former section 2515 of
Title 22, Foreign Relations and Intercourse.
NO INFERENCE TO BE DRAWN FROM AMENDMENT BY PUB. L. 108-121
No inference to be drawn from amendment to subsec. (a)(18) of
this section by section 106 of Pub. L. 108-121 with respect to tax
treatment of any amounts under program described in section
134(b)(4) of this title for any taxable year beginning before Jan.
1, 2003, see section 106(d) of Pub. L. 108-121, set out as a note
under section 134 of this title.
PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1998
For provisions directing that if any amendments made by subtitle
D [Secs. 1401-1465] of title I of Pub. L. 104-188 require an
amendment to any plan or annuity contract, such amendment shall not
be required to be made before the first day of the first plan year
beginning on or after Jan. 1, 1998, see section 1465 of Pub. L.
104-188, set out as a note under section 401 of this title.
CONTROVERSIES INVOLVING WHETHER INDIVIDUALS ARE EMPLOYEES FOR
PURPOSES OF EMPLOYMENT TAXES
Section 530 of Pub. L. 95-600, as amended by Pub. L. 96-167, Sec.
9(d), Dec. 29, 1979, 93 Stat. 1278; Pub. L. 96-541, Sec. 1, Dec.
17, 1980, 94 Stat. 3204; Pub. L. 97-248, title II, Sec. 269(c)(1),
(2), 96 Stat. 552; Pub. L. 99-514, Sec. 2, title XVII, Sec.
1706(a), Oct. 22, 1986, 100 Stat. 2095, 2781; Pub. L. 104-188,
title I, Sec. 1122(a), Aug. 20, 1996, 110 Stat. 1766, provided
that:
"(a) Termination of Certain Employment Tax Liability. -
"(1) In general. - If -
"(A) for purposes of employment taxes, the taxpayer did not
treat an individual as an employee for any period, and
"(B) in the case of periods after December 31, 1978, all
Federal tax returns (including information returns) required to
be filed by the taxpayer with respect to such individual for
such period are filed on a basis consistent with the taxpayer's
treatment of such individual as not being an employee,
then, for purposes of applying such taxes for such period with
respect to the taxpayer, the individual shall be deemed not to be
an employee unless the taxpayer had no reasonable basis for not
treating such individual as an employee.
"(2) Statutory standards providing one method of satisfying the
requirements of paragraph (1). - For purposes of paragraph (1), a
taxpayer shall in any case be treated as having a reasonable
basis for not treating an individual as an employee for a period
if the taxpayer's treatment of such individual for such period
was in reasonable reliance on any of the following:
"(A) judicial precedent, published rulings, technical advice
with respect to the taxpayer, or a letter ruling to the
taxpayer;
"(B) a past Internal Revenue Service audit of the taxpayer in
which there was no assessment attributable to the treatment
(for employment tax purposes) of the individuals holding
positions substantially similar to the position held by this
individual; or
"(C) long-standing recognized practice of a significant
segment of the industry in which such individual was engaged.
"(3) Consistency required in the case of prior tax treatment. -
Paragraph (1) shall not apply with respect to the treatment of
any individual for employment tax purposes for any period ending
after December 31, 1978, if the taxpayer (or a predecessor) has
treated any individual holding a substantially similar position
as an employee for purposes of the employment taxes for any
period beginning after December 31, 1977.
"(4) Refund or credit of overpayment. - If refund or credit of
any overpayment of an employment tax resulting from the
application of paragraph (1) is not barred on the date of the
enactment of this Act [Nov. 6, 1978] by any law or rule of law,
the period for filing a claim for refund or credit of such
overpayment (to the extent attributable to the application of
paragraph (1)) shall not expire before the date 1 year after the
date of the enactment of this Act.
"(b) Prohibition Against Regulations and Rulings on Employment
Status. - No regulation or Revenue Ruling shall be published on or
after the date of the enactment of this Act [Nov. 6, 1978] and
before the effective date of any law hereafter enacted clarifying
the employment status of individuals for purposes of the employment
taxes by the Department of the Treasury (including the Internal
Revenue Service) with respect to the employment status of any
individual for purposes of the employment taxes.
"(c) Definitions. - For purposes of this section -
"(1) Employment tax. - The term 'employment tax' means any tax
imposed by subtitle C of the Internal Revenue Code of 1986
[formerly I.R.C. 1954, section 3101 et seq. of this title].
"(2) Employment status. - The term 'employment status' means
the status of an individual, under the usual common law rules
applicable in determining the employer-employee relationship, as
an employee or as an independent contractor (or other individual
who is not an employee).
"(d) Exception. - This section shall not apply in the case of an
individual who, pursuant to an arrangement between the taxpayer and
another person, provides services for such other person as an
engineer, designer, drafter, computer programmer, systems analyst,
or other similarly skilled worker engaged in a similar line of
work.
"(e) Special Rules for Application of Section. -
"(1) Notice of availability of section. - An officer or
employee of the Internal Revenue Service shall, before or at the
commencement of any audit inquiry relating to the employment
status of one or more individuals who perform services for the
taxpayer, provide the taxpayer with a written notice of the
provisions of this section.
"(2) Rules relating to statutory standards. - For purposes of
subsection (a)(2) -
"(A) a taxpayer may not rely on an audit commenced after
December 31, 1996, for purposes of subparagraph (B) thereof
unless such audit included an examination for employment tax
purposes of whether the individual involved (or any individual
holding a position substantially similar to the position held
by the individual involved) should be treated as an employee of
the taxpayer,
"(B) in no event shall the significant segment requirement of
subparagraph (C) thereof be construed to require a reasonable
showing of the practice of more than 25 percent of the industry
(determined by not taking into account the taxpayer), and
"(C) in applying the long-standing recognized practice
requirement of subparagraph (C) thereof -
"(i) such requirement shall not be construed as requiring
the practice to have continued for more than 10 years, and
"(ii) a practice shall not fail to be treated as
long-standing merely because such practice began after 1978.
"(3) Availability of safe harbors. - Nothing in this section
shall be construed to provide that subsection (a) only applies
where the individual involved is otherwise an employee of the
taxpayer.
"(4) Burden of proof. -
"(A) In general. - If -
"(i) a taxpayer establishes a prima facie case that it was
reasonable not to treat an individual as an employee for
purposes of this section, and
"(ii) the taxpayer has fully cooperated with reasonable
requests from the Secretary of the Treasury or his delegate,
then the burden of proof with respect to such treatment shall be
on the Secretary.
"(B) Exception for other reasonable basis. - In the case of
any issue involving whether the taxpayer had a reasonable basis
not to treat an individual as an employee for purposes of this
section, subparagraph (A) shall only apply for purposes of
determining whether the taxpayer meets the requirements of
subparagraph (A), (B), or (C) of subsection (a)(2).
"(5) Preservation of prior period safe harbor. - If -
"(A) an individual would (but for the treatment referred to
in subparagraph (B)) be deemed not to be an employee of the
taxpayer under subsection (a) for any prior period, and
"(B) such individual is treated by the taxpayer as an
employee for employment tax purposes for any subsequent period,
then, for purposes of applying such taxes for such prior period
with respect to the taxpayer, the individual shall be deemed not
to be an employee.
"(6) Substantially similar position. - For purposes of this
section, the determination as to whether an individual holds a
position substantially similar to a position held by another
individual shall include consideration of the relationship
between the taxpayer and such individuals."
[Section 1122(b) of Pub. L. 104-188 provided that:
["(1) In general. - The amendment made by this section [amending
section 530 of Pub. L. 95-600, set out above] shall apply to
periods after December 31, 1996.
["(2) Notice by internal revenue service. - Section 530(e)(1) of
the Revenue Act of 1978 [Pub. L. 95-600] (as added by subsection
(a)) shall apply to audits which commence after December 31, 1996.
["(3) Burden of proof. -
["(A) In general. - Section 530(e)(4) of the Revenue Act of
1978 (as added by subsection (a)) shall apply to disputes
involving periods after December 31, 1996.
["(B) No inference. - Nothing in the amendments made by this
section shall be construed to infer the proper treatment of the
burden of proof with respect to disputes involving periods before
January 1, 1997."]
[Section 1706(b) of Pub. L. 99-514 provided that: "The amendment
made by this section [amending section 530 of Pub. L. 95-600, set
out above] shall apply to remuneration paid and services rendered
after December 31, 1986."]
