26-U.S.C.-3221
§3221 – Rate of Tax
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Title 26 > Subtitle C > Chapter 22 > Subchapter C > Section 3221
Details
- Reference: Section 3221
- Legend: §3221 – Rate of Tax
- USCode Year: 2013
Provision Content
(a) Tier 1 tax
In addition to other taxes, there is hereby imposed on every employer an excise tax, with respect to having individuals in his employ, equal to the applicable percentage of compensation paid during any calendar year by such employer for services rendered to such employer. For purposes of the preceding sentence, the term applicable percentage means the percentage equal to the sum of the rates of tax in effect under subsections (a) and (b) of section 3111 for the calendar year.
(b) Tier 2 tax
(1) In general
In addition to other taxes, there is hereby imposed on every employer an excise tax, with respect to having individuals in his employ, equal to the applicable percentage of the compensation paid during any calendar year by such employer for services rendered to such employer.
(2) Applicable percentage
For purposes of paragraph (1), the term applicable percentage means—
(A) 15.6 percent in the case of compensation paid during 2002,
(B) 14.2 percent in the case of compensation paid during 2003, and
(C) in the case of compensation paid during any calendar year after 2003, the percentage determined under section 3241 for such calendar year.
(c) Special rate for certain individuals hired in 2010
(1) In general
In the case of compensation paid by a qualified employer during the period beginning on the day after the date of the enactment of this subsection and ending on December 31, 2010, with respect to having a qualified individual in the employers employ for services rendered to such qualified employer, the applicable percentage under subsection (a) shall be equal to the rate of tax in effect under section 3111(b) for the calendar year.
(2) Qualified employer
The term qualified employer means any employer other than the United States, any State, or any political subdivision thereof, or any instrumentality of the foregoing.
(3) Qualified individual
For purposes of this subsection, the term qualified individual means any individual who—
(A) begins employment with a qualified employer after February 3, 2010, and before January 1, 2011,
(B) certifies by signed affidavit, under penalties of perjury, that such individual has not been employed for more than 40 hours during the 60-day period ending on the date such individual begins such employment,
(C) is not employed by the qualified employer to replace another employee of such employer unless such other employee separated from employment voluntarily or for cause, and
(D) is not an individual described in section 51(i)(1) (applied by substituting qualified employer for taxpayer each place it appears).
(4) Election
A qualified employer may elect to have this subsection not apply. Such election shall be made in such manner as the Secretary may require.
(5) Special rule for first calendar quarter of 2010
(A) Nonapplication of exemption during first quarter
Paragraph (1) shall not apply with respect to compensation paid during the first calendar quarter of 2010.
(B) Crediting of first quarter exemption during second quarter
The amount by which the tax imposed under subsection (a) would (but for subparagraph (A)) have been reduced with respect to compensation paid by a qualified employer during the first calendar quarter of 2010 shall be treated as a payment against the tax imposed under subsection (a) with respect to the qualified employer for the second calendar quarter of 2010 which is made on the date that such tax is due.
(d) Cross reference
For application of different contribution bases with respect to the taxes imposed by subsections (a) and (b), see section 3231(e)(2).
