Internal Revenue Code:Sec. 3102. Deduction of tax from wages

From TaxAlmanac

Location in Internal Revenue Code

     TITLE 26 - INTERNAL REVENUE CODE
      Subtitle C - Employment Taxes
       CHAPTER 21 - FEDERAL INSURANCE CONTRIBUTIONS ACT
        Subchapter A - Tax on Employees
      

Statute

    Sec. 3102. Deduction of tax from wages
 
    (a) Requirement
      The tax imposed by section 3101 shall be collected by the
    employer of the taxpayer, by deducting the amount of the tax from
    the wages as and when paid.  An employer who in any calendar year
    pays to an employee cash remuneration to which paragraph (7)(B) of
    section 3121(a) is applicable may deduct an amount equivalent to
    such tax from any such payment of remuneration, even though at the
    time of payment the total amount of such remuneration paid to the
    employee by the employer in the calendar year is less than the
    applicable dollar threshold (as defined in section 3121(x)) for
    such year; and an employer who in any calendar year pays to an
    employee cash remuneration to which paragraph (7)(C) or (10) of
    section 3121(a) is applicable may deduct an amount equivalent to
    such tax from any such payment of remuneration, even though at the
    time of payment the total amount of such remuneration paid to the
    employee by the employer in the calendar year is less than $100;
    and an employer who in any calendar year pays to an employee cash
    remuneration to which paragraph (8)(B) of section 3121(a) is
    applicable may deduct an amount equivalent to such tax from any
    such payment of remuneration, even though at the time of payment
    the total amount of such remuneration paid to the employee by the
    employer in the calendar year is less than $150 and the employee
    has not performed agricultural labor for the employer on 20 days or
    more in the calendar year for cash remuneration computed on a time
    basis; and an employer who is furnished by an employee a written
    statement of tips (received in a calendar month) pursuant to
    section 6053(a) to which paragraph (12)(B) of section 3121(a) is
    applicable may deduct an amount equivalent to such tax with respect
    to such tips from any wages of the employee (exclusive of tips)
    under his control, even though at the time such statement is
    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 so to deduct the tax shall be liable for
    the payment of such tax, and shall be indemnified against the
    claims and demands of any person for the amount of any such payment
    made by such employer.
    (c) Special rule for tips
      (1) In the case of tips which constitute wages, subsection (a)
    shall be applicable only to such tips as are included in a written
    statement 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 year) in which
    the tips were deemed paid, by deducting the amount of the tax from
    such wages of the employee (excluding tips, but including funds
    turned over by the employee to the employer pursuant to paragraph
    (2)) as are under control of the employer.
      (2) If the tax imposed by section 3101, with respect to tips
    which are included in written statements furnished in any month to
    the employer pursuant to section 6053(a), exceeds the wages of the
    employee (excluding tips) from which the employer is required to
    collect the tax under paragraph (1), the employee may 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 year) 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 calendar year,
        (B) to determine the amount to be deducted upon each payment of
      wages (exclusive of tips) during such year as if the tips so
      estimated constituted the actual tips so reported, and
        (C) to deduct upon any payment of wages (other than tips, but
      including funds turned over by the employee to the employer
      pursuant to paragraph (2)) to such employee during such year (and
      within 30 days thereafter) such amount as may be necessary to
      adjust the amount actually deducted upon such wages of the
      employee during the year to the amount required to be deducted in
      respect of tips included in written statements furnished to the
      employer during the year.
      (4) If the tax imposed by section 3101 with respect to tips which
    constitute wages exceeds the portion of such tax which can be
    collected by the employer from the wages of the employee pursuant
    to paragraph (1) or paragraph (3), such excess shall be paid by the
    employee.
    (d) Special rule for certain taxable group-term life insurance
        benefits
      (1) In general
        In the case of any payment for group-term life insurance to
      which this subsection 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 wages which consists of payments for
          group-term life insurance to which this subsection applies,
          and
            (ii) the amount of the tax imposed by section 3101 on such
          payments, and
          (C) the tax imposed by section 3101 on such payments shall be
        paid by the employee.
      (2) Benefits to which subsection applies
        This subsection shall apply to any payment for group-term life
      insurance to the extent -
          (A) such payment constitutes wages, and
          (B) such payment is for coverage for periods during which an
        employment relationship no longer exists between the employee
        and the employer.
    (e) Special rule for certain transferred Federal employees
      In the case of any payments of wages for service performed in the
    employ of an international organization pursuant to a transfer to
    which the provisions of section 3121(y) are applicable -
        (1) subsection (a) shall not apply,
        (2) the head of the Federal agency from which the transfer was
      made shall separately include on the statement required under
      section 6051 -
          (A) the amount determined to be the amount of the wages for
        such service, and
          (B) the amount of the tax imposed by section 3101 on such
        payments, and
        (3) the tax imposed by section 3101 on such payments shall be
      paid by the employee.
 

Sources

    (Aug. 16, 1954, ch. 736, 68A Stat. 415; Sept. 1, 1954, ch. 1206,
    title II, Sec. 205A, 68 Stat. 1093; Aug. 1, 1956, ch. 836, title
    II, Sec. 201(h)(3), 70 Stat. 841; Pub. L. 89-97, title III, Sec.
    313(c)(1), (2), July 30, 1965, 79 Stat. 382, 383; Pub. L. 94-455,
    title XIX, Sec. 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub.
    L. 95-216, title III, Sec. 355(a), (b), Dec. 20, 1977, 91 Stat.
    1555; Pub. L. 101-508, title V, Sec. 5124(a), Nov. 5, 1990, 104
    Stat. 1388-284; Pub. L. 103-296, title III, Sec. 319(a)(3), Aug.
    15, 1994, 108 Stat. 1534; Pub. L. 103-387, Sec. 2(a)(1)(D), Oct.
    22, 1994, 108 Stat. 4072.)
 

