
From the U.S. Code Online via GPO Access
[wais.access.gpo.gov]
[Laws in effect as of January 2, 2001]
[Document affected by Public Law 106-554 Section 1(a)(7)]
[Document affected by Public Law 107-90 Section 204(e)(3),]
[CITE: 26USC3231]

 
                     TITLE 26--INTERNAL REVENUE CODE
 
                      Subtitle C--Employment Taxes
 
                 CHAPTER 22--RAILROAD RETIREMENT TAX ACT
 
                    Subchapter D--General Provisions
 
Sec. 3231. Definitions


(a) Employer

    For purposes of this chapter, the term ``employer'' means any 
carrier (as defined in subsection (g)), and any company which is 
directly or indirectly owned or controlled by one or more such carriers 
or under common control therewith, and which operates any equipment or 
facility or performs any service (except trucking service, casual 
service, and the casual operation of equipment or facilities) in 
connection with the transportation of passengers or property by 
railroad, or the receipt, delivery, elevation, transfer in transit, 
refrigeration or icing, storage, or handling of property transported by 
railroad, and any receiver, trustee, or other individual or body, 
judicial or otherwise, when in the possession of the property or 
operating all or any part of the business of any such employer; except 
that the term ``employer'' shall not include any street, interurban, or 
suburban electric railway, unless such railway is operating as a part of 
a general steam-railroad system of transportation, but shall not exclude 
any part of the general steam-railroad system of transportation now or 
hereafter operated by any other motive power. The Surface Transportation 
Board is hereby authorized and directed upon request of the Secretary, 
or upon complaint of any party interested, to determine after hearing 
whether any line operated by electric power falls within the terms of 
this exception. The term ``employer'' shall also include railroad 
associations, traffic associations, tariff bureaus, demurrage bureaus, 
weighing and inspection bureaus, collection agencies and other 
associations, bureaus, agencies, or organizations controlled and 
maintained wholly or principally by two or more employers as 
hereinbefore defined and engaged in the performance of services in 
connection with or incidental to railroad transportation; and railway 
labor organizations, national in scope, which have been or may be 
organized in accordance with the provisions of the Railway Labor Act, as 
amended (45 U.S.C., chapter 8), and their State and National legislative 
committees and their general committees and their insurance departments 
and their local lodges and divisions, established pursuant to the 
constitutions and bylaws of such organizations. The term ``employer'' 
shall not include any company by reason of its being engaged in the 
mining of coal, the supplying of coal to an employer where delivery is 
not beyond the mine tipple, and the operation of equipment or facilities 
therefor, or in any of such activities.

(b) Employee

    For purposes of this chapter, the term ``employee'' means any 
individual in the service of one or more employers for compensation; 
except that the term ``employee'' shall include an employee of a local 
lodge or division defined as an employer in subsection (a) only if he 
was in the service of or in the employment relation to a carrier on or 
after August 29, 1935. An individual shall be deemed to have been in the 
employment relation to a carrier on August 29, 1935, if--
        (1) he was on that date on leave of absence from his employment, 
    expressly granted to him by the carrier by whom he was employed, or 
    by a duly authorized representative of such carrier, and the grant 
    of such leave of absence was established to the satisfaction of the 
    Railroad Retirement Board before July 1947; or
        (2) he was in the service of a carrier after August 29, 1935, 
    and before January 1946 in each of 6 calendar months, whether or not 
    consecutive; or
        (3) before August 29, 1935, he did not retire and was not 
    retired or discharged from the service of the last carrier by whom 
    he was employed or its corporate or operating successor, but--
            (A) solely by reason of his physical or mental disability he 
        ceased before August 29, 1935, to be in the service of such 
        carrier and thereafter remained continuously disabled until he 
        attained age 65 or until August 1945, or
            (B) solely for such last stated reason a carrier by whom he 
        was employed before August 29, 1935, or a carrier who is its 
        successor did not on or after August 29, 1935, and before August 
        1945 call him to return to service, or
            (C) if he was so called he was solely for such reason unable 
        to render service in 6 calendar months as provided in paragraph 
        (2); or

        (4) he was on August 29, 1935, absent from the service of a 
    carrier by reason of a discharge which, within 1 year after the 
    effective date thereof, was protested, to an appropriate labor 
    representative or to the carrier, as wrongful, and which was 
    followed within 10 years of the effective date thereof by his 
    reinstatement in good faith to his former service with all his 
    seniority rights;

except that an individual shall not be deemed to have been on August 29, 
1935, in the employment relation to a carrier if before that date he was 
granted a pension or gratuity on the basis of which a pension was 
awarded to him pursuant to section 6 of the Railroad Retirement Act of 
1937 (45 U.S.C. 228f), or if during the last payroll period before 
August 29, 1935, in which he rendered service to a carrier he was not in 
the service of an employer, in accordance with subsection (d), with 
respect to any service in such payroll period, or if he could have been 
in the employment relation to an employer only by reason of his having 
been, either before or after August 29, 1935, in the service of a local 
lodge or division defined as an employer in subsection (a). The term 
``employee'' includes an officer of an employer. The term ``employee'' 
shall not include any individual while such individual is engaged in the 
physical operations consisting of the mining of coal, the preparation of 
coal, the handling (other than movement by rail with standard railroad 
locomotives) of coal not beyond the mine tipple, or the loading of coal 
at the tipple.

(c) Employee representative

    For purposes of this chapter, the term ``employee representative'' 
means any officer or official representative of a railway labor 
organization other than a labor organization included in the term 
``employer'' as defined in subsection (a), who before or after June 29, 
1937, was in the service of an employer as defined in subsection (a) and 
who is duly authorized and designated to represent employees in 
accordance with the Railway Labor Act (45 U.S.C., chapter 8), as 
amended, and any individual who is regularly assigned to or regularly 
employed by such officer or official representative in connection with 
the duties of his office.