(Aug. 16, 1954, ch. 736, 68A Stat. 433; Aug. 31, 1954, ch. 1164, pt. II, §206(a), 68 Stat. 1040; Pub. L. 86–28, pt. II, §201(d), May 19, 1959, 73 Stat. 29; Pub. L. 88–133, title II, §202, Oct. 5, 1963, 77 Stat. 221; Pub. L. 89–97, title I, §§105(b)(3), 111(c)(3), July 30, 1965, 79 Stat. 335, 342; Pub. L. 89–212, §§4, 5(c), Sept. 29, 1965, 79 Stat. 861, 862; Pub. L. 89–699, title III, §301(c), (e), Oct. 30, 1966, 80 Stat. 1078; Pub. L. 89–700, title III, §§301(iii), (v), (vi), 302, Oct. 30, 1966, 80 Stat. 1088, 1089; Pub. L. 91–215, §5(a), (b)(1), Mar. 17, 1970, 84 Stat. 71; Pub. L. 93–69, title I, §102(d)–(f), July 10, 1973, 87 Stat. 162, 163; Pub. L. 93–445, title V, §501, Oct. 16, 1974, 88 Stat. 1359; Pub. L. 94–93, title II, §203, Aug. 9, 1975, 89 Stat. 466; Pub. L. 94–455, title XIX, §§1903(a)(9), 1906(b)(13)(G), Oct. 4, 1976, 90 Stat. 1808, 1835; Pub. L. 97–34, title VII, §741(c), Aug. 13, 1981, 95 Stat. 347; Pub. L. 98–76, title II, §§211(b), 222, Aug. 12, 1983, 97 Stat. 419, 420; Pub. L. 100–203, title IX, §9032(a), Dec. 22, 1987, 101 Stat. 1330–296; Pub. L. 101–508, title V, §5125(c), Nov. 5, 1990, 104 Stat. 1388–286; Pub. L. 107–90, title II, §§203(b), 204(a), Dec. 21, 2001, 115 Stat. 891; Pub. L. 111–147, title I, §101(d)(1), Mar. 18, 2010, 124 Stat. 74.)
References in Text
The date of the enactment of this subsection, referred to in subsec. (c)(1), is the date of the enactment of Pub. L. 111–147, which was approved Mar. 18, 2010.
Amendments
2010—Subsecs. (c), (d). Pub. L. 111–147 added subsec. (c) and redesignated former subsec. (c) as (d).
2001—Subsec. (b). Pub. L. 107–90, §204(a), amended heading and text of subsec. (b) generally. Prior to amendment, text read as follows: In addition to other taxes, there is hereby imposed on every employer an excise tax, with respect to having individuals in his employ, equal to 16.10 percent of the compensation paid during any calendar year by such employer for services rendered to such employer.
Subsecs. (c) to (e). Pub. L. 107–90, §203(b), redesignated subsec. (e) as (c) and struck out former subsecs. (c) and (d) which provided, in subsec. (c), for imposition of excise tax on every employer, with respect to having individuals in his employ, for each man-hour for which compensation was paid by such employer for services rendered to him during any calendar quarter, and for credit against such tax of amount equivalent in each month to the aggregate amount of reductions in supplemental annuities accruing in such month to employees of such employer, and, in subsec. (d), that such tax would not apply to an employer with respect to employees covered by a supplemental pension plan which is established pursuant to an agreement reached through collective bargaining between the employer and employees.
1990—Subsec. (a). Pub. L. 101–508 substituted applicable for following before percentage of and provision defining applicable percentage for provision specifying the tax rate to be 7.05 percent, 7.15 percent, 7.51 percent, and 7.65 percent in the case of compensation paid during 1985, 1986 or 1987, 1988 or 1989, or 1990 or thereafter, respectively.
1987—Subsec. (b). Pub. L. 100–203 amended subsec. (b) generally. Prior to amendment, subsec. (b) read as follows: In addition to other taxes, there is hereby imposed on every employer an excise tax, with respect to having individuals in his employ, equal to the following percentage of compensation paid during any calendar year by such employer for services rendered to such employer:
1983—Subsec. (a). Pub. L. 98–76, §222(a), in amending subsec. (a) generally, substituted provisions imposing an excise tax on employers, with respect to having individuals in his employ, equal to a percentage of compensation paid as set out in an accompanying table, for provisions which imposed an excise tax on employers, with respect to having individuals in his employ, equal to 12.75 percent of so much of the compensation paid in any calendar month by such employer for services rendered to him as was not in excess of an amount equal to one-twelfth of the current maximum annual taxable wages as defined in section 3121 for any month, with certain exceptions dealing with multiple employers.
