
From the U.S. Code Online via GPO Access
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[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 26USC3102]

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

(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.)


                               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.''

                  Section Referred to in Other Sections

    This section is referred to in sections 3402, 3505, 3507, 6053 of 
this title.