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 41, 275, 3402, 3507,
3509, 4999, 6014, 6051, 6053, 6103, 6331 of this title; title 42
section 653a.
-FOOTNOTE-
(!1) So in original. The comma probably should be a semicolon.
(!2) So in original. Probably should be followed by "or".
-End-
-CITE-
26 USC Sec. 3402 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle C - Employment Taxes
CHAPTER 24 - COLLECTION OF INCOME TAX AT SOURCE ON WAGES
-HEAD-
Sec. 3402. Income tax collected at source
-STATUTE-
(a) Requirement of withholding
(1) In general
Except as otherwise provided in this section, every employer
making payment of wages shall deduct and withhold upon such wages
a tax determined in accordance with tables or computational
procedures prescribed by the Secretary. Any tables or procedures
prescribed under this paragraph shall -
(A) apply with respect to the amount of wages paid during
such periods as the Secretary may prescribe, and
(B) be in such form, and provide for such amounts to be
deducted and withheld, as the Secretary determines to be most
appropriate to carry out the purposes of this chapter and to
reflect the provisions of chapter 1 applicable to such periods.
(2) Amount of wages
For purposes of applying tables or procedures prescribed under
paragraph (1), the term "the amount of wages" means the amount by
which the wages exceed the number of withholding exemptions
claimed multiplied by the amount of one such exemption. The
amount of each withholding exemption shall be equal to the amount
of one personal exemption provided in section 151(b), prorated to
the payroll period. The maximum number of withholding exemptions
permitted shall be calculated in accordance with regulations
prescribed by the Secretary under this section, taking into
account any reduction in withholding to which an employee is
entitled under this section.
(b) Percentage method of withholding
(1) If wages are paid with respect to a period which is not a
payroll period, the withholding exemption allowable with respect to
each payment of such wages shall be the exemption allowed for a
miscellaneous payroll period containing a number of days (including
Sundays and holidays) equal to the number of days in the period
with respect to which such wages are paid.
(2) In any case in which wages are paid by an employer without
regard to any payroll period or other period, the withholding
exemption allowable with respect to each payment of such wages
shall be the exemption allowed for a miscellaneous payroll period
containing a number of days equal to the number of days (including
Sundays and holidays) which have elapsed since the date of the last
payment of such wages by such employer during the calendar year, or
the date of commencement of employment with such employer during
such year, or January 1 of such year, whichever is the later.
(3) In any case in which the period, or the time described in
paragraph (2), in respect of any wages is less than one week, the
Secretary, under regulations prescribed by him, may authorize an
employer to compute the tax to be deducted and withheld as if the
aggregate of the wages paid to the employee during the calendar
week were paid for a weekly payroll period.
(4) In determining the amount to be deducted and withheld under
this subsection, the wages may, at the election of the employer, be
computed to the nearest dollar.
(c) Wage bracket withholding
(1) At the election of the employer with respect to any employee,
the employer shall deduct and withhold upon the wages paid to such
employee a tax (in lieu of the tax required to be deducted and
withheld under subsection (a)) determined in accordance with tables
prescribed by the Secretary in accordance with paragraph (6).
(2) If wages are paid with respect to a period which is not a
payroll period, the amount to be deducted and withheld shall be
that applicable in the case of a miscellaneous payroll period
containing a number of days (including Sundays and holidays) equal
to the number of days in the period with respect to which such
wages are paid.
(3) In any case in which wages are paid by an employer without
regard to any payroll period or other period, the amount to be
deducted and withheld shall be that applicable in the case of a
miscellaneous payroll period containing a number of days equal to
the number of days (including Sundays and holidays) which have
elapsed since the date of the last payment of such wages by such
employer during the calendar year, or the date of commencement of
employment with such employer during such year, or January 1 of
such year, whichever is the later.
(4) In any case in which the period, or the time described in
paragraph (3), in respect of any wages is less than one week, the
Secretary, under regulations prescribed by him, may authorize an
employer to determine the amount to be deducted and withheld under
the tables applicable in the case of a weekly payroll period, in
which case the aggregate of the wages paid to the employee during
the calendar week shall be considered the weekly wages.
(5) If the wages exceed the highest wage bracket, in determining
the amount to be deducted and withheld under this subsection, the
wages may, at the election of the employer, be computed to the
nearest dollar.
(6) In the case of wages paid after December 31, 1969, the amount
deducted and withheld under paragraph (1) shall be determined in
accordance with tables prescribed by the Secretary. In the tables
so prescribed, the amounts set forth as amounts of wages and
amounts of income tax to be deducted and withheld shall be computed
on the basis of the table for an annual payroll period prescribed
pursuant to subsection (a).
(d) Tax paid by recipient
If the employer, in violation of the provisions of this chapter,
fails to deduct and withhold the tax under this chapter, and
thereafter the tax against which such tax may be credited is paid,
the tax so required to be deducted and withheld shall not be
collected from the employer; but this subsection shall in no case
relieve the employer from liability for any penalties or additions
to the tax otherwise applicable in respect of such failure to
deduct and withhold.
(e) Included and excluded wages
If the remuneration paid by an employer to an employee for
services performed during one-half or more of any payroll period of
not more than 31 consecutive days constitutes wages, all the
remuneration paid by such employer to such employee for such period
shall be deemed to be wages; but if the remuneration paid by an
employer to an employee for services performed during more than
one-half of any such payroll period does not constitute wages, then
none of the remuneration paid by such employer to such employee for
such period shall be deemed to be wages.
(f) Withholding exemptions
(1) In general
An employee receiving wages shall on any day be entitled to the
following withholding exemptions:
(A) an exemption for himself unless he is an individual
described in section 151(d)(2);
(B) if the employee is married, any exemption to which his
spouse is entitled, or would be entitled if such spouse were an
employee receiving wages, under subparagraph (A) or (D), but
only if such spouse does not have in effect a withholding
exemption certificate claiming such exemption;
(C) an exemption for each individual with respect to whom, on
the basis of facts existing at the beginning of such day, there
may reasonably be expected to be allowable an exemption under
section 151(c) for the taxable year under subtitle A in respect
of which amounts deducted and withheld under this chapter in
the calendar year in which such day falls are allowed as a
credit;
(D) any allowance to which he is entitled under subsection
(m), but only if his spouse does not have in effect a
withholding exemption certificate claiming such allowance; and
(E) a standard deduction allowance which shall be an amount
equal to one exemption (or more than one exemption if so
prescribed by the Secretary) unless (i) he is married (as
determined under section 7703) and his spouse is an employee
receiving wages subject to withholding or (ii) he has
withholding exemption certificates in effect with respect to
more than one employer.
For purposes of this title, any standard deduction allowance
under subparagraph (E) shall be treated as if it were denominated
a withholding exemption.
(2) Exemption certificates
(A) On commencement of employment
On or before the date of the commencement of employment with
an employer, the employee shall furnish the employer with a
signed withholding exemption certificate relating to the number
of withholding exemptions which he claims, which shall in no
event exceed the number to which he is entitled.
(B) Change of status
If, on any day during the calendar year, the number of
withholding exemptions to which the employee is entitled is
less than the number of withholding exemptions claimed by the
employee on the withholding exemption certificate then in
effect with respect to him, the employee shall within 10 days
thereafter furnish the employer with a new withholding
exemption certificate relating to the number of withholding
exemptions which the employee then claims, which shall in no
event exceed the number to which he is entitled on such day.
If, on any day during the calendar year, the number of
withholding exemptions to which the employee is entitled is
greater than the number of withholding exemptions claimed, the
employee may furnish the employer with a new withholding
exemption certificate relating to the number of withholding
exemptions which the employee then claims, which shall in no
event exceed the number to which he is entitled on such day.
(C) Change of status which affects next calendar year
If on any day during the calendar year the number of
withholding exemptions to which the employee will be, or may
reasonably be expected to be, entitled at the beginning of his
next taxable year under subtitle A is different from the number
to which the employee is entitled on such day, the employee
shall, in such cases and at such times as the Secretary may by
regulations prescribe, furnish the employer with a withholding
exemption certificate relating to the number of withholding
exemptions which he claims with respect to such next taxable
year, which shall in no event exceed the number to which he
will be, or may reasonably be expected to be, so entitled.