(d) Service

    For purposes of this chapter, an individual is in the service of an 
employer whether his service is rendered within or without the United 
States, if--
        (1) he is subject to the continuing authority of the employer to 
    supervise and direct the manner of rendition of his service, or he 
    is rendering professional or technical services and is integrated 
    into the staff of the employer, or he is rendering, on the property 
    used in the employer's operations, other personal services the 
    rendition of which is integrated into the employer's operations, and
        (2) he renders such service for compensation;

except that an individual shall be deemed to be in the service of an 
employer, other than a local lodge or division or a general committee of 
a railway-labor-organization employer, not conducting the principal part 
of its business in the United States, only when he is rendering service 
to it in the United States; and an individual shall be deemed to be in 
the service of such a local lodge or division only if--
        (3) all, or substantially all, the individuals constituting its 
    membership are employees of an employer conducting the principal 
    part of its business in the United States; or
        (4) the headquarters of such local lodge or division is located 
    in the United States;

and an individual shall be deemed to be in the service of such a general 
committee only if--
        (5) he is representing a local lodge or division described in 
    paragraph (3) or (4) immediately above; or
        (6) all, or substantially all, the individuals represented by it 
    are employees of an employer conducting the principal part of its 
    business in the United States; or
        (7) he acts in the capacity of a general chairman or an 
    assistant general chairman of a general committee which represents 
    individuals rendering service in the United States to an employer, 
    but in such case if his office or headquarters is not located in the 
    United States and the individuals represented by such general 
    committee are employees of an employer not conducting the principal 
    part of its business in the United States, only such proportion of 
    the remuneration for such service shall be regarded as compensation 
    as the proportion which the mileage in the United States under the 
    jurisdiction of such general committee bears to the total mileage 
    under its jurisdiction, unless such mileage formula is inapplicable, 
    in which case such other formula as the Railroad Retirement Board 
    may have prescribed pursuant to section 1(c) of the Railroad 
    Retirement Act of 1937 (45 U.S.C. 228a) shall be applicable, and if 
    the application of such mileage formula, or such other formula as 
    the Board may prescribe, would result in the compensation of the 
    individual being less than 10 percent of his remuneration for such 
    service, no part of such remuneration shall be regarded as 
    compensation;

Provided however, That an individual not a citizen or resident of the 
United States shall not be deemed to be in the service of an employer 
when rendering service outside the United States to an employer who is 
required under the laws applicable in the place where the service is 
rendered to employ therein, in whole or in part, citizens or residents 
thereof; and the laws applicable on August 29, 1935, in the place where 
the service is rendered shall be deemed to have been applicable there at 
all times prior to that date.

(e) Compensation

    For purposes of this chapter--
        (1) The term ``compensation'' means any form of money 
    remuneration paid to an individual for services rendered as an 
    employee to one or more employers. Such term does not include (i) 
    the amount of any payment (including any amount paid by an employer 
    for insurance or annuities, or into a fund, to provide for any such 
    payment) made to, or on behalf of, an employee or any of his 
    dependents under a plan or system established by an employer which 
    makes provision for his employees generally (or for his employees 
    generally and their dependents) or for a class or classes of his 
    employees (or for a class or classes of his employees and their 
    dependents), on account of sickness or accident disability or 
    medical or hospitalization expenses in connection with sickness or 
    accident disability or death, except that this clause does not apply 
    to a payment for group-term life insurance to the extent that such 
    payment is includible in the gross income of the employee, (ii) tips 
    (except as is provided under paragraph (3)), (iii) an amount paid 
    specifically--either as an advance, as reimbursement or allowance--
    for traveling or other bona fide and necessary expenses incurred or 
    reasonably expected to be incurred in the business of the employer 
    provided any such payment is identified by the employer either by a 
    separate payment or by specifically indicating the separate amounts 
    where both wages and expense reimbursement or allowance are combined 
    in a single payment, or (iv) any remuneration which would not (if 
    chapter 21 applied to such remuneration) be treated as wages (as 
    defined in section 3121(a)) by reason of section 3121(a)(5). Such 
    term does not include remuneration for service which is performed by 
    a nonresident alien individual for the period he is temporarily 
    present in the United States as a nonimmigrant under subparagraph 
    (F), (J), (M), or (Q) of section 101(a)(15) of the Immigration and 
    Nationality Act, as amended, and which is performed to carry out the 
    purpose specified in subparagraph (F), (J), (M), or (Q), as the case 
    may be. For the purpose of determining the amount of taxes under 
    sections 3201 and 3221, compensation earned in the service of a 
    local lodge or division of a railway-labor-organization employer 
    shall be disregarded with respect to any calendar month if the 
    amount thereof is less than $25. Compensation for service as a 
    delegate to a national or international convention of a railway 
    labor organization defined as an ``employer'' in subsection (a) of 
    this section shall be disregarded for purposes of determining the 
    amount of taxes due pursuant to this chapter if the individual 
    rendering such service has not previously rendered service, other 
    than as such a delegate, which may be included in his ``years of 
    service'' for purposes of the Railroad Retirement Act. Nothing in 
    the regulations prescribed for purposes of chapter 24 (relating to 
    wage withholding) which provides an exclusion from ``wages'' as used 
    in such chapter shall be construed to require a similar exclusion 
    from ``compensation'' in regulations prescribed for purposes of this 
    chapter.