Pub. L. 98–76, §211(b), substituted 12.75 percent for 11.75 percent.
Subsec. (b). Pub. L. 98–76, §222(a), in amending subsec. (b) generally, substituted provisions imposing a second tier excise tax on employers equal to a percentage of compensation paid as set out in an accompanying table, for provisions that the rate of tax imposed by former subsec. (a) would be increased by the rate of tax imposed with respect to wages by section 3111(a) plus the rate imposed by section 3111(b).
Subsec. (e). Pub. L. 98–76, §222(b), added subsec. (e).
1981—Subsec. (a). Pub. L. 97–34 substituted in first sentence 11.75 for 9.5.
1976—Subsec. (a). Pub. L. 94–455, §§1903(a)(9)(A), 1906(b)(13)(G), struck out provisions relating to the September 30, 1973 qualification on the applicability of provisions of this subsection, of the Internal Revenue Code of 1954 after as defined in section 3121 wherever appearing, and of the Treasury after to the Secretary.
Subsec. (b). Pub. L. 94–455, §1903(a)(9)(B), struck out , with respect to compensation paid for services rendered after September 30, 1973, after shall be increased, of the Internal Revenue Code of 1954 after by section 3111(a) and of such Code after by section 3111(b).
Subsec. (c). Pub. L. 94–455, §§1903(a)(9)(C), 1906(b)(13)(G), struck out (1) at the rate of two cents for the period beginning November 1, 1966, and ending March 31, 1970, and (2) commencing April 1, 1970, after during any calendar quarter, , commencing with the quarter beginning April 1, 1970 after required for each calendar quarter, of the Treasury after representatives, and the Secretary and of the Treasury after shall certify to the Secretary.
1975—Subsec. (a). Pub. L. 94–93 substituted compensation paid in any calendar month by such employer for compensation paid by such employer.
1974—Subsec. (c). Pub. L. 93–445, §501(a), struck out for appropriation to the Railroad Retirement Supplemental Account provided for in section 15(b) of the Railroad Retirement Act of 1937 after commencing April 1, 1970, at such rate as will make available, substituted at the level provided under section 3(j) of the Railroad Retirement Act of 1937 as in effect on December 31, 1974 for under section 3(j) of such Act, and inserted or section 2(h)(2) of the Railroad Retirement Act of 1974 after section 3(j)(2) of the Railroad Retirement Act of 1937.
Subsec. (d). Pub. L. 93–445, §501(b), substituted section 2(b) of the Railroad Retirement Act of 1974 for section 3(j) of the Railroad Retirement Act of 1937 and section 2(b) of such Act for section 3(j) of such Act.
1973—Subsec. (a). Pub. L. 93–69, §102(d), (e), substituted new tax rate provisions on employers for services rendered after Sept. 30, 1973, for former provisions which prescribed 6¼, 6½, 7, 7¼, and 7½ percent on income for services rendered after Sept. 30, 1965; Dec. 31, 1965; Dec. 31, 1966; Dec. 31, 1967; and Dec. 31, 1968, respectively, as is, with respect to any employee for any calendar month, not in excess of (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 Sept. 30, 1965, and, in first sentence, 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, respectively.
Subsec. (b). Pub. L. 93–69, §102(f), substituted 1973 for 1965 and by the rate of tax imposed with respect to wages by section 3111(a) of the Internal Revenue Code of 1954 plus the rate imposed by section 3111(b) of such Code, for by a number of percentage points (including fractional points) equal at any given time to the number of percentage points (including fractional points) by which the rate of the tax imposed with respect to wages by section 3111(a) plus the rate imposed by section 3111(b) at such time exceeds 2¾ percent (the rate provided by paragraph (2) of section 3111 as amended by the Social Security Amendments of 1956).