(3) When certificate takes effect
(A) First certificate furnished
A withholding exemption certificate furnished the employer in
cases in which no previous such certificate is in effect shall
take effect as of the beginning of the first payroll period
ending, or the first payment of wages made without regard to a
payroll period, on or after the date on which such certificate
is so furnished.
(B) Furnished to take place of existing certificate
(i) In general
Except as provided in clauses (ii) and (iii), a withholding
exemption certificate furnished to the employer in cases in
which a previous such certificate is in effect shall take
effect as of the beginning of the 1st payroll period ending
(or the 1st payment of wages made without regard to a payroll
period) on or after the 30th day after the day on which such
certificate is so furnished.
(ii) Employer may elect earlier effective date
At the election of the employer, a certificate described in
clause (i) may be made effective beginning with any payment
of wages made on or after the day on which the certificate is
so furnished and before the 30th day referred to in clause
(i).
(iii) Change of status which affects next year
Any certificate furnished pursuant to paragraph (2)(C)
shall not take effect, and may not be made effective, with
respect to any payment of wages made in the calendar year in
which the certificate is furnished.
(4) Period during which certificate remains in effect
A withholding exemption certificate which takes effect under
this subsection, or which on December 31, 1954, was in effect
under the corresponding subsection of prior law, shall continue
in effect with respect to the employer until another such
certificate takes effect under this subsection.
(5) Form and contents of certificate
Withholding exemption certificates shall be in such form and
contain such information as the Secretary may by regulations
prescribe.
(6) Exemption of certain nonresident aliens
Notwithstanding the provisions of paragraph (1), a nonresident
alien individual (other than an individual described in section
3401(a)(6)(A) or (B)) shall be entitled to only one withholding
exemption.
(7) Exemption where certificate with another employer is in
effect
If a withholding exemption certificate is in effect with
respect to one employer, an employee shall not be entitled under
a certificate in effect with any other employer to any
withholding exemption which he has claimed under such first
certificate.
(g) Overlapping pay periods, and payment by agent or fiduciary
If a payment of wages is made to an employee by an employer -
(1) with respect to a payroll period or other period, any part
of which is included in a payroll period or other period with
respect to which wages are also paid to such employee by such
employer, or
(2) without regard to any payroll period or other period, but
on or prior to the expiration of a payroll period or other period
with respect to which wages are also paid to such employee by
such employer, or
(3) with respect to a period beginning in one and ending in
another calendar year, or
(4) through an agent, fiduciary, or other person who also has
the control, receipt, custody, or disposal of, or pays, the wages
payable by another employer to such employee,
the manner of withholding and the amount to be deducted and
withheld under this chapter shall be determined in accordance with
regulations prescribed by the Secretary under which the withholding
exemption allowed to the employee in any calendar year shall
approximate the withholding exemption allowable with respect to an
annual payroll period.
(h) Alternative methods of computing amount to be withheld
The Secretary may, under regulations prescribed by him, authorize
-
(1) Withholding on basis of average wages
An employer -
(A) to estimate the wages which will be paid to any employee
in any quarter of the calendar year,
(B) to determine the amount to be deducted and withheld upon
each payment of wages to such employee during such quarter as
if the appropriate average of the wages so estimated
constituted the actual wages paid, and
(C) to deduct and withhold upon any payment of wages to such
employee during such quarter (and, in the case of tips referred
to in subsection (k), within 30 days thereafter) such amount as
may be necessary to adjust the amount actually deducted and
withheld upon the wages of such employee during such quarter to
the amount required to be deducted and withheld during such
quarter without regard to this subsection.
(2) Withholding on basis of annualized wages
An employer to determine the amount of tax to be deducted and
withheld upon a payment of wages to an employee for a payroll
period by -
(A) multiplying the amount of an employee's wages for a
payroll period by the number of such payroll periods in the
calendar year,
(B) determining the amount of tax which would be required to
be deducted and withheld upon the amount determined under
subparagraph (A) if such amount constituted the actual wages
for the calendar year and the payroll period of the employee
were an annual payroll period, and
(C) dividing the amount of tax determined under subparagraph
(B) by the number of payroll periods (described in subparagraph
(A)) in the calendar year.
(3) Withholding on basis of cumulative wages
An employer, in the case of any employee who requests to have
the amount of tax to be withheld from his wages computed on the
basis of his cumulative wages, to -
(A) add the amount of the wages to be paid to the employee
for the payroll period to the total amount of wages paid by the
employer to the employee during the calendar year,
(B) divide the aggregate amount of wages computed under
subparagraph (A) by the number of payroll periods to which such
aggregate amount of wages relates,
(C) compute the total amount of tax that would have been
required to be deducted and withheld under subsection (a) if
the average amount of wages (as computed under subparagraph
(B)) had been paid to the employee for the number of payroll
periods to which the aggregate amount of wages (computed under
subparagraph (A)) relates,
(D) determine the excess, if any, of the amount of tax
computed under subparagraph (C) over the total amount of tax
deducted and withheld by the employer from wages paid to the
employee during the calendar year, and
(E) deduct and withhold upon the payment of wages (referred
to in subparagraph (A)) to the employee an amount equal to the
excess (if any) computed under subparagraph (D).
(4) Other methods
An employer to determine the amount of tax to be deducted and
withheld upon the wages paid to an employee by any other method
which will require the employer to deduct and withhold upon such
wages substantially the same amount as would be required to be
deducted and withheld by applying subsection (a) or (c), either
with respect to a payroll period or with respect to the entire
taxable year.
(i) Changes in withholding
(1) In general
The Secretary may by regulations provide for increases in the
amount of withholding otherwise required under this section in
cases where the employee requests such changes.
(2) Treatment as tax
Any increased withholding under paragraph (1) shall for all
purposes be considered tax required to be deducted and withheld
under this chapter.
(j) Noncash remuneration to retail commission salesman
In the case of remuneration paid in any medium other than cash
for services performed by an individual as a retail salesman for a
person, where the service performed by such individual for such
person is ordinarily performed for remuneration solely by way of
cash commission an employer shall not be required to deduct or
withhold any tax under this subchapter with respect to such
remuneration, provided that such employer files with the Secretary
such information with respect to such remuneration as the Secretary
may by regulation prescribe.
(k) Tips
In the case of tips which constitute wages, subsection (a) shall
be applicable only to such tips as are included in a written
statement furnished to the employer pursuant to section 6053(a),
and only to the extent that the tax can be deducted and withheld by
the employer, at or after the time such statement is so furnished
and before the close of the calendar year in which such statement
is furnished, from such wages of the employee (excluding tips, but
including funds turned over by the employee to the employer for the
purpose of such deduction and withholding) as are under the control
of the employer; 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 (16)(B) of section 3401(a) is
applicable may deduct and withhold the tax with respect to such
tips from any wages of the employee (excluding tips) under his
control, even though at the time such statement is furnished the
total amount of the tips included in statements furnished to the
employer as having been received by the employee in such calendar
month in the course of his employment by such employer is less than
$20. Such tax shall not at any time be deducted and withheld in an
amount which exceeds the aggregate of such wages and funds
(including funds turned over under section 3102(c)(2) or section
3202(c)(2)) minus any tax required by section 3102(a) or section
3202(a) to be collected from such wages and funds.
(l) Determination and disclosure of marital status
(1) Determination of status by employer
For purposes of applying the tables in subsections (a) and (c)
to a payment of wages, the employer shall treat the employee as a
single person unless there is in effect with respect to such
payment of wages a withholding exemption certificate furnished to
the employer by the employee after the date of the enactment of
this subsection indicating that the employee is married.
(2) Disclosure of status by employee
An employee shall be entitled to furnish the employer with a
withholding exemption certificate indicating he is married only
if, on the day of such furnishing, he is married (determined with
the application of the rules in paragraph (3)). An employee whose
marital status changes from married to single shall, at such time
as the Secretary may by regulations prescribe, furnish the
employer with a new withholding exemption certificate.
(3) Determination of marital status
For purposes of paragraph (2), an employee shall on any day be
considered -
(A) as not married, if (i) he is legally separated from his
spouse under a decree of divorce or separate maintenance, or
(ii) either he or his spouse is, or on any preceding day within
the calendar year was, a nonresident alien; or
(B) as married, if (i) his spouse (other than a spouse
referred to in subparagraph (A)) died within the portion of his
taxable year which precedes such day, or (ii) his spouse died
during one of the two taxable years immediately preceding the
current taxable year and, on the basis of facts existing at the
beginning of such day, the employee reasonably expects, at the
close of his taxable year, to be a surviving spouse (as defined
in section 2(a)).
