26 U.S.C. 3134 (U.S. Code, current edition)
Summary
The U.S. Code text of 26 U.S.C. § 3134, Employee retention credit for employers subject to closure due to COVID–19, in Title 26—Internal Revenue Code, with notes. Subsection (a) allows an eligible employer a credit against applicable employment taxes for each calendar quarter equal to 70 percent of the qualified wages with respect to each employee for that quarter. The qualified wages taken into account for any employee for any calendar quarter shall not exceed $10,000. For a recovery startup business, the credit for any calendar quarter shall not exceed $50,000, and the credit is limited to employment taxes.
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“26 U.S.C. 3134 (U.S. Code, current edition).”
Original at www.govinfo.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/26-u-s-c-3134-u-s-code-current-edition-f48117ee24/
, SHA-256 831213d53778a183ae17900835bfe85c34ee79c6ed685b6865af05bba2847f47.Full text
Page 2739 TITLE 26—INTERNAL REVENUE CODE § 3134
(3) regulations or other guidance providing 5102(a) of Pub. L. 116–127, which is set out in a note
for waiver of penalties for failure to deposit under section 2601 of Title 29, Labor.
amounts in anticipation of the allowance of Section 2301 of the CARES Act, referred to in subsec.
(f)(3), is section 2301 of title II of div. A of Pub. L.
the credit allowed under this section,
116–136, which is set out as a note under section 3111 of
(4) regulations or other guidance for recap- this title.
turing the benefit of credits determined under Section 7 of the Small Business Act, referred to in
this section in cases where there is a subse- subsec. (f)(7)(A)(i), (B), is classified to section 636 of
quent adjustment to the credit determined Title 15, Commerce and Trade.
under subsection (a), Section 7A of the Small Business Act, referred to in
(5) regulations or other guidance to ensure subsec. (f)(7)(A)(i), (B), is classified to section 636m of
that the wages taken into account under this Title 15, Commerce and Trade.
section conform with the paid leave required Section 324 of the Economic Aid to Hard-Hit Small
Businesses, Non-Profits, and Venues Act, referred to in
to be provided under the Emergency Family
subsec. (f)(7)(A)(ii), is classified to section 9009a of Title
and Medical Leave Expansion Act (including 15, Commerce and Trade.
the amendments made by such Act), Section 5003 of the American Rescue Plan Act of 2021,
(6) regulations or other guidance to permit referred to in subsec. (f)(7)(A)(iii), is classified to sec-
the advancement of the credit determined tion 9009c of Title 15, Commerce and Trade.
under subsection (a), and
(7) regulations or other guidance with re- Statutory Notes and Related Subsidiaries
spect to the allocation, reporting, and sub-
stantiation of collectively bargained defined EFFECTIVE DATE
benefit pension plan contributions and collec- Section applicable to amounts paid with respect to
tively bargained apprenticeship program con- calendar quarters beginning after Mar. 31, 2021, see sec-
tributions. tion 9641(d) of Pub. L. 117–2, set out as a note under
secton 3131 of this title.
(h) Application of section
This section shall apply only to wages paid § 3133. Special rule related to tax on employers
with respect to the period beginning on April 1,
2021, and ending on September 30, 2021. (a) In general
(i) Treatment of deposits The credit allowed by section 3131 and the
credit allowed by section 3132 shall each be in-
The Secretary shall waive any penalty under
creased by the amount of the taxes imposed by
section 6656 for any failure to make a deposit of
subsections (a) and (b) of section 3111 and sec-
applicable employment taxes if the Secretary
tion 3221(a) on qualified sick leave wages, or
determines that such failure was due to the an-
qualified family leave wages, for which credit is
ticipation of the credit allowed under this sec-
allowed under such section 3131 or 3132 (respec-
tion.
tively).
(j) Non-discrimination requirement
(b) Denial of double benefit
No credit shall be allowed under this section
to any employer for any calendar quarter if such For denial of double benefit with respect to
employer, with respect to the availability of the the credit increase under subsection (a), see sec-
provision of qualified family leave wages to tions 3131(f)(3) and 3132(f)(3).
which this section otherwise applies for such (Added Pub. L. 117–2, title IX, § 9641(a), Mar. 11,
calendar quarter, discriminates in favor of high- 2021, 135 Stat. 171.)
ly compensated employees (within the meaning
of section 414(q)), full-time employees, or em- Statutory Notes and Related Subsidiaries
ployees on the basis of employment tenure with
such employer. EFFECTIVE DATE
(Added Pub. L. 117–2, title IX, § 9641(a), Mar. 11, Section applicable to amounts paid with respect to
calendar quarters beginning after Mar. 31, 2021, see sec-
2021, 135 Stat. 166.) tion 9641(d) of Pub. L. 117–2, set out as a note under
secton 3131 of this title.