Miscellaneous

                                 AMENDMENTS
      1994 - Subsec. (a). Pub. L. 103-387 in second sentence
    substituted ''An employer who in any calendar year'' for ''An
    employer who in any calendar quarter'' and ''remuneration paid to
    the employee by the employer in the calendar year is less than the
    applicable dollar threshold (as defined in section 3121(x)) for
    such year'' for ''remuneration paid to the employee by the employer
    in the calendar quarter is less than $50''.
      Subsec. (e). Pub. L. 103-296 added subsec. (e).
      1990 - Subsec. (d). Pub. L. 101-508 added subsec. (d).
      1977 - Subsec. (a). Pub. L. 95-216, Sec. 355(a), substituted
    ''cash remuneration to which paragraph (7)(B) of section 3121(a) is
    applicable'' for ''cash remuneration to which paragraph (7)(B) or
    (C) or (10) of section 3121(a) is applicable'' and inserted ''and
    an employer who in any calendar year pays to an employee cash
    remuneration to which paragraph (7)(C) or (10) of section 3121(a)
    is applicable may deduct an amount equivalent to such tax from any
    such payment of remuneration, even though at the time of payment
    the total amount of such remuneration paid to the employee by the
    employer in the calendar year is less than $100;''.
      Subsec. (c)(1), (2). Pub. L. 95-216, Sec. 355(b)(1), substituted
    ''year'' for ''quarter'' wherever appearing.
      Subsec. (c)(3)(A). Pub. L. 95-216, Sec. 355(b)(2)(A), substituted
    ''in any calendar year'' for ''in any quarter of the calendar
    year''.
      Subsec. (c)(3)(B), (C). Pub. L. 95-216, Sec. 355(b)(2)(B),
    substituted ''year'' for ''quarter'' wherever appearing.
      1976 - Subsec. (c)(3). Pub. L. 94-455 struck out ''or his
    delegate'' after ''Secretary''.
      1965 - Subsec. (a). Pub. L. 89-97, Sec. 313(c)(2), inserted
    provisions at end of second sentence allowing a deduction from any
    wages of an employee of an amount equivalent to the tax on tips
    when an employer is furnished with a written statement of tips
    received by an employee.
      Subsec. (c). Pub. L. 89-97, Sec. 313(c)(1), added subsec. (c).
      1956 - Subsec. (a). Act Aug. 1, 1956, substituted ''$150 and the
    employee has not performed agricultural labor for the employer on
    20 days or more in the calendar year for cash remuneration computed
    on a time basis'' for ''$100''.
      1954 - Subsec. (a). Act Sept. 1, 1954, inserted last sentence
    permitting in certain instances an employer to deduct employee tax
    even though payment to employee is less than $50 for calendar
    quarter or $100 for calendar year.
                     EFFECTIVE DATE OF 1994 AMENDMENTS
      Section 2(a)(3) of Pub. L. 103-387 provided that:
      ''(A) In general. - Except as provided in subparagraph (B), the
    amendments made by this subsection (amending this section, section
    3121 of this title, and sections 409 and 410 of Title 42, The
    Public Health and Welfare) shall apply to remuneration paid after
    December 31, 1993.
      ''(B) Excluded employment. - The amendments made by paragraphs
    (1)(C) and (2)(B) (amending section 3121 of this title and section
    410 of Title 42) shall apply to services performed after December
    31, 1994.''
      Amendment by Pub. L. 103-296 applicable with respect to service
    performed after calendar quarter following calendar quarter in
    which Aug. 15, 1994, occurs, see section 319(c) of Pub. L. 103-296,
    set out as a note under section 1402 of this title.
                      EFFECTIVE DATE OF 1990 AMENDMENT
      Section 5124(c) of Pub. L. 101-508 provided that: ''The
    amendments made by this section (amending this section and section
    3202 of this title) shall apply to coverage provided after December
    31, 1990.''
                      EFFECTIVE DATE OF 1977 AMENDMENT
      Section 355(c) of Pub. L. 95-216 provided that: ''The amendments
    made by this section (amending this section) shall apply with
    respect to remuneration paid and to tips received after December
    31, 1977.''
                      EFFECTIVE DATE OF 1965 AMENDMENT
      Amendment by Pub. L. 89-97 applicable only with respect to tips
    received by employees after 1965, see section 313(f) of Pub. L.
    89-97, set out as an Effective Date note under section 6053 of this
    title.
     NO LOSS OF SOCIAL SECURITY COVERAGE FOR 1994; CONTINUATION OF W-2
                             FILING REQUIREMENT
      Section 2(a)(4) of Pub. L. 103-387 provided that:
    ''Notwithstanding the amendments made by this subsection (amending
    this section, section 3121 of this title, and sections 409 and 410
    of Title 42, The Public Health and Welfare), if the wages (as
    defined in section 3121(a) of the Internal Revenue Code of 1986)
    paid during 1994 to an employee for domestic service in a private
    home of the employer are less than $1,000 -
        ''(A) the employer shall file any return or statement required
      under section 6051 of such Code with respect to such wages
      (determined without regard to such amendments), and
        ''(B) the employee shall be entitled to credit under section
      209 of the Social Security Act (42 U.S.C. 409) with respect to
      any such wages required to be included on any such return or
      statement.''
 

References

                   SECTION REFERRED TO IN OTHER SECTIONS
      This section is referred to in sections 3402, 3505, 3507, 6053 of
    this title.