                (2) Application of contribution bases

        (A) Compensation in excess of applicable base excluded

            (i) In general

                The term ``compensation'' does not include that part of 
            remuneration paid during any calendar year to an individual 
            by an employer after remuneration equal to the applicable 
            base has been paid during such calendar year to such 
            individual by such employer for services rendered as an 
            employee to such employer.
            (ii) Remuneration not treated as compensation 
                    excluded

                There shall not be taken into account under clause (i) 
            remuneration which (without regard to clause (i)) is not 
            treated as compensation under this subsection.
            (iii) Hospital insurance taxes

                Clause (i) shall not apply to--
                    (I) so much of the rate applicable under section 
                3201(a) or 3221(a) as does not exceed the rate of tax in 
                effect under section 3101(b), and
                    (II) so much of the rate applicable under section 
                3211(a)(1) as does not exceed the rate of tax in effect 
                under section 1401(b).

        (B) Applicable base

            (i) Tier 1 taxes

                Except as provided in clause (ii), the term ``applicable 
            base'' means for any calendar year the contribution and 
            benefit base determined under section 230 of the Social 
            Security Act for such calendar year.
            (ii) Tier 2 taxes, etc.

                For purposes of--
                    (I) the taxes imposed by sections 3201(b), 
                3211(a)(2), and 3221(b), and
                    (II) computing average monthly compensation under 
                section 3(j) of the Railroad Retirement Act of 1974 
                (except with respect to annuity amounts determined under 
                subsection (a) or (f)(3) of section 3 of such Act),

          clause (2) of the first sentence, and the second sentence, of 
            subsection (c) of section 230 of the Social Security Act 
            shall be disregarded.

        (C) Successor employers

            For purposes of this paragraph, the second sentence of 
        section 3121(a)(1) (relating to successor employers) shall 
        apply, except that--
                (i) the term ``services'' shall be substituted for 
            ``employment'' each place it appears,
                (ii) the term ``compensation'' shall be substituted for 
            ``remuneration (other than remuneration referred to in the 
            succeeding paragraphs of this subsection)'' each place it 
            appears, and
                (iii) the terms ``employer'', ``services'', and 
            ``compensation'' shall have the meanings given such terms by 
            this section.

        (3) Solely for purposes of the taxes imposed by section 3201 and 
    other provisions of this chapter insofar as they relate to such 
    taxes, the term ``compensation'' also includes cash tips received by 
    an employee in any calendar month in the course of his employment by 
    an employer unless the amount of such cash tips is less than $20.
        (4)(A) For purposes of applying sections 3201(a), 3211(a)(1), 
    and 3221(a), in the case of payments made to an employee or any of 
    his dependents on account of sickness or accident disability, clause 
    (i) of the second sentence of paragraph (1) shall exclude from the 
    term ``compensation'' only--
            (i) payments which are received under a workmen's 
        compensation law, and
            (ii) benefits received under the Railroad Retirement Act of 
        1974.

        (B) Notwithstanding any other provision of law, for purposes of 
    the sections specified in subparagraph (A), the term 
    ``compensation'' shall include benefits paid under section 2(a) of 
    the Railroad Unemployment Insurance Act for days of sickness, except 
    to the extent that such sickness (as determined in accordance with 
    standards prescribed by the Railroad Retirement Board) is the result 
    of on-the-job injury.
        (C) Under regulations prescribed by the Secretary, subparagraphs 
    (A) and (B) shall not apply to payments made after the expiration of 
    a 6-month period comparable to the 6-month period described in 
    section 3121(a)(4).
        (D) Except as otherwise provided in regulations prescribed by 
    the Secretary, any third party which makes a payment included in 
    compensation solely by reason of subparagraph (A) or (B) shall be 
    treated for purposes of this chapter as the employer with respect to 
    such compensation.
        (5) The term ``compensation'' shall not include 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), 117, 
    or 132.
        (6) The term ``compensation'' shall not include 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.
        (7) The term ``compensation'' shall not include any 
    contribution, payment, or service provided by an employer which may 
    be excluded from the gross income of an employee, his spouse, or his 
    dependents, under the provisions of section 120 (relating to amounts 
    received under qualified group legal services plans).

     (8) Treatment of certain deferred compensation and salary 
                           reduction arrangements

        (A) Certain employer contributions treated as compensation

            Nothing in any paragraph of this subsection (other than 
        paragraph (2)) shall exclude from the term ``compensation'' any 
        amount described in subparagraph (A) or (B) of section 
        3121(v)(1).

        (B) Treatment of certain nonqualified deferred compensation

            The rules of section 3121(v)(2) which apply for purposes of 
        chapter 21 shall also apply for purposes of this chapter.

                        (9) Meals and lodging

        The term ``compensation'' shall not include the value of meals 
    or lodging furnished by or on behalf of the employer if at the time 
    of such furnishing it is reasonable to believe that the employee 
    will be able to exclude such items from income under section 119.

                    (10) Archer MSA contributions

        The term ``compensation'' shall not include 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).

(f) Company

    For purposes of this chapter, the term ``company'' includes 
corporations, associations, and joint-stock companies.

(g) Carrier

    For purposes of this chapter, the term ``carrier'' means a rail 
carrier subject to part A of subtitle IV of title 49.

(h) Tips constituting compensation, time deemed paid

    For purposes of this chapter, tips which constitute compensation for 
purposes of the taxes imposed by section 3201 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.

(i) Concurrent employment by 2 or more employers

    For purposes of this chapter, if 2 or more related corporations 
which are employers concurrently employ the same individual and 
compensate such individual through a common paymaster which is 1 of such 
corporations, each such corporation shall be considered to have paid as 
remuneration to such individual only the amounts actually disbursed by 
it to such individual and shall not be considered to have paid as 
remuneration to such individual amounts actually disbursed to such 
individual by another of such corporations.