(m) Withholding allowances
Under regulations prescribed by the Secretary, an employee shall
be entitled to additional withholding allowances or additional
reductions in withholding under this subsection. In determining the
number of additional withholding allowances or the amount of
additional reductions in withholding under this subsection, the
employee may take into account (to the extent and in the manner
provided by such regulations) -
(1) estimated itemized deductions allowable under chapter 1
(other than the deductions referred to in section 151 and other
than the deductions required to be taken into account in
determining adjusted gross income under section 62(a) (other than
paragraph (10) thereof)),
(2) estimated tax credits allowable under chapter 1, and
(3) such additional deductions (including the additional
standard deduction under section 63(c)(3) for the aged and blind)
and other items as may be specified by the Secretary in
regulations.
(n) Employees incurring no income tax liability
Notwithstanding any other provision of this section, an employer
shall not be required to deduct and withhold any tax under this
chapter upon a payment of wages to an employee if there is in
effect with respect to such payment a withholding exemption
certificate (in such form and containing such other information as
the Secretary may prescribe) furnished to the employer by the
employee certifying that the employee -
(1) incurred no liability for income tax imposed under subtitle
A for his preceding taxable year, and
(2) anticipates that he will incur no liability for income tax
imposed under subtitle A for his current taxable year.
The Secretary shall by regulations provide for the coordination of
the provisions of this subsection with the provisions of subsection
(f).
(o) Extension of withholding to certain payments other than wages
(1) General rule
For purposes of this chapter (and so much of subtitle F as
relates to this chapter) -
(A) any supplemental unemployment compensation benefit paid
to an individual,
(B) any payment of an annuity to an individual, if at the
time the payment is made a request that such annuity be subject
to withholding under this chapter is in effect, and
(C) any payment to an individual of sick pay which does not
constitute wages (determined without regard to this
subsection), if at the time the payment is made a request that
such sick pay be subject to withholding under this chapter is
in effect,
shall be treated as if it were a payment of wages by an employer
to an employee for a payroll period.
(2) Definitions
(A) Supplemental unemployment compensation benefits
For purposes of paragraph (1), the term "supplemental
unemployment compensation benefits" means amounts which are
paid to an employee, pursuant to a plan to which the employer
is a party, because of an employee's involuntary separation
from employment (whether or not such separation is temporary),
resulting directly from a reduction in force, the
discontinuance of a plant or operation, or other similar
conditions, but only to the extent such benefits are includible
in the employee's gross income.
(B) Annuity
For purposes of this subsection, the term "annuity" means any
amount paid to an individual as a pension or annuity.
(C) Sick pay
For purposes of this subsection, the term "sick pay" means
any amount which -
(i) is paid to an employee pursuant to a plan to which the
employer is a party, and
(ii) constitutes remuneration or a payment in lieu of
remuneration for any period during which the employee is
temporarily absent from work on account of sickness or
personal injuries.
(3) Amount withheld from annuity payments or sick pay
If a payee makes a request that an annuity or any sick pay be
subject to withholding under this chapter, the amount to be
deducted and withheld under this chapter from any payment to
which such request applies shall be an amount (not less than a
minimum amount determined under regulations prescribed by the
Secretary) specified by the payee in such request. The amount
deducted and withheld with respect to a payment which is greater
or less than a full payment shall bear the same relation to the
specified amount as such payment bears to a full payment.
(4) Request for withholding
A request that an annuity or any sick pay be subject to
withholding under this chapter -
(A) shall be made by the payee in writing to the person
making the payments and shall contain the social security
number of the payee,
(B) shall specify the amount to be deducted and withheld from
each full payment, and
(C) shall take effect -
(i) in the case of sick pay, with respect to payments made
more than 7 days after the date on which such request is
furnished to the payor, or
(ii) in the case of an annuity, at such time (after the
date on which such request is furnished to the payor) as the
Secretary shall by regulations prescribe.
Such a request may be changed or terminated by furnishing to the
person making the payments a written statement of change or
termination which shall take effect in the same manner as
provided in subparagraph (C). At the election of the payor, any
such request (or statement of change or revocation) may take
effect earlier than as provided in subparagraph (C).
(5) Special rule for sick pay paid pursuant to certain
collective-bargaining agreements
In the case of any sick pay paid pursuant to a
collective-bargaining agreement between employee representatives
and one or more employers which contains a provision specifying
that this paragraph is to apply to sick pay paid pursuant to such
agreement and contains a provision for determining the amount to
be deducted and withheld from each payment of such sick pay -
(A) the requirement of paragraph (1)(C) that a request for
withholding be in effect shall not apply, and
(B) except as provided in subsection (n), the amounts to be
deducted and withheld under this chapter shall be determined in
accordance with such agreement.
The preceding sentence shall not apply with respect to sick pay
paid pursuant to any agreement to any individual unless the
social security number of such individual is furnished to the
payor and the payor is furnished with such information as is
necessary to determine whether the payment is pursuant to the
agreement and to determine the amount to be deducted and
withheld.
(6) Coordination with withholding on designated distributions
under section 3405
This subsection shall not apply to any amount which is a
designated distribution (within the meaning of section
3405(e)(1)).
(p) Voluntary withholding agreements
(1) Certain Federal payments
(A) In general
If, at the time a specified Federal payment is made to any
person, a request by such person is in effect that such payment
be subject to withholding under this chapter, then for purposes
of this chapter and so much of subtitle F as relates to this
chapter, such payment shall be treated as if it were a payment
of wages by an employer to an employee.
(B) Amount withheld
The amount to be deducted and withheld under this chapter
from any payment to which any request under subparagraph (A)
applies shall be an amount equal to the percentage of such
payment specified in such request. Such a request shall apply
to any payment only if the percentage specified is 7 percent,
any percentage applicable to any of the 3 lowest income
brackets in the table under section 1(c), or such other
percentage as is permitted under regulations prescribed by the
Secretary.
(C) Specified Federal payments
For purposes of this paragraph, the term "specified Federal
payment" means -
(i) any payment of a social security benefit (as defined in
section 86(d)),
(ii) any payment referred to in the second sentence of
section 451(d) which is treated as insurance proceeds,
(iii) any amount which is includible in gross income under
section 77(a), and
(iv) any other payment made pursuant to Federal law which
is specified by the Secretary for purposes of this paragraph.
(D) Requests for withholding
Rules similar to the rules that apply to annuities under
subsection (o)(4) shall apply to requests under this paragraph
and paragraph (2).
(2) Voluntary withholding on unemployment benefits
If, at the time a payment of unemployment compensation (as
defined in section 85(b)) is made to any person, a request by
such person is in effect that such payment be subject to
withholding under this chapter, then for purposes of this chapter
and so much of subtitle F as relates to this chapter, such
payment shall be treated as if it were a payment of wages by an
employer to an employee. The amount to be deducted and withheld
under this chapter from any payment to which any request under
this paragraph applies shall be an amount equal to 10 percent of
such payment.
(3) Authority for other voluntary withholding
The Secretary is authorized by regulations to provide for
withholding -
(A) from remuneration for services performed by an employee
for the employee's employer which (without regard to this
paragraph) does not constitute wages, and
(B) from any other type of payment with respect to which the
Secretary finds that withholding would be appropriate under the
provisions of this chapter,
if the employer and employee, or the person making and the person
receiving such other type of payment, agree to such withholding.
Such agreement shall be in such form and manner as the Secretary
may by regulations prescribe. For purposes of this chapter (and
so much of subtitle F as relates to this chapter), remuneration
or other payments with respect to which such agreement is made
shall be treated as if they were wages paid by an employer to an
employee to the extent that such remuneration is paid or other
payments are made during the period for which the agreement is in
effect.
(q) Extension of withholding to certain gambling winnings
(1) General rule
Every person, including the Government of the United States, a
State, or a political subdivision thereof, or any
instrumentalities of the foregoing, making any payment of
winnings which are subject to withholding shall deduct and
withhold from such payment a tax in an amount equal to the
product of the third lowest rate of tax applicable under section
1(c) and such payment.
