Internal Revenue Code:Sec. 3221. Rate of tax
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Location in Internal Revenue Code
TITLE 26 - INTERNAL REVENUE CODE
Subtitle C - Employment Taxes
CHAPTER 22 - RAILROAD RETIREMENT TAX ACT
Subchapter C - Tax on Employers
Statute
Sec. 3221. Rate of tax
(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) Cross reference
For application of different contribution bases with respect
to the taxes imposed by subsections (a) and (b), see section
3231(e)(2).
Sources
(Aug. 16, 1954, ch. 736, 68A Stat. 433; Aug. 31, 1954, ch. 1164,
pt. II, Sec. 206(a), 68 Stat. 1040; Pub. L. 86-28, pt. II, Sec.
201(d), May 19, 1959, 73 Stat. 29; Pub. L. 88-133, title II, Sec.
202, Oct. 5, 1963, 77 Stat. 221; Pub. L. 89-97, title I, Sec.
105(b)(3), 111(c)(3), July 30, 1965, 79 Stat. 335, 342; Pub. L.
89-212, Sec. 4, 5(c), Sept. 29, 1965, 79 Stat. 861, 862; Pub. L.
89-699, title III, Sec. 301(c), (e), Oct. 30, 1966, 80 Stat. 1078;
Pub. L. 89-700, title III, Sec. 301(iii), (v), (vi), 302, Oct. 30,
1966, 80 Stat. 1088, 1089; Pub. L. 91-215, Sec. 5(a), (b)(1), Mar.
17, 1970, 84 Stat. 71; Pub. L. 93-69, title I, Sec. 102(d)-(f),
July 10, 1973, 87 Stat. 162, 163; Pub. L. 93-445, title V, Sec.
501, Oct. 16, 1974, 88 Stat. 1359; Pub. L. 94-93, title II, Sec.
203, Aug. 9, 1975, 89 Stat. 466; Pub. L. 94-455, title XIX, Sec.
1903(a)(9), 1906(b)(13)(G), Oct. 4, 1976, 90 Stat. 1808, 1835; Pub.
L. 97-34, title VII, Sec. 741(c), Aug. 13, 1981, 95 Stat. 347; Pub.
L. 98-76, title II, Sec. 211(b), 222, Aug. 12, 1983, 97 Stat. 419,
420; Pub. L. 100-203, title IX, Sec. 9032(a), Dec. 22, 1987, 101
Stat. 1330-296; Pub. L. 101-508, title V, Sec. 5125(c), Nov. 5,
1990, 104 Stat. 1388-286; Pub. L. 107-90, title II, Sec. 203(b),
204(a), Dec. 21, 2001, 115 Stat. 891.)
Miscellaneous
AMENDMENTS
2001 - Subsec. (b). Pub. L. 107-90, Sec. 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, Sec. 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:
''In the case of compensation
paid during: The rate shall be:
1985 13.75
1986 or thereafter 14.75.''
1983 - Subsec. (a). Pub. L. 98-76, Sec. 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, Sec. 211(b), substituted ''12.75 percent'' for
''11.75 percent''.
Subsec. (b). Pub. L. 98-76, Sec. 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, Sec. 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, Sec. 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, Sec. 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, Sec. 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, Sec. 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, Sec. 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, Sec. 102(d), (e), substituted
new tax rate provisions on employers for services rendered after
Sept. 30, 1973, for former provisions which prescribed 6 1/4, 6
1/2, 7, 7 1/4, and 7 1/2 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, Sec. 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 2 3/4 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, Sec. 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, Sec. 5(b)(1), added subsec. (d).
1966 - Subsec. (a). Pub. L. 89-700, Sec. 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, Sec. 301(c), substituted ''7 percent'' for ''6
3/4 percent'' in subd. (3), ''7 1/4 percent'' for ''7 percent'' in
subd. (4), and ''7 1/2 percent'' for ''7 1/4 percent'' in subd.
(5).
Subsec. (b). Pub. L. 89-700, Sec. 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 6
3/4 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 7 1/4
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 2 3/4 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, Sec. 201(d)(1), (2)(A), (B),
designated former provisions of section as subsec. (a), increased
the tax from 6 1/4 percent of the compensation not in excess of
$350 for any calendar month to 6 3/4 percent of the compensation
not in excess of $400 for any calendar month for services rendered
before Jan. 1, 1962, and to 7 1/4 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, Sec. 201(d)(2)(C), added subsec. (b).
1954 - Act Aug. 31, 1954, substituted ''$350'' for ''$300''
wherever appearing.
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 an Effective and Termination Dates of
2001 Amendments note under section 24 of this title.
EFFECTIVE DATE OF 1987 AMENDMENT
Section 9032(b) of Pub. L. 100-203 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
Section 604 of Pub. L. 93-445 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
Section 5(b)(2) of Pub. L. 91-215 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.''
References
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 72, 3231, 3241, 6205,
6413 of this title; title 45 sections 231f-1, 231n-1; title 49
section 24104.