(Aug. 16, 1954, ch. 736, 68A Stat. 434; Aug. 31, 1954, ch. 1164, pt. II, 
Sec. 206(b), 68 Stat. 1040; Pub. L. 89-212, Sec. 2(b), Sept. 29, 1965, 
79 Stat. 859; Pub. L. 90-624, Sec. 1, Oct. 22, 1968, 82 Stat. 1316; Pub. 
L. 94-92, title II, Sec. 203(b), Aug. 9, 1975, 89 Stat. 465; Pub. L. 94-
93, title II, Secs. 204-206, Aug. 9, 1975, 89 Stat. 466; Pub. L. 94-455, 
title XIX, Secs. 1903(a)(10), 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 
1808, 1834; Pub. L. 94-547, Sec. 4(b), Oct. 18, 1976, 90 Stat. 2526; 
Pub. L. 95-473, Sec. 2(a)(2)(G), Oct. 17, 1978, 92 Stat. 1465; Pub. L. 
97-34, title VII, Secs. 741(d)(2), 743(a)-(c), Aug. 13, 1981, 95 Stat. 
347, 348; Pub. L. 97-123, Sec. 3(c), Dec. 29, 1981, 95 Stat. 1662; Pub. 
L. 98-76, title II, Sec. 225(a)(1), (3), (b), (c)(1)(C), (6)-(8), Aug. 
12, 1983, 97 Stat. 424, 425; Pub. L. 98-369, div. A, title V, 
Sec. 531(d)(2), July 18, 1984, 98 Stat. 884; Pub. L. 98-611, Sec. 1(f), 
Oct. 31, 1984, 98 Stat. 3178; Pub. L. 98-612, Sec. 1(c), Oct. 31, 1984, 
98 Stat. 3181; Pub. L. 99-514, title I, Sec. 122(e)(2), title XVIII, 
Sec. 1899A(41), Oct. 22, 1986, 100 Stat. 2112, 2960; Pub. L. 100-647, 
title I, Secs. 1001(d)(2)(C)(ii), 1011B(a)(22)(B), Nov. 10, 1988, 102 
Stat. 3351, 3486; Pub. L. 101-140, title II, Sec. 203(a)(2), Nov. 8, 
1989, 103 Stat. 830; Pub. L. 101-239, title X, Secs. 10205(a), 10206(a), 
(b), 10207(a), (b), Dec. 19, 1989, 103 Stat. 2474-2476; Pub. L. 101-508, 
title XI, Secs. 11331(c), 11704(a)(19), Nov. 5, 1990, 104 Stat. 1388-
468, 1388-519; Pub. L. 103-66, title XIII, Sec. 13207(c), Aug. 10, 1993, 
107 Stat. 468; Pub. L. 103-296, title III, Sec. 320(a)(1)(D), Aug. 15, 
1994, 108 Stat. 1535; Pub. L. 104-88, title III, Sec. 304(d), Dec. 29, 
1995, 109 Stat. 944; Pub. L. 104-191, title III, Sec. 301(c)(2)(A), Aug. 
21, 1996, 110 Stat. 2049; Pub. L. 106-554, Sec. 1(a)(7) [title II, 
Sec. 202(b)(5)], Dec. 21, 2000, 114 Stat. 2763, 2763A-629.)

                       References in Text

    The Railway Labor Act, referred to in subsecs. (a) and (c), is act 
May 20, 1926, ch. 347, 44 Stat. 577, as amended, which is classified 
principally to chapter 8 (Sec. 151 et seq.) of Title 45, Railroads. For 
complete classification of this Act to the Code, see section 151 of 
Title 45 and Tables.
    Sections 1 and 6 of the Railroad Retirement Act of 1937, referred to 
in subsecs. (b) and (d)(7), were classified to sections 228a and 228f of 
Title 45. The subject matter of sections 228a and 228f is covered by 
sections 231 and 231o of Title 45.
    Section 230 of the Social Security Act, referred to in subsec. 
(e)(2)(B), is classified to section 430 of Title 42, The Public Health 
and Welfare.
    Section 3(a), (f)(3), (j) of the Railroad Retirement Act of 1974, 
referred to in subsec. (e)(2)(B)(ii)(II), is classified to section 
231b(a), (f)(3), (j) of Title 45, Railroads.
    The Railroad Retirement Act of 1974, referred to in subsec. 
(e)(4)(A)(ii), is act Aug. 29, 1935, ch. 812, as amended generally by 
Pub. L. 93-445, title I, Sec. 101, Oct. 16, 1974, 88 Stat. 1305, which 
is classified generally to subchapter IV (Sec. 231 et seq.) of chapter 9 
of Title 45. For further details and complete classification of this Act 
to the Code, see Codification note set out preceding section 231 of 
Title 45, section 231t of Title 45, and Tables.
    Section 101(a)(15) of the Immigration and Nationality Act, referred 
to in subsec. (e)(1), is classified to section 1101(a)(15) of Title 8, 
Aliens and Nationality.
    Section 2(a) of the Railroad Unemployment Insurance Act, referred to 
in subsec. (e)(4)(B), is classified to section 352(a) of Title 45, 
Railroads.