(2) Exemption where tax otherwise withheld
In the case of any payment of winnings which are subject to
withholding made to a nonresident alien individual or a foreign
corporation, the tax imposed under paragraph (1) shall not apply
to any such payment subject to tax under section 1441(a)
(relating to withholding on nonresident aliens) or tax under
section 1442(a) (relating to withholding on foreign
corporations).
(3) Winnings which are subject to withholding
For purposes of this subsection, the term "winnings which are
subject to withholding" means proceeds from a wager determined in
accordance with the following:
(A) In general
Except as provided in subparagraphs (B) and (C), proceeds of
more than $5,000 from a wagering transaction, if the amount of
such proceeds is at least 300 times as large as the amount
wagered.
(B) State-conducted lotteries
Proceeds of more than $5,000 from a wager placed in a lottery
conducted by an agency of a State acting under authority of
State law, but only if such wager is placed with the State
agency conducting such lottery, or with its authorized
employees or agents.
(C) Sweepstakes, wagering pools, certain parimutuel pools, jai
alai, and lotteries
Proceeds of more than $5,000 from -
(i) a wager placed in a sweepstakes, wagering pool, or
lottery (other than a wager described in subparagraph (B)),
or
(ii) a wagering transaction in a parimutuel pool with
respect to horse races, dog races, or jai alai if the amount
of such proceeds is at least 300 times as large as the amount
wagered.
(4) Rules for determining proceeds from a wager
For purposes of this subsection -
(A) proceeds from a wager shall be determined by reducing the
amount received by the amount of the wager, and
(B) proceeds which are not money shall be taken into account
at their fair market value.
(5) Exception for bingo, keno, and slot machines
The tax imposed under paragraph (1) shall not apply to winnings
from a slot machine, keno, and bingo.
(6) Statement by recipient
Every person who is to receive a payment of winnings which are
subject to withholding shall furnish the person making such
payment a statement, made under the penalties of perjury,
containing the name, address, and taxpayer identification number
of the person receiving the payment and of each person entitled
to any portion of such payment.
(7) Coordination with other sections
For purposes of sections 3403 and 3404 and for purposes of so
much of subtitle F (except section 7205) as relates to this
chapter, payments to any person of winnings which are subject to
withholding shall be treated as if they were wages paid by an
employer to an employee.
(r) Extension of withholding to certain taxable payments of Indian
casino profits
(1) In general
Every person, including an Indian tribe, making a payment to a
member of an Indian tribe from the net revenues of any class II
or class III gaming activity conducted or licensed by such tribe
shall deduct and withhold from such payment a tax in an amount
equal to such payment's proportionate share of the annualized
tax.
(2) Exception
The tax imposed by paragraph (1) shall not apply to any payment
to the extent that the payment, when annualized, does not exceed
an amount equal to the sum of -
(A) the basic standard deduction (as defined in section
63(c)) for an individual to whom section 63(c)(2)(C) (!1)
applies, and
(B) the exemption amount (as defined in section 151(d)).
(3) Annualized tax
For purposes of paragraph (1), the term "annualized tax" means,
with respect to any payment, the amount of tax which would be
imposed by section 1(c) (determined without regard to any rate of
tax in excess of the fourth lowest rate of tax applicable under
section 1(c)) on an amount of taxable income equal to the excess
of -
(A) the annualized amount of such payment, over
(B) the amount determined under paragraph (2).
(4) Classes of gaming activities, etc.
For purposes of this subsection, terms used in paragraph (1)
which are defined in section 4 of the Indian Gaming Regulatory
Act (25 U.S.C. 2701 et seq.), as in effect on the date of the
enactment of this subsection, shall have the respective meanings
given such terms by such section.
(5) Annualization
Payments shall be placed on an annualized basis under
regulations prescribed by the Secretary.
(6) Alternate withholding procedures
At the election of an Indian tribe, the tax imposed by this
subsection on any payment made by such tribe shall be determined
in accordance with such tables or computational procedures as may
be specified in regulations prescribed by the Secretary (in lieu
of in accordance with paragraphs (2) and (3)).
(7) Coordination with other sections
For purposes of this chapter and so much of subtitle F as
relates to this chapter, payments to any person which are subject
to withholding under this subsection shall be treated as if they
were wages paid by an employer to an employee.
(s) Exemption from withholding for any vehicle fringe benefit
(1) Employer election not to withhold
The employer may elect not to deduct and withhold any tax under
this chapter with respect to any vehicle fringe benefit provided
to any employee if such employee is notified by the employer of
such election (at such time and in such manner as the Secretary
shall by regulations prescribe). The preceding sentence shall not
apply to any vehicle fringe benefit unless the amount of such
benefit is included by the employer on a statement timely
furnished under section 6051.
(2) Employer must furnish W-2
Any vehicle fringe benefit shall be treated as wages from which
amounts are required to be deducted and withheld under this
chapter for purposes of section 6051.
(3) Vehicle fringe benefit
For purposes of this subsection, the term "vehicle fringe
benefit" means any fringe benefit -
(A) which constitutes wages (as defined in section 3401), and
(B) which consists of providing a highway motor vehicle for
the use of the employee.
-SOURCE-
(Aug. 16, 1954, ch. 736, 68A Stat. 457; Aug. 9, 1955, ch. 666, Sec.
2, 69 Stat. 605; Pub. L. 87-256, Sec. 110(g)(2), Sept. 21, 1961, 75
Stat. 537; Pub. L. 88-272, title III, Sec. 302(a), (b), Feb. 26,
1964, 78 Stat. 140; Pub. L. 89-97, title III, Sec. 313(d)(3)-(5),
July 30, 1965, 79 Stat. 384; Pub. L. 89-212, Sec. 2(c), Sept. 29,
1965, 79 Stat. 859; Pub. L. 89-368, title I, Sec. 101(a)-(e)(3),
Mar. 15, 1966, 80 Stat. 38-61; Pub. L. 90-364, title I, Sec.
102(c), June 28, 1968, 82 Stat. 256; Pub. L. 91-36, Sec. 2(a), June
30, 1969, 83 Stat. 42; Pub. L. 91-53, Sec. 6(a), Aug. 7, 1969, 83
Stat. 96; Pub. L. 91-172, title VIII, Sec. 805(a)-(e), (f)(1), (g),
Dec. 30, 1969, 83 Stat. 686, 704-708; Pub. L. 92-178, title II,
Sec. 208(a), (b)(1), (c)-(h)(1), Dec. 10, 1971, 85 Stat. 512-517;
Pub. L. 94-12, title II, Secs. 202(b), 205, Mar. 29, 1975, 89 Stat.
29, 32; Pub. L. 94-164, Secs. 2(b)(2), 5(a)(1), Dec. 23, 1975, 89
Stat. 971, 975; Pub. L. 94-331, Sec. 3(a)(1), June 30, 1976, 90
Stat. 782; Pub. L. 94-396, Sec. 2(a)(1), Sept. 3, 1976, 90 Stat.
1201; Pub. L. 94-414, Sec. 3(a)(1), Sept. 17, 1976, 90 Stat. 1273;
Pub. L. 94-455, title IV, Sec. 401(d), title V, Secs. 502(b),
504(c)(3), title XII, Sec. 1207(d), title XIX, Secs. 1903(a)(17),
1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1557, 1559, 1566, 1705,
1810, 1834; Pub. L. 95-30, title I, Sec. 105, title IV, Sec.
405(a), May 23, 1977, 91 Stat. 140, 156; Pub. L. 95-600, title I,
Secs. 101(e), 102(c), title VI, Sec. 601(b)(2), Nov. 6, 1978, 92
Stat. 2770, 2771, 2896; Pub. L. 96-601, Sec. 4(a)-(d), Dec. 24,
1980, 94 Stat. 3496, 3497; Pub. L. 97-34, title I, Sec. 101(e),
Aug. 13, 1981, 95 Stat. 184; Pub. L. 97-248, title III, Secs.
317(a), 334(d), Sept. 3, 1982, 96 Stat. 607, 627; Pub. L. 98-67,
title I, Sec. 104(d)(3), Aug. 5, 1983, 97 Stat. 380; Pub. L. 99-44,
Sec. 3, May 24, 1985, 99 Stat. 77; Pub. L. 99-514, title I, Sec.
104(b)(15), title XIII, Secs. 1301(j)(8), 1303(b)(4), title XV,
Sec. 1581(b), Oct. 22, 1986, 100 Stat. 2106, 2658, 2766; Pub. L.