1970—Subsec. (c). Pub. L. 91–215, §5(a), provided a variable standard of taxation on employers for services rendered them during any calendar quarter at the existing 2 cent rate for each man-hour of services for the period from Nov. 1, 1966 to Mar. 31, 1970, and thereafter at such rates as will permit supplemental annuity payments under section 228c(j) of this title, and authorized the Railroad Retirement Board to make the necessary determination of rates, and made it its duty to publish notice of such determinations in the Federal Register.
Subsec. (d). Pub. L. 91–215, §5(b)(1), added subsec. (d).
1966—Subsec. (a). Pub. L. 89–700, §§301(iii), (v), 302, 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 four places, and inserted sentence providing that where compensation for services rendered in a month is paid by two or more employers, one of the employers may, by notice to the Secretary, and by agreement with the other employer, elect for the tax imposed by section 3201 and this section to apply to all of the compensation paid by such employer for such month as does not exceed the maximum amount of compensation in respect to which taxes are imposed by section 3201 and this section; and in such a case the liability of the other employer shall be limited to the difference, if any, between the compensation paid by the electing employer and the maximum amount of compensation to which section 3201 and this section apply.
Pub. L. 89–699, §301(c), substituted 7 percent for 6¾ percent in subd. (3), 7¼ percent for 7 percent in subd. (4), and 7½ percent for 7¼ percent in subd. (5).
Subsec. (b). Pub. L. 89–700, §301(vi), substituted after September 30, 1965 for after December 31, 1964.
Subsec. (c). Pub. L. 89–699 added subsec. (c).
1965—Subsec. (a). Pub. L. 89–212 substituted pars. (1) to (5) for former pars. (1) and (2) which imposed an excise tax equal to 6¾ percent of so much of the compensation paid by such employer for services rendered to him after the month in which this provision was amended in 1959, and before Jan. 1, 1962, and 7¼ percent of so much of the compensation paid by such employer for services rendered to him after Dec. 31, 1961, 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 wherever appearing.
Subsec. (b). Pub. L. 89–97 substituted the rate of the tax imposed with respect to wages by section 3111(a) at such time exceeds 2¾ percent (the rate provided by paragraph (2) of section 3111 as amended by the Social Security Amendments of 1956) for the rate of the tax imposed with respect to wages by section 3111 at such time exceeds the rate provided by paragraph (2) of such section 3111 as amended by the Social Security Amendments of 1956 and inserted plus the rate imposed by section 3111(b) after section 3111(a), respectively.
1963—Subsec. (a). Pub. L. 88–133 limited the 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, §201(d)(1), (2)(A), (B), designated former provisions of section as subsec. (a), increased the tax from 6¼ percent of the compensation not in excess of $350 for any calendar month to 6¾ percent of the compensation not in excess of $400 for any calendar month for services rendered before Jan. 1, 1962, and to 7¼ percent for services rendered after Dec. 31, 1961, and substituted after the month in which this provision was amended in 1959 for after 1954 and for after December 31, 1954 in six places, not more than $400 for not more than $350, and less than $400 for less than $350.
Subsec. (b). Pub. L. 86–28, §201(d)(2)(C), added subsec. (b).
1954—Act Aug. 31, 1954, substituted $350 for $300 wherever appearing.
Effective Date of 2010 Amendment
Amendment by Pub. L. 111–147 applicable to compensation paid after Mar. 18, 2010, see section 101(e) of Pub. L. 111–147, set out as a note under section 51 of this title.
Effective Date of 2001 Amendment
Amendment by section 203(b) of Pub. L. 107–90 applicable to calendar years beginning after Dec. 31, 2001, see section 203(c) of Pub. L. 107–90, set out as a note under section 3211 of this title.
Amendment by section 204(a) of Pub. L. 107–90 applicable to calendar years beginning after Dec. 31, 2001, see section 204(f) of Pub. L. 107–90, set out as a note under section 24 of this title.
Effective Date of 1987 Amendment
Pub. L. 100–203, title IX, §9032(b), Dec. 22, 1987, 101 Stat. 1330–296, provided that: The amendments made by this section [amending this section] shall apply with respect to compensation paid after December 31, 1987.