                               Amendments

    2000--Subsec. (e)(10). Pub. L. 106-554 substituted ``Archer MSA'' 
for ``Medical savings account'' in heading.
    1996--Subsec. (e)(10). Pub. L. 104-191 added par. (10).
    1995--Subsec. (a). Pub. L. 104-88, Sec. 304(d)(1), substituted 
``Surface Transportation Board'' for ``Interstate Commerce Commission''.
    Subsec. (g). Pub. L. 104-88, Sec. 304(d)(2), substituted ``a rail 
carrier subject to part A of subtitle IV'' for ``an express carrier, 
sleeping car carrier, or rail carrier providing transportation subject 
to subchapter I of chapter 105''.
    1994--Subsec. (e)(1). Pub. L. 103-296 substituted ``(J), (M), or 
(Q)'' for ``(J), or (M)'' in two places.
    1993--Subsec. (e)(2)(A)(iii). Pub. L. 103-66, Sec. 13207(c)(1), 
added cl. (iii).
    Subsec. (e)(2)(B)(i). Pub. L. 103-66, Sec. 13207(c)(2), amended 
heading and text of cl. (i) generally. Prior to amendment, text read as 
follows:
    ``(I) In general.--Except as provided in subclause (II) of this 
clause and in clause (ii), the term `applicable base' means for any 
calendar year the contribution and benefit base determined under section 
230 of the Social Security Act for such calendar year.
    ``(II) Hospital insurance taxes.--For purposes of applying so much 
of the rate applicable under section 3201(a) or 3221(a) (as the case may 
be) as does not exceed the rate of tax in effect under section 3101(b), 
and for purposes of applying so much of the rate of tax applicable under 
section 3211(a)(1) as does not exceed the rate of tax in effect under 
section 1401(b), the term `applicable base' means for any calendar year 
the applicable contribution base determined under section 3121(x)(2) for 
such calendar year.''
    1990--Subsec. (e)(2)(B)(i). Pub. L. 101-508, Sec. 11331(c), amended 
cl. (i) generally. Prior to amendment, cl. (i) read as follows: ``Except 
as provided in clause (ii), the term `applicable base' means for any 
calendar year the contribution and benefit base determined under section 
230 of the Social Security Act for such calendar year.''
    Subsec. (e)(8) to (10). Pub. L. 101-508, Sec. 11704(a)(19), 
redesignated pars. (9) and (10) as (8) and (9), respectively.
    1989--Subsec. (e)(1). Pub. L. 101-239, Sec. 10207(b), inserted at 
end ``Nothing in the regulations prescribed for purposes of chapter 24 
(relating to wage withholding) which provides an exclusion from `wages' 
as used in such chapter shall be construed to require a similar 
exclusion from `compensation' in regulations prescribed for purposes of 
this chapter.''
    Pub. L. 101-239, Sec. 10206(a), substituted ``(iii)'' for ``or 
(iii)'' and inserted ``, or (iv) any remuneration which would not (if 
chapter 21 applied to such remuneration) be treated as wages (as defined 
in section 3121(a)) by reason of section 3121(a)(5)''.
    Pub. L. 101-239, Sec. 10205(a), inserted ``or death, except that 
this clause does not apply to a payment for group-term life insurance to 
the extent that such payment is includible in the gross income of the 
employee'' before ``, (ii) tips''.
    Subsec. (e)(8). Pub. L. 101-140 amended subsec. (e) to read as if 
amendments by Pub. L. 100-647, Sec. 1011B(a)(22)(B), had not been 
enacted, see 1988 Amendment note below.
    Subsec. (e)(9). Pub. L. 101-239, Sec. 10206(b), added par. (9).
    Subsec. (e)(10). Pub. L. 101-239, Sec. 10207(a), added par. (10).
    1988--Subsec. (e)(1). Pub. L. 100-647, Sec. 1001(d)(2)(C)(ii), 
substituted ``(F), (J), or (M)'' for ``(F) or (J)'' in two places.
    Subsec. (e)(8). Pub. L. 100-647, Sec. 1011B(a)(22)(B), added par. 
(8).
    1986--Subsec. (e)(5). Pub. L. 99-514, Sec. 122(e)(2), inserted 
reference to section 74(c).
    Subsec. (e)(6), (7). Pub. L. 99-514, Sec. 1899A(41), redesignated 
par. (6), relating to amounts excludable under section 120, as (7).
    1984--Subsec. (e)(5). Pub. L. 98-369, Sec. 531(d)(2), added par. 
(5).
    Subsec. (e)(6). Pub. L. 98-611 added par. (6) relating to amounts 
excludable under section 127.
    Pub. L. 98-612 added par. (6) relating to amounts excludable under 
section 120.
    1983--Subsec. (e)(1). Pub. L. 98-76, Sec. 225(a)(3), struck out 
provisions that compensation which was paid in one calendar month but 
which would be payable in a prior or subsequent taxable month but for 
the fact prescribed date of payment would fall on a Saturday, Sunday or 
legal holiday would be deemed to have been paid in such prior or 
subsequent taxable month and that compensation which was earned during 
the period for which the Secretary would require a return of taxes under 
this chapter to be made and which was payable during the calendar month 
following such period would be deemed to have been paid during such 
period only.
    Subsec. (e)(2). Pub. L. 98-76, Sec. 225(a)(1), amended par. (2) 
generally, substituting provisions which exclude compensation in excess 
of applicable base, which define ``applicable base'', and which provide 
for the applicability of successor employer provisions to this 
paragraph, for provisions that a payment made by an employer to an 
individual through the employer's payroll would be presumed, in the 
absence of evidence to the contrary, to be compensation for service 
rendered by such individual as an employee of the employer in the period 
with respect to which the payment was made, that an employee receiving 
retroactive wage payments would be deemed to be paid compensation in the 
period during which such compensation was earned only upon a written 
request by such employee, made within six months following the payment, 
and a showing that such compensation was earned during a period other 
than the period in which it was paid, that an employee would be deemed 
to be paid ``for time lost'' the amount he was paid by an employer with 
respect to an identifiable period of absence from the active service of 
the employer, including absence on account of personal injury, and the 
amount he was paid by the employer for loss of earnings resulting from 
his displacement to a less remunerative position or occupation, and that 
if a payment was made by an employer with respect to a personal injury 
and included pay for time lost, the total payment would be deemed to be 
paid for time lost unless, at the time of payment, a part of such 