100-203, title X, Sec. 10302(a), Dec. 22, 1987, 101 Stat. 1330-429;
Pub. L. 100-647, title I, Sec. 1003(a)(2), Nov. 10, 1988, 102 Stat.
3382; Pub. L. 101-508, title XI, Sec. 11801(a)(41), Nov. 5, 1990,
104 Stat. 1388-521; Pub. L. 102-318, title V, Sec. 522(b)(2)(D),
July 3, 1992, 106 Stat. 314; Pub. L. 102-486, title XIX, Secs.
1934(a), 1942(a), Oct. 24, 1992, 106 Stat. 3031, 3036; Pub. L.
103-465, title VII, Secs. 701(a), 702(a), Dec. 8, 1994, 108 Stat.
4995, 4996; Pub. L. 107-16, title I, Sec. 101(c)(6)-(9), June 7,
2001, 115 Stat. 43, 44.)
-STATAMEND-
AMENDMENT OF SECTION
For termination of amendment by section 901 of Pub. L. 107-16,
see Effective and Termination Dates of 2001 Amendment note below.
-REFTEXT-
REFERENCES IN TEXT
The date of the enactment of this subsection, referred to in
subsec. (l)(1), is the date of enactment of Pub. L. 89-368, which
was approved Mar. 15, 1966.
Section 63(c)(2)(C), referred to in subsec. (r)(2)(A), was
redesignated section 63(c)(2)(D), and a new section 63(c)(2)(C) was
added, by Pub. L. 107-147, title IV, Sec. 411(e)(1)(C), (D), Mar.
9, 2002, 116 Stat. 46.
Section 4 of the Indian Gaming Regulatory Act, referred to in
subsec. (r)(4), is classified to section 2703 of Title 25, Indians.
The date of the enactment of this subsection, referred to in
subsec. (r)(4), is the date of enactment of Pub. L. 103-465, which
was approved Dec. 8, 1994.
-MISC1-
AMENDMENTS
2001 - Subsec. (p)(1)(B). Pub. L. 107-16, Secs. 101(c)(6), 901,
temporarily substituted "7 percent, any percentage applicable to
any of the 3 lowest income brackets in the table under section
1(c)," for "7, 15, 28, or 31 percent". See Effective and
Termination Dates of 2001 Amendment note below.
Subsec. (p)(2). Pub. L. 107-16, Secs. 101(c)(7), 901, temporarily
substituted "10 percent" for "15 percent". See Effective and
Termination Dates of 2001 Amendment note below.
Subsec. (q)(1). Pub. L. 107-16, Secs. 101(c)(8), 901, temporarily
substituted "equal to the product of the third lowest rate of tax
applicable under section 1(c) and such payment" for "equal to 28
percent of such payment". See Effective and Termination Dates of
2001 Amendment note below.
Subsec. (r)(3). Pub. L. 107-16, Secs. 101(c)(9), 901, temporarily
substituted "the fourth lowest rate of tax applicable under section
1(c)" for "31 percent" in introductory provisions. See Effective
and Termination Dates of 2001 Amendment note below.
1994 - Subsec. (p). Pub. L. 103-465, Sec. 702(a), reenacted
heading without change and amended text of subsec. (p) generally.
Prior to amendment, text read as follows: "The Secretary is
authorized by regulations to provide for withholding -
"(1) from remuneration for services performed by an employee
for his employer which (without regard to this subsection) does
not constitute wages, and
"(2) from any other type of payment with respect to which the
Secretary finds that withholding would be appropriate under the
provisions of this chapter,
if the employer and the employee, or in the case of any other type
of payment the person making and the person receiving the payment,
agree to such withholding. Such agreement shall be made in such
form and manner as the Secretary may by regulations provide. For
purposes of this chapter (and so much of subtitle F as relates to
this chapter) remuneration or other payments with respect to which
such agreement is made shall be treated as if they were wages paid
by an employer to an employee to the extent that such remuneration
is paid or other payments are made during the period for which the
agreement is in effect."
Subsec. (r). Pub. L. 103-465, Sec. 701(a), added subsec. (r).
1992 - Subsec. (o)(6). Pub. L. 102-318 substituted "3405(e)(1)"
for "3405(d)(1)".
Subsec. (q)(1). Pub. L. 102-486, Sec. 1934(a), substituted "28
percent" for "20 percent".
Subsec. (q)(3)(A), (C). Pub. L. 102-486, Sec. 1942(a),
substituted "$5,000" for "$1,000".
1990 - Subsec. (a)(3). Pub. L. 101-508 struck out par. (3) which
read as follows: "Notwithstanding the provisions of this
subsection, the Secretary shall modify the tables and procedures
under paragraph (1) to reflect -
"(A) the amendments made by section 101(b) of the Economic
Recovery Tax Act of 1981, and such modification shall take effect
on October 1, 1981, as if such amendments made a 5-percent
reduction effective on such date, and
"(B) the amendments made by section 101(a) of such Act, and
such modifications shall take effect -
"(i) on July 1, 1982, as if the reductions in the rate of tax
under section 1 (as amended by such section) were attributable
to a 10-percent reduction effective on such date, and
"(ii) on July 1, 1983, as if such reductions were
attributable to a 10-percent reduction effective on such date."
1988 - Subsec. (m)(1). Pub. L. 100-647 substituted "section 62(a)
(other than paragraph (10) thereof))" for "section 62) (other than
paragraph (13) thereof)".
1987 - Subsec. (f)(3)(B). Pub. L. 100-203 amended subpar. (B)
generally. Prior to amendment, subpar. (B) read as follows: "A
withholding exemption certificate furnished the employer in cases
in which a previous such certificate is in effect shall take effect
with respect to the first payment of wages made on or after the
first status determination date which occurs at least 30 days from
the date on which such certificate is so furnished, except that at
the election of the employer such certificate may be made effective
with respect to any payment of wages made on or after the date on
which such certificate is so furnished; but a certificate furnished
pursuant to paragraph (2)(C) shall not take effect, and may not be
made effective, with respect to any payment of wages made in the
calendar year in which the certificate is furnished. For purposes
of this subparagraph the term 'status determination date' means
January 1, May 1, July 1, and October 1 of each year."
1986 - Subsec. (f)(1). Pub. L. 99-514, Sec. 104(b)(15)(F),
substituted "standard deduction" for "zero bracket" and
"subparagraph (E)" for "subparagraph (G)" in last sentence.
Subsec. (f)(1)(A). Pub. L. 99-514, Sec. 104(b)(15)(B), inserted
"unless he is an individual described in section 151(d)(2)" after
"himself".
Subsec. (f)(1)(B). Pub. L. 99-514, Sec. 104(b)(15)(A),
redesignated subpar. (D) as (B) and struck out former subpar. (B)
which read as follows: "one additional exemption for himself if, on
the basis of facts existing at the beginning of such day, there may
reasonably be expected to be allowable an exemption under section
151(c)(1) (relating to old age) for the taxable year under subtitle
A in respect of which amounts deducted and withheld under this
chapter in the calendar year in which such day falls are allowed as
a credit;".
Pub. L. 99-514, Sec. 104(b)(15)(C), which directed that
"subparagraph (A) or (D)" be substituted for "subparagraph (A),
(B), (C), or (F)" was executed by making the substitution for
"subparagraph (A), (B), or (C)", as the probable intent of
Congress.
Subsec. (f)(1)(C). Pub. L. 99-514, Sec. 104(b)(15)(A), (D),
redesignated subpar. (E) as (C), substituted "section 151(c)" for
"section 151(e)", and struck out former subpar. (C) which read as
follows: "one additional exemption for himself if, on the basis of
facts existing at the beginning of such day, there may reasonably
be expected to be allowable an exemption under section 151(d)(1)
(relating to the blind) for the taxable year under subtitle A in
respect of which amounts deducted and withheld under this chapter
in the calendar year in which such day falls are allowed as a
credit;".
Subsec. (f)(1)(D). Pub. L. 99-514, Sec. 104(b)(15)(A),
redesignated subpar. (F) as (D). Former subpar. (D) redesignated
(B).
Subsec. (f)(1)(E). Pub. L. 99-514, Sec. 104(b)(15)(A), (E),
redesignated subpar. (G) as (E) and substituted "standard
deduction" for "zero bracket". Former subpar. (E) redesignated (C).