Effective and Termination Dates of 1983 Amendment
Amendment by section 211(b) of Pub. L. 98–76 applicable to compensation paid for services rendered after Dec. 31, 1983, and before Jan. 1, 1985, see section 212 of Pub. L. 98–76, set out as a note under section 3201 of this title.
Amendment by section 222 of Pub. L. 98–76 applicable to remuneration paid after Dec. 31, 1984, see section 227(a) of Pub. L. 98–76, set out as a note under section 3201 of this title.
Effective Date of 1981 Amendment
Amendment by Pub. L. 97–34 applicable to compensation paid for services rendered after Sept. 30, 1981, see section 741(e) of Pub. L. 97–34, set out as a note under section 3201 of this title.
Effective Date of 1976 Amendment
Amendment by section 1903(a)(9) 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 3101 of this title.
Effective Date of 1975 Amendment
Amendment by Pub. L. 94–93 applicable for taxable years ending on or after Aug. 9, 1975, and for taxable years ending before Aug. 9, 1975, as to which the period for assessment and collection of tax or the filing of a claim for credit or refund has not expired on Aug. 9, 1975, see section 207 of Pub. L. 94–93, set out as a note under section 3201 of this title.
Effective Date of 1974 Amendment
Pub. L. 93–445, title VI, §604, Oct. 16, 1974, 88 Stat. 1361, provided that: The amendments made by the provisions of title V of this Act [amending this section and section 6413 of this title] shall become effective on January 1, 1975, and shall apply only with respect to compensation paid for services rendered on or after that date.
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 1966 Amendment
Amendment by Pub. L. 89–699 effective with respect to man-hours, beginning with first month following Oct. 30, 1966, for which compensation is paid, see section 301(f) of Pub. L. 89–699, set out as a note under section 3211 of this title.
Effective Date of 1965 Amendments
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 [September 1965], and amendment by section 5(c) of Pub. L. 89–212 effective only with respect to compensation paid for services rendered after Sept. 30, 1965, see section 6 of Pub. L. 89–212, set out as a note under section 3201 of this title.
Amendment by section 105(b)(3) of Pub. L. 89–97 effective with respect to compensation paid for services rendered after Dec. 31, 1965, see section 105(b)(4) of Pub. L. 89–97, set out as a note under section 3201 of this title.
Amendment by section 111(c)(3) of Pub. L. 89–97 applicable to calendar year 1966 or to any subsequent calendar year but only if by October 1 immediately preceding such calendar year the Railroad Retirement Tax Act provides for a maximum amount of monthly compensation taxable under such Act during all months of such calendar year equal to one-twelfth of maximum wages which Federal Insurance Contributions Act provides may be counted for such calendar year, see section 111(e) of Pub. L. 89–97, set out as an Effective Date note under section 1395i–1 of Title 42, The Public Health and Welfare.
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.
Penalties and Interest Not Assessed for Failure To Make Timely Payment During Period January 1, 1982, to June 30, 1982, of Taxes Attributable to Amendments by Pub. L. 97–123
For provision that no penalties or interest shall be assessed on account of any failure to make timely payment of taxes imposed by subsec. (b) of this section with respect to payments made for the period Jan. 1, 1982, and ending June 30, 1982, to the extent that such taxes are attributable to section 3 of Pub. L. 97–123 or the amendments made by that section, see section 3(f) of Pub. L. 97–123, set out as a note under section 3101 of this title.
Excise Taxes on Employers; Employees Covered by Certain Supplemental Pension Plans
Pub. L. 91–215, §5(b)(2), Mar. 17, 1970, 84 Stat. 71, provided that: The amendment made by paragraph (1) [amending this section] shall apply to (A) supplemental annuities paid on or after April 1, 1970, and (B) man-hours with respect to which compensation is paid for services rendered to such employer on or after such day.
U.S. Encyclopedia of Law Coverage
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