26-U.S.C.-3202
§3202 – Deduction of Tax From Compensation
Pathway
Title 26 > Subtitle C > Chapter 22 > Subchapter A > Section 3202
Details
- Reference: Section 3202
- Legend: §3202 – Deduction of Tax From Compensation
- USCode Year: 2013
Provision Content
(a) Requirement
The taxes imposed by section 3201 shall be collected by the employer of the taxpayer by deducting the amount of the taxes from the compensation of the employee as and when paid. An employer who is furnished by an employee a written statement of tips (received in a calendar month) pursuant to section 6053(a) to which paragraph (3) of section 3231(e) is applicable may deduct an amount equivalent to such taxes with respect to such tips from any compensation of the employee (exclusive of tips) under his control, even though at the time such statement is furnished the total amount of the tips included in statements furnished to the employer as having been received by the employee in such calendar month in the course of his employment by such employer is less than $20.
(b) Indemnification of employer
Every employer required under subsection (a) to deduct the tax shall be liable for the payment of such tax and shall not be liable to any person for the amount of any such payment.
(c) Special rule for tips
(1) In the case of tips which constitute compensation, subsection (a) shall be applicable only to such tips as are included in a written statement furnished to the employer pursuant to section 6053(a), and only to the extent that collection can be made by the employer, at or after the time such statement is so furnished and before the close of the 10th day following the calendar month (or, if paragraph (3) applies, the 30th day following the quarter) in which the tips were deemed paid, by deducting the amount of the tax from such compensation of the employee (excluding tips, but including funds turned over by the employee to the employer pursuant to paragraph (2)) as are under control of the employer.
(2) If the taxes imposed by section 3201, with respect to tips which are included in written statements furnished in any month to the employer pursuant to section 6053(a), exceed the compensation of the employee (excluding tips) from which the employer is required to collect the taxes under paragraph (1), the employee may furnish to the employer on or before the 10th day of the following month (or, if paragraph (3) applies, on or before the 30th day of the following quarter) an amount of money equal to the amount of the excess.
(3) The Secretary may, under regulations prescribed by him, authorize employers—
(A) to estimate the amount of tips that will be reported by the employee pursuant to section 6053(a) in any quarter of the calendar year,
(B) to determine the amount to be deducted upon each payment of compensation (exclusive of tips) during such quarter as if the tips so estimated constituted actual tips so reported, and
(C) to deduct upon any payment of compensation (other than tips, but including funds turned over by the employee to the employer pursuant to paragraph (2)) to such employee during such quarter (and within 30 days thereafter) such amount as may be necessary to adjust the amount actually deducted upon such compensation of the employee during the quarter to the amount required to be deducted in respect of tips included in written statements furnished to the employer during the quarter.
(4) If the taxes imposed by section 3201 with respect to tips which constitute compensation exceed the portion of such taxes which can be collected by the employer from the compensation of the employee pursuant to paragraph (1) or paragraph (3), such excess shall be paid by the employee.
(d) Special rule for certain taxable group-term life insurance benefits
(1) In general
In the case of any payment for group-term life insurance to which this subsection applies—
(A) subsection (a) shall not apply,
(B) the employer shall separately include on the statement required under section 6051—
(i) the portion of the compensation which consists of payments for group-term life insurance to which this subsection applies, and
(ii) the amount of the tax imposed by section 3201 on such payments, and
(C) the tax imposed by section 3201 on such payments shall be paid by the employee.
(2) Benefits to which subsection applies
This subsection shall apply to any payment for group-term life insurance to the extent—
(A) such payment constitutes compensation, and
(B) such payment is for coverage for periods during which an employment relationship no longer exists between the employee and the employer.
(Aug. 16, 1954, ch. 736, 68A Stat. 431; Aug. 31, 1954, ch. 1164, pt. II, §206(a), 68 Stat. 1040; Pub. L. 86–28, pt. II, §201(b), May 19, 1959, 73 Stat. 29; Pub. L. 88–133, title II, §202, Oct. 5, 1963,77 Stat. 221; Pub. L. 89–212, §§2(a), 4, Sept. 29, 1965, 79 Stat. 858, 861; Pub. L. 89–700, title III, §301(iii), (v), Oct. 30, 1966, 80 Stat. 1088; Pub. L. 93–69, title I, §102(b), July 10, 1973, 87 Stat. 162; Pub. L. 94–455, title XIX, §§1903(a)(7), 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1807, 1834; Pub. L. 98–76, title II, §225(a)(2), (c)(1)(A), (B), (2)–(5), Aug. 12, 1983, 97 Stat. 425; Pub. L. 101–508, title V, §5124(b), Nov. 5, 1990, 104 Stat. 1388–285.)
Amendments
1990—Subsec. (d). Pub. L. 101–508 added subsec. (d).
1983—Subsec. (a). Pub. L. 98–76, §225(a)(2), (c)(1)(A), (2), substituted taxes imposed by section 3201 for tax imposed by section 3201, substituted the amount of the taxes for the amount of the tax, and such taxes for such tax, and struck out provisions that if an employee was paid compensation by more than one employer for services rendered during any calendar month and the aggregate of such compensation was in excess of an amount equal to one-twelfth of the current maximum annual taxable wages as defined in section 3121 for any month, the tax to be deducted by each employer other than a subordinate unit of a national railway-labor-organization employer from the compensation paid by him to the employee with respect to such month would be that proportion of the tax with respect to such compensation paid by all such employers which the compensation paid by him to the employee for services rendered during such month bears to the total compensation paid by all such employers to such employee for services rendered during such month; and that in the event that the compensation so paid by such employers to the employee for services rendered during such month was less than an amount equal to one-twelfth of the current maximum annual taxable wages as defined in section 3121 for any month, each subordinate unit of a national railway-labor-organization employer would deduct such proportion of any additional tax as the compensation paid by such employer to such employee for services rendered during such month bears to the total compensation paid by all such employers to such employee for services rendered during such month.