Pub. L. 99-514, Sec. 1301(j)(8), substituted "section 7703" for
"section 143".
Subsec. (f)(1)(F), (G). Pub. L. 99-514, Sec. 104(b)(15)(A),
redesignated subpars. (F) and (G) as (D) and (E), respectively.
Subsec. (i)(1). Pub. L. 99-514, Sec. 1581(b), struck out "or
decreases" after "increases".
Subsec. (m)(3). Pub. L. 99-514, Sec. 104(b)(15)(G), inserted
"(including the additional standard deduction under section
63(c)(3) for the aged and blind)".
Subsec. (r). Pub. L. 99-514, Sec. 1303(b)(4), struck out subsec.
(r) which provided for extension of withholding to GSOC
distributions.
1985 - Subsec. (s). Pub. L. 99-44 added subsec. (s).
1983 - Subsec. (s). Pub. L. 98-67 struck out subsec. (s) which
related to extension of withholding to certain payments where
identifying number was not furnished or was inaccurate. See section
3406 of this title.
1982 - Subsec. (o)(6). Pub. L. 97-248, Sec. 334(d), added par.
(6).
Subsec. (s). Pub. L. 97-248, Sec. 317(a), added subsec. (s).
1981 - Subsec. (a). Pub. L. 97-34, Sec. 101(e)(1), revised
subsec. (a) generally to provide for a 5-percent reduction in
income tax withholding rates on Oct. 1, 1981, a further 10-percent
reduction on July 1, 1982, and a final 10-percent reduction on July
1, 1983.
Subsec. (b)(1). Pub. L. 97-34, Sec. 101(e)(2)(A), redesignated
par. (2) as (1). Former par. (1), which set out a table for
determining amount of one withholding exemption for each of the
various payroll periods, was struck out.
Subsec. (b)(2). Pub. L. 97-34, Sec. 101(e)(2)(A), redesignated
par. (3) as (2). Former par. (2) redesignated (1).
Subsec. (b)(3). Pub. L. 97-34, Sec. 101(e)(2)(A), (B),
redesignated par. (4) as (3) and substituted provisions relating to
an employer's computation of the tax to be deducted and withheld as
if the aggregate of the wages paid to the employee during the
calendar week were paid for a weekly payroll period, for provisions
relating to an employer's computation of the tax to be deducted and
withheld using the excess of the aggregate of the wages paid to the
employee during the calendar week over the withholding exemption
allowed by this subsection for a weekly payroll period. Former par.
(3) redesignated (2).
Subsec. (b)(4), (5). Pub. L. 97-34, Sec. 101(e)(2)(A),
redesignated par. (5) as (4). Former par. (4) redesignated (3).
Subsec. (f)(1)(G). Pub. L. 97-34, Sec. 101(e)(3), inserted "(or
more than one exemption if so prescribed by the Secretary)" after
"an amount equal to one exemption".
Subsec. (i). Pub. L. 97-34, Sec. 101(e)(4), substituted
provisions authorizing the Secretary by regulations to provide for
increases or decreases in the amount of withholding otherwise
required under this section in cases where the employee requests
the changes, for provisions under which the Secretary was
authorized to provide withholding in addition to that otherwise
required under this section in cases in which the employer and the
employee agreed to such additional withholding.
Subsec. (m). Pub. L. 97-34, Sec. 101(e)(5), revised provisions
respecting additional withholding allowances for anticipated excess
itemized deductions and tax credits claimed in accordance with
Treasury regulations and Treasury statutory authority to provide
additional withholding allowances for any additional items
specified in Treasury regulations.
1980 - Subsec. (o)(1)(C). Pub. L. 96-601, Sec. 4(a), added
subpar. (C).
Subsec. (o)(2)(B). Pub. L. 96-601, Sec. 4(d), struck out ", but
only to the extent that the amount is includible in the gross
income of such individual" after "pension or annuity".
Subsec. (o)(2)(C). Pub. L. 96-601, Sec. 4(c), added subpar. (C).
Subsec. (o)(3). Pub. L. 96-601, Sec. 4(b), substituted provision
authorizing amount to be withheld from annuity payments or sick pay
for provision relating to request for withholding. See subsec.
(o)(4) of this section.
Subsec. (o)(4), (5). Pub. L. 96-601, Sec. 4(b), added pars. (4)
and (5).
1978 - Subsec. (a). Pub. L. 95-600, Sec. 101(e)(1), substituted
"With respect to wages paid after December 31, 1978, the tables so
prescribed shall be the same as the tables prescribed under this
subsection which were in effect on January 1, 1975, except that
such tables shall be modified to the extent necessary to reflect
the amendments made by sections 101 and 102 of the Tax Reduction
and Simplification Act of 1977 and the amendments made by section
101 of the Revenue Act of 1978." for "With respect to wages paid
after May 31, 1977, and before January 1, 1979, the tables so
prescribed shall be the same as the tables prescribed under this
subsection which were in effect on January 1, 1976; except that
such tables shall be modified to the extent necessary so that, had
they been in effect for all of 1977, they would reflect the full
year effect of the amendments made by sections 101 and 102 of the
Tax Reduction and Simplification Act of 1977. With respect to wages
paid after December 31, 1978, the tables so prescribed shall be the
same as the tables prescribed under this subsection which were in
effect on January 1, 1975, except that such tables shall be
modified to the extent necessary to reflect the amendments made by
sections 101 and 102 of the Tax Reduction and Simplification Act of
1977.".
Subsec. (b)(1). Pub. L. 95-600, Sec. 102(c)(1), increased the
amounts set out in the table for one withholding exemption for each
of the payroll period categories from $14.40, $28.80, $31.30,
$62.50, $187.50, $375.00, $750.00 and $2.10 to $19.23, $38.46,
$41.66, $83.33, $250.00, $500.00, $1,000.00 and $2.74,
respectively.
Subsec. (m)(1). Pub. L. 95-600, Secs. 101(e)(2), 102(c)(2),
substituted "$1,000" for "$750", "$3,400" for "$3,200" and "$2,300"
for "$2,200".
Subsec. (r). Pub. L. 95-600, Sec. 601(b)(2), added subsec. (r).
1977 - Subsec. (a). Pub. L. 95-30, Sec. 105(a), substituted "With
respect to wages paid after May 31, 1977, and before January 1,
1979, the tables so prescribed shall be the same as the tables
prescribed under this subsection which were in effect on January 1,
1976; except that such tables shall be modified to the extent
necessary so that, had they been in effect for all of 1977, they
would reflect the full year effect of the amendments made by
sections 101 and 102 of the Tax Reduction and Simplification Act of
1977. With respect to wages paid after December 31, 1978, the
tables so prescribed shall be the same as the tables prescribed
under this subsection which were in effect on January 1, 1975,
except that such tables shall be modified to the extent necessary
to reflect the amendments made by sections 101 and 102 of the Tax
Reduction and Simplification Act of 1977" for "With respect to
wages paid prior to January 1, 1978, the tables so prescribed shall
be the same as the tables prescribed under this section which were
in effect on January 1, 1976. With respect to wages paid after
December 31, 1977, the Secretary shall prescribe new tables which
shall be the same as the tables prescribed under this subsection
which were in effect on January 1, 1975, except that such tables
shall be modified to the extent necessary to reflect the amendments
made to subsections (b) and (c) of section 141 by the Tax Reform
Act of 1976".
Subsec. (f)(1). Pub. L. 95-30, Sec. 105(b)(1), substituted "zero
bracket" for "standard deduction" in subpar. (G) and in provisions
following subpar. (G).
Subsec. (m)(1)(B). Pub. L. 95-30, Sec. 105(b)(2), substituted "an
amount equal to $3,200 ($2,200" for "an amount equal to the lesser
of (i) 16 percent of his estimated wages, or (ii) $2,800 ($2,400".
Subsec. (m)(2)(A). Pub. L. 95-30, Sec. 105(b)(3)(A), (B),
substituted "section 151" for "sections 141 and 151" and "(or the
zero bracket amount (within the meaning of section 63(d)))" for
"(or the amount of the standard deduction)".
Subsec. (m)(2)(C). Pub. L. 95-30, Sec. 105(b)(3)(C), substituted
"(or the zero bracket amount)" for "(or the standard deduction)".
Subsec. (q)(3)(C). Pub. L. 95-30, Sec. 405(a), inserted reference
to certain parimutuel pools and jai alai in heading and, in text,
designated existing provisions as cl. (i) and added cl. (ii).