payment was specifically apportioned to factors other than time lost, in 
which event only such part of the payment as was not so apportioned 
would be deemed to be paid for time lost.
    Subsec. (e)(3). Pub. L. 98-76, Sec. 225(c)(1)(C), (6), substituted 
``taxes imposed by section 3201'' for ``tax imposed by section 3201'', 
and ``such taxes'' for ``such tax''.
    Subsec. (e)(4)(A). Pub. L. 98-76, Sec. 225(c)(7), substituted 
``3201(a), 3211(a)(1), and 3221(a)'' for ``3201(b) and 3221(b) (and so 
much of section 3211(a) as relates to the rates of the taxes imposed by 
sections 3101 and 3111)''.
    Subsec. (h). Pub. L. 98-76, Sec. 225(c)(8), substituted ``taxes 
imposed by section 3201'' for ``tax imposed under section 3201'', and 
struck out ``; and tips so deemed to be paid in any month shall be 
deemed paid for services rendered in such month'' after ``time 
received''.
    Subsec. (i). Pub. L. 98-76, Sec. 225(b), added subsec. (i).
    1981--Subsec. (e)(1). Pub. L. 97-34, Sec. 743(a), inserted after 
third sentence provision that ``Compensation which is paid in one 
calendar month but which would be payable in a prior or subsequent 
taxable month but for the fact that prescribed date of payment would 
fall on a Saturday, Sunday or legal holiday shall be deemed to have been 
paid in such prior or subsequent taxable month.''
    Pub. L. 97-34, Sec. 741(d)(2), struck out cl. (iii) exclusion from 
term ``compensation'' the voluntary payment by an employer, without 
deduction from the remuneration of the employee, of the tax imposed on 
such employee by section 3201, redesignated as cl. (iii) provisions 
formerly designated (iv).
    Subsec. (e)(2). Pub. L. 97-34, Sec. 743(b), (c), inserted first 
sentence respecting presumption of a payment through the employer's 
payroll as being compensation for services rendered as an employee in 
the period with respect to which payment is made, and in second sentence 
following ``an employee'' inserted ``receiving retroactive wage 
payments''.
    Subsec. (e)(4). Pub. L. 97-123 added par. (4).
    1978--Subsec. (g). Pub. L. 95-473 substituted ``express carrier, 
sleeping car carrier, or rail carrier providing transportation subject 
to subchapter I of chapter 105 of title 49'' for ``express company, 
sleeping-car company, or carrier by railroad, subject to part I of the 
Interstate Commerce Act (49 U.S.C., chapter 1)''.
    1976--Subsec. (a). Pub. L. 94-455, Secs. 1903(a)(10)(A), 
1906(b)(13)(A), struck out ``44 Stat. 577;'' before ``45 U.S.C., chapter 
8'' and ``or his delegate'' after ``Secretary'', respectively.
    Subsec. (b). Pub. L. 94-455, Sec. 1903(a)(10)(B), struck out in 
provisions following par. (4) ``50 Stat. 312;'' before ``45 U.S.C. 
228f''.
    Subsec. (c). Pub. L. 94-455, Sec. 1903(a)(10)(C), struck out ``44 
Stat. 577;'' before ``45 U.S.C. chapter 8''.
    Subsec. (d)(7). Pub. L. 94-455, Sec. 1903(a)(10)(D), struck out ``50 
Stat. 308;'' before ``45 U.S.C. 228a''.
    Subsec. (e)(1). Pub. L. 94-547 provided that ``compensation'' not 
include amount of any payment (including any amount paid by an employer 
for insurance or annuities, or into a fund, to provide for any such 
payment) made to, or on behalf of, an employee or any of his dependents 
under a plan or system established by an employer which makes provision 
for his employees generally (or for his employees generally and their 
dependents) or for a class or classes of his employees (or for a class 
or classes of his employees and their dependents), on account of 
sickness or accident disability or medical or hospitalization expenses 
in connection with sickness or accident disability, or an amount paid 
specifically--either as an advance, as reimbursement or allowance--for 
traveling or other bona fide and necessary expenses incurred or 
reasonably expected to be incurred in the business of the employer 
provided any such payment is identified by the employer either by a 
separate payment or by specifically indicating the separate amounts 
where both wages and expense reimbursement or allowance are combined in 
a single payment.
    Pub. L. 94-455, Sec. 1906(b)(13)(A), struck out ``or his delegate'' 
after ``Secretary''.
    1975--Subsec. (e)(1). Pub. L. 94-93, Sec. 204, substituted ``paid to 
an individual for services rendered as an employee to one or more 
employers'' for ``earned by an individual for services rendered as an 
employee to one or more employers, or as an employee representative, 
including remuneration paid for time lost as an employee, but 
remuneration paid for time lost shall be deemed earned in the month in 
which such time is lost''.
    Pub. L. 94-92 increased from $3 to $25 amount of compensation earned 
in the service of a local lodge or division of a railway-labor-
organization employer to be disregarded with respect to any calendar 
month in the determination of amount of taxes under sections 3201 and 
3221.
    Subsec. (e)(2). Pub. L. 94-93, Secs. 205, 206, substituted provision 
that an employee shall be deemed to be paid compensation in the period 
during which such compensation is earned only upon a written request by 
such employee, made within six months following the payment, and a 
showing that such compensation was earned during a period other than the 
period in which it was paid for provision that a payment made by an 
employer to an individual through the employer's payroll shall be 
presumed, in the absence of evidence to the contrary, to be compensation 
for service rendered by such individual as an employee of the employer 
in the period with respect to which payment is made.
    1968--Subsec. (e)(1). Pub. L. 90-624 inserted provision excluding 
remuneration for service performed by nonresident alien individuals 
temporarily in the United States as participants in a cultural exchange 
or training program.
    1965--Subsec. (e)(1). Pub. L. 89-212, Sec. 2(b)(1), inserted 
``(except as is provided under paragraph (3))''.
    Subsec. (e)(3). Pub. L. 89-212, Sec. 2(b)(2), added par. (3).
    Subsec. (h). Pub. L. 89-212, Sec. 2(b)(3), added subsec. (h).
    1954--Subsec. (e)(1). Act Aug. 31, 1954, excluded from taxation 
compensation, for service as a delegate to a national or international 
convention of a railway labor organization, of any person who has no 
other previous creditable service.


