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United States Code (Last Updated: May 24, 2014) |
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Title 26. INTERNAL REVENUE CODE |
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SubTitle C. Employment Taxes |
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Chapter 24. COLLECTION OF INCOME TAX AT SOURCE ON WAGES |
§ 3401. Definitions
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(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performed by a nonresident alien individual, as may be designated by regulations prescribed by the Secretary; or [(7) Repealed.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, § 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), (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, 134(b)(4), or 134(b)(5); 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), 108(f)(4), 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); 2 (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); or (23) for any benefit or payment which is excludable from the gross income of the employee under section 139B(b). The term “wages” includes any amount includible in gross income of an employee under section 409A and payment of such amount shall be treated as having been made in the taxable year in which the amount is so includible. (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) Crew leader rules to apply Rules similar to the rules of section 3121(o) shall apply for purposes of this chapter.
(h) Differential wage payments to active duty members of the uniformed services (1) In general For purposes of subsection (a), any differential wage payment shall be treated as a payment of wages by the employer to the employee.
(2) Differential wage payment For purposes of paragraph (1), the term “differential wage payment” means any payment which— (A) is made by an employer to an individual with respect to any period during which the individual is performing service in the uniformed services (as defined in chapter 43 of title 38, United States Code) while on active duty for a period of more than 30 days, and (B) represents all or a portion of the wages the individual would have received from the employer if the individual were performing service for the employer.
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.
Amendments
2008—Subsec. (a)(23). Pub. L. 110–245, § 115(c), added par. (23).
Subsec. (h). Pub. L. 110–245, § 105(a)(1), added subsec. (h).
2005—Subsecs. (g), (h). Pub. L. 109–135 redesignated subsec. (h) as (g).
2004—Subsec. (a). Pub. L. 108–357, § 885(b)(2), inserted concluding provisions.
Subsec. (a)(18). Pub. L. 108–375 substituted “134(b)(4), or 134(b)(5)” for “or 134(b)(4)”.
Subsec. (a)(19). Pub. L. 108–357, § 320(b)(4), inserted “108(f)(4),” after “74(c),”.
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 added subpar. (E).
1998—Subsec. (a)(19), (21). Pub. L. 105–206 inserted “for” after par. designation.
1996—Subsec. (a)(1). Pub. L. 104–188, § 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, § 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, § 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, § 1011B(a)(22)(D), had not been enacted, see 1988 Amendment note below.
Subsec. (h). Pub. L. 101–239, § 7631(b), added subsec. (h).
1988—Subsec. (a)(12)(C). Pub. L. 100–647, § 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, § 1001(g)(4)(B)(iii), inserted “(determined without regard to section 274(n))” after “section 217”.
Subsec. (a)(19), (20). Pub. L. 100–647, § 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, § 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, § 1272(c), added subpar. (D).
Subsec. (a)(20). Pub. L. 99–514, § 122(e)(4), inserted reference to section 74(c).
1984—Subsec. (a). Pub. L. 98–369, § 531(d)(4)(A), inserted “(including benefits)” in introductory provisions.
Subsec. (a)(12). Pub. L. 98–369, § 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, § 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, § 311(h)(6), substituted “section 219(a)” for “section 219(a) or 220(a)”.
Subsec. (a)(18). Pub. L. 97–34, § 124(e)(2)(A), substituted “section 127 or 129” for “section 127”.
Pub. L. 97–34, § 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, § 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, § 1906(b)(13)(A), struck out “or his delegate” after “Secretary”.
Subsec. (a)(12)(D). Pub. L. 94–455, § 1501(b)(7), inserted “or 220(a)” after “section 219(a)”.
Subsec. (a)(17). Pub. L. 94–455, § 1207(e)(1)(C), added par. (17).
Subsec. (c). Pub. L. 94–455, § 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, § 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, § 313(d)(2), added par. (16).
Subsec. (f). Pub. L. 89–97, § 313(d)(1), added subsec. (f).
1964—Subsec. (a)(14). Pub. L. 88–272, § 204(b), added par. (14).
Subsec. (a)(15). Pub. L. 88–272, § 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
Effective Date Of Amendment
Pub. L. 110–245, title I, § 105(a)(2),
Amendment by section 115(c) of Pub. L. 110–245 effective as if included in section 5 of Pub. L. 110–142, see section 115(d) of Pub. L. 110–245, set out as a note under section 3121 of this title.
Amendment by Pub. L. 108–375 applicable to travel benefits provided after
Amendment by section 320(b)(4) of Pub. L. 108–357 applicable to amounts received by an individual in taxable years beginning after
Amendment by section 885(b)(2) of Pub. L. 108–357 applicable to amounts deferred after
Amendment by Pub. L. 108–173 applicable to taxable years beginning after
Amendment by Pub. L. 108–121 applicable to taxable years beginning after
Amendment by Pub. L. 107–16 applicable to distributions after
Amendment by Pub. L. 104–191 applicable to taxable years beginning after
Amendment by section 1421(b)(8)(D) of Pub. L. 104–188 applicable to taxable years beginning after
Amendment by Pub. L. 104–117 applicable to remuneration paid after
Pub. L. 101–508, title XI, § 11703(f)(2),
Pub. L. 101–239, title VII, § 7631(c),
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.
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
Amendment by section 122(e)(4) of Pub. L. 99–514 applicable to prizes and awards granted after
Amendment by section 1272(c) of Pub. L. 99–514 applicable to taxable years beginning after
Amendment by section 491(d)(38) of Pub. L. 98–369 applicable to obligations issued after
Amendment by section 531(d)(4) of Pub. L. 98–369 effective
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.
Amendment by section 112(b)(5) of Pub. L. 97–34 applicable with respect to taxable years beginning after
Amendment by section 124(e)(2)(A) of Pub. L. 97–34 applicable to remuneration paid after
Amendment by section 311(h)(6) of Pub. L. 97–34 applicable to taxable years beginning after
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.
Amendment by Pub. L. 95–615 applicable to remuneration paid after
Amendment by Pub. L. 95–600 applicable with respect to taxable years beginning after
Amendment by section 1501(b)(7) of Pub. L. 94–455 effective for taxable years beginning after
Amendment by Pub. L. 93–406 effective on
Pub. L. 92–279, § 3(b),
Amendment by Pub. L. 89–809 applicable with respect to remuneration paid after
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.
Amendment by section 204(b) of Pub. L. 88–272 applicable to remuneration paid after
Amendment by section 213(c) of Pub. L. 88–272 applicable to remuneration paid after the seventh day following
Amendment by Pub. L. 87–792 applicable to taxable years beginning after
Amendment by Pub. L. 87–293 applicable with respect to remuneration paid after
Pub. L. 87–256, § 110(h)(4),
Short Title Of Amendment
Pub. L. 89–368, § 1,
Repeals
Section 201(c) of Pub. L. 87–293, cited as a credit to this section, was repealed by Pub. L. 89–572, § 5(a),
Miscellaneous
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
For provisions directing that if any amendments made by subtitle D [§§ 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
Pub. L. 95–600, title V, § 530,
[Pub. L. 109–280, title VIII, § 864(b),
[Pub. L. 104–188, title I, § 1122(b),
[“(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
[“(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
[“(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
[“(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
[Pub. L. 99–514, title XVII, § 1706(b),