1976 - Subsec. (a). Pub. L. 94-455, Secs. 401(d)(1), 1906
(b)(13)(A), struck out "or his delegate" after "Secretary",
inserted "With respect to wages paid prior to January 1, 1978"
after "by the Secretary", as amended, and substituted "prescribed
under this section which were" for "contained in this subsection
as" after "same as the tables", "1976" for "1975" after "January
1", and "With respect to wages paid after December 31, 1977, the
Secretary shall prescribe new tables which shall be the same as the
tables prescribed under this subsection which were in effect on
January 1, 1975, except that such tables shall be modified to the
extent necessary to reflect the amendments made to subsections (b)
and (c) of section 141 by the Tax Reform Act of 1976" for "except
that the amounts set forth as amounts of income tax to be withheld
with respect to wages paid after April 30, 1975, and before January
1, 1976, shall reflect the full calendar year effect for 1975 of
the amendments made by sections 201, 202, 203, and 204 of the Tax
Reduction Act of 1975" after "effect on January 1, 1976", as
amended.
Pub. L. 94-414 substituted "October 1, 1976" for "September 15,
1976".
Pub. L. 94-396 substituted "September 15, 1976" for "September 1,
1976".
Pub. L. 94-331 substituted "September 1, 1976" for "July 1,
1976".
Subsec. (c)(4). Pub. L. 94-455, Sec. 1906(b)(13)(A), struck out
"or his delegate" after "Secretary".
Subsec. (c)(6). Pub. L. 94-455, Secs. 401(d)(2), 1906(b)(13)(A),
substituted "the table for an annual payroll period prescribed
pursuant to subsection (a)" for "table 7 contained in subsection
(a)" after "basis of the", as subsec. (c)(6) was in effect on the
day before the date of enactment of the Tax Reduction Act of 1975,
Pub. L. 94-12, which was approved on Mar. 29, 1975, and struck out
"or his delegate" after "Secretary".
Subsecs. (f), (h), (i), (j). Pub. L. 94-455, Sec. 1906(b)(13)(A),
struck out "or his delegate" after "Secretary".
Subsec. (l). Pub. L. 94-455, Sec. 1903(a)(17), substituted
"section 2(a)" for "section 2(b)" after "as defined in".
Subsec. (m)(1)(B). Pub. L. 94-455, Sec. 401(d)(3), reenacted
subpar. (B) without change.
Subsec. (m)(2)(A). Pub. L. 94-455, Sec. 502(b), inserted "(other
than paragraph (13) thereof)" after "under section 62".
Subsec. (m)(2)(D), (3)(B). Pub. L. 94-455, Sec. 1906(b)(13)(A),
struck out "or his delegate" after "Secretary".
Subsec. (m)(4). Pub. L. 94-455, Sec. 504(c)(3), added subpar.
(C). Sec. 1906(b)(13)(A) struck out "or his delegate" after
"Secretary".
Subsecs. (n), (p). Pub. L. 94-455, Sec. 1906(b)(13)(A), struck
out "or his delegate" after "Secretary" wherever appearing.
Subsec. (q). Pub. L. 94-455, Sec. 1207(d), added subsec. (q).
1975 - Subsec. (a). Pub. L. 94-164, Sec. 5(a)(1), inserted
provision that the tables prescribed with respect to wages paid
after Dec. 31, 1975, and before July 1, 1976, shall be the same as
the tables prescribed under this subsection which were in effect on
Dec. 10, 1975.
Pub. L. 94-12, Sec. 205(a), substituted provisions directing the
Secretary to prescribe new withholding tables setting changed
withholding rates for wages paid during the period May 1, 1975, to
Dec. 31, 1975, so as to reflect the full calendar year effect for
1975 of the amendments to the minimum standard deduction, the
percentage standard deduction, the earned income credit, and the
additional tax credit by sections 201, 202, 203, and 204 of the Tax
Reduction Act of 1975, Pub. L. 94-12, for provisions setting out 8
tables to be followed by employers in withholding taxes on wages
paid.
Subsec. (c)(6). Pub. L. 94-12, Sec. 205(b), substituted "the
table for an annual payroll period prescribed pursuant to
subsection (a)" for "table 7 contained in subsection (a)". See 1976
Amendment note set out above.
Subsec. (m)(1)(B). Pub. L. 94-164, Sec. 2(b)(2), substituted
"$2,800" and "$2,400" for "$2,600" and "$2,300" respectively in cl.
(ii).
Pub. L. 94-12, Sec. 202(b), substituted "the lesser of (i) 16
percent of his estimated wages, or (ii) $2,600 ($2,300 in the case
of an individual who is not married (within the meaning of section
143) and who is not a surviving spouse (as defined in section
2(a)))" for "the lesser of (i) $2,000 or (ii) 15 percent of his
estimated wages".
1971 - Subsec. (a). Pub. L. 92-178, Sec. 208(a), substituted new
sets of tables 1 to 8 applicable (under Sec. 208(i)(1)) with
respect to wages paid after Jan. 15, 1972, for the tables
applicable in the case of wages paid as provided in former: par.
(1) after Dec. 31, 1969, and before July 1, 1970; par. (2) after
June 30, 1970, and before Jan. 1, 1971; par. (3) after Dec. 31,
1970, and before Jan. 1, 1972; par. (4) after Dec. 31, 1971, and
before Jan. 1, 1973; and par. (5) after Dec. 31, 1972. Pub. L.
92-178, Sec. 208(h)(1), made provisions of par. (3) applicable
(under section 208(i)(2)) with respect to wages paid after Dec. 31,
1971, and before Jan. 16, 1972.
Subsec. (b)(1). Pub. L. 92-178, Sec. 208(b)(1), revised
withholding rates upwards, substituting 14.40; 28.80; 31.30; 62.50;
187.50; 375.00; 750.00; and 2.10 for 12.50; 25.00 27.10; 54.20;
162.50; 325.00; 650.00; and 1.80, respectively, to be effective
with respect to wages paid after Jan. 15, 1972. Pub. L. 92-178,
Sec. 208(h)(2), in amending Pub. L. 91-172, Sec. 805(b)(1),
extended application of such former withholding rates to wages paid
after June 30, 1970, and before Jan. 16, 1972, previously
applicable to wages paid before Jan. 1, 1972.
Subsec. (c)(6). Pub. L. 92-178, Sec. 208(g), substituted "table 7
contained in subsection (a)" for "table 7 contained in paragraph
(1), (2), (3), (4), or (5) (whichever is applicable) of subsection
(a)".
Subsec. (f)(1)(G). Pub. L. 92-178, Sec. 208(c), added subpar.
(G).
Subsec. (f)(7). Pub. L. 92-178, Sec. 208(d), added par. (7).
Subsec. (m)(1)(B). Pub. L. 92-178, Sec. 208(e), substituted "an
amount equal to the lesser of (i) $2,000 or (ii) 15 percent of his
estimated wages" for "an amount equal to 15 percent of his
estimated wages".
Subsec. (m)(2)(A). Pub. L. 92-178, Sec. 208(f)(1), inserted "or
(if such a return has not been filed for such preceding taxable
year at the time the withholding exemption certificate is furnished
the employer) the second taxable year preceding the estimation
year" after "for the taxable year preceding the estimation year".
Subsec. (m)(2)(D). Pub. L. 92-178, Sec. 208(f)(2), substituted as
definition of "estimation year" the calendar year in which the
wages are paid for prior provision defining term as meaning "(i)
with respect to payments of wages after April 30 and on or before
December 31 of any calendar year, such calendar year, and (ii) with
respect to payments of wages on or after January 1 and before May 1
of any calendar year, the preceding calendar year (except that with
respect to an exemption certificate furnished by an employee after
he has filed his return for the preceding calendar year, such term
means the current calendar year)."
Subsec. (m)(3)(B) to (E). Pub. L. 92-178, Sec. 208(f)(3), struck
out subpars. (B) and (C) providing that only one certificate be in
effect and for termination of effectiveness of certificate and
redesignated subpars. (D) and (E) as (B) and (C), respectively.
1969 - Subsec. (a)(1). Pub. L. 91-172, Sec. 805(a), (b)(2),
substituted new sets of tables 1 to 8 for application to wages paid
after Dec. 31, 1969, and before July 1, 1970, and a |