                    Effective Date of 1996 Amendment

    Amendment by Pub. L. 104-191 applicable to taxable years beginning 
after Dec. 31, 1996, see section 301(j) of Pub. L. 104-191, set out as a 
note under section 62 of this title.


                    Effective Date of 1995 Amendment

    Amendment by Pub. L. 104-88 effective Jan. 1, 1996, see section 2 of 
Pub. L. 104-88, set out as an Effective Date note under section 701 of 
Title 49, Transportation.


                    Effective Date of 1994 Amendment

    Amendment by Pub. L. 103-296 effective with calendar quarter 
following Aug. 15, 1994, see section 320(c) of Pub. L. 103-296, set out 
as a note under section 871 of this title.


                    Effective Date of 1993 Amendment

    Amendment by Pub. L. 103-66 applicable to 1994 and later calendar 
years, see section 13207(e) of Pub. L. 103-66, set out as a note under 
section 1402 of this title.


                    Effective Date of 1990 Amendment

    Amendment by section 11331(c) of Pub. L. 101-508 applicable to 1991 
and later calendar years, see section 11331(e) of Pub. L. 101-508, set 
out as a note under section 1402 of this title.


                    Effective Date of 1989 Amendments

    Section 10205(b) of Pub. L. 101-239 provided that:
    ``(1) In general.--Except as provided in paragraph (2), the 
amendment made by subsection (a) [amending this section] shall apply 
to--
        ``(A) group-term life insurance coverage in effect after 
    December 31, 1989, and
        ``(B) remuneration paid before January 1, 1990, which the 
    employer treated as compensation when paid.
    ``(2) Exception.--The amendment made by subsection (a) shall not 
apply with respect to payments by the employer (or a successor of such 
employer) for group-term life insurance for such employer's former 
employees who separated from employment with the employer on or before 
December 31, 1989, to the extent that such payments are not for coverage 
for any such employee for any period for which such employee is employed 
by such employer (or a successor of such employer) after the date of 
such separation.
    ``(3) Benefit determinations to take into account remuneration on 
which tax paid.--The term `compensation' as defined in section 1(h) of 
the Railroad Retirement Act of 1974 [45 U.S.C. 231(h)] includes any 
remuneration which is included in the term `compensation' as defined in 
section 3231(e)(1) of the Internal Revenue Code of 1986 by reason of the 
amendment made by subsection (a).''
    Section 10206(c) of Pub. L. 101-239 provided that:
    ``(1) Subsection (a).--The amendment made by subsection (a) 
[amending this section] shall apply to remuneration paid after December 
31, 1989.
    ``(2) Subsection (b).--Except as otherwise provided in this 
subsection--
        ``(A) In general.--The amendment made by subsection (b) 
    [amending this section] shall apply to--
            ``(i) remuneration paid after December 31, 1989, and
            ``(ii) remuneration paid before January 1, 1990, which the 
        employer treated as compensation when paid.
        ``(B) Benefit determinations to take into account remuneration 
    on which tax paid.--The term `compensation' as defined in section 
    1(h) of the Railroad Retirement Act of 1974 [45 U.S.C. 231(h)] 
    includes any remuneration which is included in the term 
    `compensation' as defined in section 3231(e)(1) of the Internal 
    Revenue Code of 1986 by reason of the amendment made by subsection 
    (b).
    ``(3) Special rule for certain payments.--For purposes of applying 
the amendment made by subsection (b) to remuneration paid after December 
31, 1989, which would have been taken into account before January 1, 
1990, if such amendments had applied to periods before January 1, 1990, 
such remuneration shall be taken into account when paid (or, at the 
election of the payor, at the time which would be appropriate if such 
amendments had applied).
    ``(4) Exception for certain 401(k) contributions.--The amendment 
made by subsection (b) shall not apply to employer contributions made 
during 1990 and attributable to services performed during 1989 under a 
qualified cash or deferred arrangement (as defined in section 401(k) of 
the Internal Revenue Code of 1986) if, under the terms of the 
arrangement as in effect on June 15, 1989--
        ``(A) the employee makes an election with respect to such 
    contributions before January 1, 1990, and
        ``(B) the employer identifies the amount of such contribution 
    before January 1, 1990.
    ``(5) Special rule with respect to nonqualified deferred 
compensation plans.--In the case of an agreement in existence on June 
15, 1989, between a nonqualified deferred compensation plan (as defined 
in section 3121(v)(2)(C) of such Code) and an individual, the amendment 
made by subsection (b) shall apply with respect to services performed by 
the individual after December 31, 1989. The preceding sentence shall not 
apply in the case of a plan to which section 457(a) of such Code 
applies.''
    Section 10207(c) of Pub. L. 101-239 provided that: ``The amendments 
made by this section [amending this section] shall apply to remuneration 
paid after December 31, 1989.''
    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.


                    Effective Date of 1988 Amendment

    Amendment by section 1001(d)(2)(C)(ii) 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)(B) of Pub. L. 100-647 not 
applicable to any individual who separated from service with the 
employer before Jan. 1, 1989, see section 1011B(a)(22)(F) of Pub. L. 
100-647, set out as a note under section 3121 of this title.


                    Effective Date of 1986 Amendment

    Amendment by section 122(e)(2) of Pub. L. 99-514 applicable to 
prizes and awards granted after Dec. 31, 1986, see section 151(c) of 
Pub. L. 99-514, set out as a note under section 1 of this title.