Subsec. (c)(2). Pub. L. 98–76, §225(c)(1)(B), (3), (5), substituted taxes imposed by section 3201 for tax imposed by section 3201, the taxes under paragraph (1) for the tax under paragraph (1), and exceed for exceeds.
Subsec. (c)(4). Pub. L. 98–76, §225(c)(1)(B), (4), (5), substituted taxes imposed by section 3201 for tax imposed by section 3201, such taxes for such tax, and exceed for exceeds.
1976—Subsec. (a). Pub. L. 94–455, §1903(a)(7)(A), struck out provisions relating to the September 30, 1973, qualification on the applicability of provisions of this subsection and of the Internal Revenue Code of 1954 before for any month wherever appearing.
Subsec. (b). Pub. L. 94–455, §1903(a)(7)(B), struck out made after to deduct the tax shall be.
Subsec. (c)(3). Pub. L. 94–455, §1906(b)(13)(A), struck out or his delegate after Secretary.
1973—Subsec. (a). Pub. L. 93–69, in second sentence reading If an employee . . ., substituted 1973 for 1965 wherever appearing, struck out (i) $450, or (ii) before an amount equal to in two places, and struck out , whichever is greater, after Internal Revenue Code of 1954 in two places.
1966—Subsec. (a). Pub. L. 89–700 substituted after September 30, 1965 for after the month in which this provision was amended in 1959 in six places, and (i) $450, or (ii) an amount equal to one-twelfth of the current maximum annual taxable ‘wages’ as defined in section 3121 of the Internal Revenue Code of 1954, whichever is greater, for any month after September 30, 1965 for $400 for any calendar month before the calendar month next following the month in which this provision was amended in 1963, or $450 for any calendar month after the month in which this provision was so amended and before the calendar month next following the calendar month in which this provision was amended in 1965, or (i) $450, or (ii) an amount equal to one-twelfth of the current maximum annual taxable ‘wages’ as defined in section 3121 of the Internal Revenue Code of 1954, whichever is greater, for any month after the month in which this provision was so amended in two places.
1965—Subsec. (a). Pub. L. 89–212, §§2(a)(1), 4, inserted sentence permitting an employer who is furnished by an employee a written statement of tips pursuant to section 6053(a) to which par. (3) of section 3231(e) is applicable to deduct an amount equivalent to such tax with respect to such tips from any compensation of the employee under his control, even though at the time such statement is furnished the total amount of the tips included in statements furnished to the employer as having been received by the employee in such calendar month in the course of his employment by such employer is less than $20, and inserted and before the calendar month next following the calendar month in which this provision was amended in 1965, or (i) $450, or (ii) an amount equal to one-twelfth of the current maximum annual taxable ‘wages’ as defined in section 3121, whichever is greater, for any month after the month in which this provision was so amended in two places.
Subsec. (c). Pub. L. 89–212, §2(a)(2), added subsec. (c).
1963—Subsec. (a). Pub. L. 88–133 limited existing taxable compensation base of $400 to any calendar month before Nov. 1963 and increased such base to $450 for any calendar month after Oct. 1963.
1959—Subsec. (a). Pub. L. 86–28 substituted after the month in which this provision was amended in 1959 for after 1954 and for after December 31, 1954 in five places, and $400 for $350 in two places.
1954—Subsec. (a). Act Aug. 31, 1954, substituted $350 for $300 wherever appearing.
Effective Date of 1990 Amendment
Amendment by Pub. L. 101–508 applicable to coverage provided after Dec. 31, 1990, see section 5124(c) of Pub. L. 101–508, set out as a note under section 3102 of this title.
Effective Date of 1983 Amendment
Amendment by Pub. L. 98–76 applicable to remuneration paid after Dec. 31, 1984, see section 227(a) of Pub. L. 98–76, set out as a note under section 3201 of this title.
Effective Date of 1976 Amendment
Amendment by section 1903(a)(7) of Pub. L. 94–455 applicable with respect to compensation paid for services rendered after Dec. 31, 1976, see section 1903(d) of Pub. L. 94–455, set out as a note under section 3201 of this title.
Effective Date of 1973 Amendment
Amendment by Pub. L. 93–69 effective Oct. 1, 1973, and applicable only with respect to compensation paid for services rendered on or after Oct. 1, 1973; and applicable to railway labor organization covered by a private supplemental pension plan as of Oct. 1, 1973, and subject to a moratorium agreed to on or before Mar. 8, 1973, for changes in pay rates, on the earlier of (1) date of expiration of such moratorium, or (2) date as of which the railway labor organization through collective bargaining agreement makes amendment applicable, see section 109(b) of Pub. L. 93–69, set out as a note under section 3201 of this title.
Effective Date of 1965 Amendment
Amendment by section 2(a) of Pub. L. 89–212 effective only with respect to tips received after 1965, and amendment by section 4 of Pub. L. 89–212 effective only with respect to calendar months after the month in which Pub. L. 89–212 is enacted, see section 6 of Pub. L. 89–212, set out as a note under section 3201 of this title.
Effective Date of 1959 Amendment
Amendment by Pub. L. 86–28 effective, except as otherwise provided, first day of calendar month next following May 1959, see section 202 of Pub. L. 86–28, set out as a note under section 3201 of this title.
Effective Date of 1954 Amendment
Amendment by act Aug. 31, 1954, effective as if enacted as a part of the Internal Revenue Code of 1986 [formerly I.R.C. 1954], see section 407 of act Aug. 31, 1954, as amended, set out as a note under section 3201 of this title.
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