                    Effective Date of 1984 Amendments

    Section 1(d)(3) of Pub. L. 98-612 provided that: ``The amendment 
made by subsection (c) [amending this section] shall apply to 
remuneration paid after December 31, 1984.''
    Amendment by Pub. L. 98-611 applicable to remuneration paid after 
Dec. 31, 1984, see section 1(g)(3) of Pub. L. 98-611, set out as a note 
under section 127 of this title.
    Amendment by Pub. L. 98-369 effective Jan. 1, 1985, see section 
531(h) of Pub. L. 98-369, set out as an Effective Date note under 
section 132 of this title.


                    Effective Date of 1983 Amendment

    Amendment by 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 Amendments

    Amendment by Pub. L. 97-123 applicable to remuneration paid after 
Dec. 31, 1981, except as otherwise provided, see section 3(g) of Pub. L. 
97-123, set out as a note under section 3121 of this title.
    Amendment by section 741(d)(2) of 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.
    Section 743(d) of Pub. L. 97-34 provided that: ``The amendments made 
by this section [amending this section] shall apply for taxable years 
beginning after December 31, 1981.''


                    Effective Date of 1976 Amendment

    Section 4(c)(2) of Pub. L. 94-547 provided that: ``The amendments 
made by subsection (b) of this section [amending this section] shall 
apply with respect to taxable years ending after December 31, 1953: 
Provided, however, That any taxes paid under the Railroad Retirement Tax 
Act [this chapter] prior to the date on which this Act is enacted [Oct. 
18, 1976] shall not be affected or adjusted by reason of the amendments 
made by such subsection (b) except to the extent that the applicable 
period of limitation for the assessment of tax and the filing of a claim 
for credit or refund has not expired prior to the date on which this Act 
is enacted. If the applicable period of limitation for the filing of a 
claim for credit or refund would expire within the six-month period 
following the date on which this Act is enacted, the applicable period 
for the filing of such a claim for credit or refund shall be extended to 
include such six-month period.''


                    Effective Date of 1975 Amendments

    Amendment by sections 204 and 205 of 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, and amendment by section 206 of Pub. L. 94-93 
applicable for taxable years beginning on or after Aug. 9, 1975: 
Provided, however, That with respect to payment made prior to Aug. 9, 
1975, the employee may file a written request under section 206 of Pub. 
L. 94-93 within six months after Aug. 9, 1975, see section 207 of Pub. 
L. 94-93, set out as a note under section 3201 of this title.
    Amendment by Pub. L. 94-92 effective Jan. 1, 1975, and applicable 
only with respect to compensation paid for services rendered on or after 
Jan. 1, 1975, see section 203(c) of Pub. L. 94-92, set out as a note 
under section 1402 of this title.


                    Effective Date of 1968 Amendment

    Section 4(a) of Pub. L. 90-624, as amended by Pub. L. 99-514, 
Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
    ``(1) The amendments made by the first two sections of this Act 
[amending this section and section 228a of Title 45, Railroads] shall 
apply with respect to service performed after December 31, 1961.
    ``(2) Notwithstanding the expiration before the date of the 
enactment of this Act [Oct. 22, 1968] or within 6 months after such date 
of the period for filing claim for credit or refund, claim for credit or 
refund of any overpayment of any tax imposed by chapter 22 of the 
Internal Revenue Code of 1986 [formerly I.R.C. 1954, 26 U.S.C. 3201 et 
seq.] attributable to the amendment made by the first section of this 
Act [amending this section] may be filed at any time within one year 
after such date of enactment.
    ``(3) Any credit or refund of an overpayment of the tax imposed by 
section 3201 or 3211 of the Internal Revenue Code of 1986 which is 
attributable to the amendment made by the first section of this Act 
shall be appropriately adjusted for any lump-sum payment which has been 
made under section 5(f)(2) of the Railroad Retirement Act of 1937 
[section 228e(f)(2) of Title 45] before the date of the allowance of 
such credit or the making of such refund.''


                    Effective Date of 1965 Amendment

    Amendment by Pub. L. 89-212 effective only with respect to tips 
received after 1965, see section 6 of Pub. L. 89-212, 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.


                               Regulations

    For provisions requiring that the regulations prescribed under 
subsec. (e)(4) of this section prescribe procedures under which, if 
(with respect to any employee) the third party promptly (A) withholds 
the employee portion of the taxes involved, (B) deposits such portion 
under section 6302 of such Code, and (C) notifies the employer of the 
amount of the wages or compensation involved, the employer (and not the 
third party) shall be liable for the employer portion of the taxes 
involved and for meeting the requirements of section 6051 of this title 
(relating to receipts for employees) with respect to the wages or 
compensation involved, see section 3(d) of Pub. L. 97-123, set out as a 
note under section 3121 of this title.


Exclusion From Wages and Compensation of Refunds Required From Employers 
   To Compensate for Duplication of Medicare Benefits by Health Care 
                     Benefits Provided by Employers

    For purposes of this chapter, the term ``compensation'' shall not 
include the amount of any refund required under section 421 of Pub. L. 
100-360, 42 U.S.C. 1395b note, see section 10202 of Pub. L. 101-239, set 
out as a note under section 1395b of Title 42, The Public Health and 
Welfare.


     Payments Under State Temporary Disability Law To Be Treated as 
                        Remuneration for Service

    For purposes of applying subsec. (e) of this section with respect to 
subsec. (e)(4) of this section, payments under a State temporary 
disability law to be treated as remuneration for service, see section 
3(e) of Pub. L. 97-123, set out as a note under section 3121 of this 
title.

                  Section Referred to in Other Sections

    This section is referred to in sections 1402, 3121, 3201, 3202, 
3211, 3212, 3221, 6053, 6413, 6652 of this title; title 42 sections 410, 
411; title 45 section 351.