Editorial Notes
REFERENCES IN TEXT § 3134. Employee retention credit for employers
The Emergency Family and Medical Leave Expansion
subject to closure due to COVID–19
Act and such Act, referred to in subsecs. (c)(1), (2)(B) (a) In general
and (g)(5), is div. C of Pub. L. 116–127, Mar. 18, 2020, 134
Stat. 189. For complete classification of this Act to the In the case of an eligible employer, there shall
Code, see Short Title of 2020 Amendment note set out be allowed as a credit against applicable em-
under section 2601 of Title 29, Labor, and Tables. ployment taxes for each calendar quarter an
The Family and Medical Leave Act of 1993 and such amount equal to 70 percent of the qualified
Act, referred to in subsec. (c)(2), is Pub. L. 103–3, Feb. wages with respect to each employee of such em-
5, 1993, 107 Stat. 6, which enacted chapter 28 (§ 2601 et
ployer for such calendar quarter.
seq.) of Title 29, Labor, sections 60m and 60n of Title 2,
The Congress, and sections 6381 to 6387 of Title 5, Gov- (b) Limitations and refundability
ernment Organization and Employees, amended section
(1) In general
2105 of Title 5, and enacted provisions set out as notes
under section 2601 of Title 29. Sections 102, 105, and 110 (A) Wages taken into account
of the Act are classified to sections 2612, 2615, and 2620, The amount of qualified wages with re-
respectively, of Title 29. For complete classification of
this Act to the Code, see Short Title note set out under
spect to any employee which may be taken
section 2601 of Title 29 and Tables. into account under subsection (a) by the eli-
Section 5102(a) of the Families First Coronavirus Re- gible employer for any calendar quarter
sponse Act, referred to in subsec. (c)(2)(A)(i), is section shall not exceed $10,000.
§ 3134 TITLE 26—INTERNAL REVENUE CODE Page 2740
(B) Recovery startup businesses (i) subparagraph (A)(ii)(II) shall be ap-
In the case of an eligible employer which plied—
is a recovery startup business (as defined in (I) by substituting ‘‘for the imme-
subsection (c)(5)), the amount of the credit diately preceding calendar quarter’’ for
allowed under subsection (a) (after applica- ‘‘for such calendar quarter’’, and
tion of subparagraph (A)) for any calendar (II) by substituting ‘‘the corresponding
quarter shall not exceed $50,000. calendar quarter in calendar year 2019’’
for ‘‘the same calendar quarter in cal-
(2) Credit limited to employment taxes endar year 2019’’, and
The credit allowed by subsection (a) with re-
(ii) the last sentence of subparagraph (A)
spect to any calendar quarter shall not exceed
shall be applied by substituting ‘‘the cor-
the applicable employment taxes (reduced by
responding calendar quarter in calendar
any credits allowed under sections 3131 and
year 2019’’ for ‘‘the same calendar quarter
3132) on the wages paid with respect to the em-
in calendar year 2019’’.
ployment of all the employees of the eligible
employer for such calendar quarter. An election under this subparagraph shall be
(3) Refundability of excess credit made at such time and in such manner as
the Secretary shall prescribe.
If the amount of the credit under subsection
(a) exceeds the limitation of paragraph (2) for (C) Tax-exempt organizations
any calendar quarter, such excess shall be In the case of an organization which is de-
treated as an overpayment that shall be re- scribed in section 501(c) and exempt from tax
funded under sections 6402(a) and 6413(b). under section 501(a)—
(c) Definitions (i) clauses (i) and (ii)(I) of subparagraph
(A) shall apply to all operations of such or-
For purposes of this section— ganization, and
(1) Applicable employment taxes (ii) any reference in this section to gross
The term ‘‘applicable employment taxes’’ receipts shall be treated as a reference to
means the following: gross receipts within the meaning of sec-
(A) The taxes imposed under section tion 6033.
3111(b). (3) Qualified wages
(B) So much of the taxes imposed under (A) In general
section 3221(a) as are attributable to the rate
The term ‘‘qualified wages’’ means—
in effect under section 3111(b).
(i) in the case of an eligible employer for
(2) Eligible employer which the average number of full-time em-
(A) In general ployees (within the meaning of section
The term ‘‘eligible employer’’ means any 4980H) employed by such eligible employer
employer— during 2019 was greater than 500, wages
(i) which was carrying on a trade or busi- paid by such eligible employer with re-
ness during the calendar quarter for which spect to which an employee is not pro-
the credit is determined under subsection viding services due to circumstances de-
(a), and scribed in subclause (I) or (II) of paragraph
(ii) with respect to any calendar quarter, (2)(A)(ii), or
for which— (ii) in the case of an eligible employer
(I) the operation of the trade or busi- for which the average number of full-time
ness described in clause (i) is fully or employees (within the meaning of section
partially suspended during the calendar 4980H) employed by such eligible employer
quarter due to orders from an appro- during 2019 was not greater than 500—
priate governmental authority limiting (I) with respect to an eligible employer
commerce, travel, or group meetings (for described in subclause (I) of paragraph
commercial, social, religious, or other (2)(A)(ii), wages paid by such eligible em-
purposes) due to the coronavirus disease ployer with respect to an employee dur-
2019 (COVID–19), ing any period described in such clause,
(II) the gross receipts (within the or
meaning of section 448(c)) of such em- (II) with respect to an eligible em-
ployer for such calendar quarter are less ployer described in subclause (II) of such
than 80 percent of the gross receipts of paragraph, wages paid by such eligible
such employer for the same calendar employer with respect to an employee
quarter in calendar year 2019, or during such quarter.
(III) the employer is a recovery startup (B) Special rule for employers not in exist-
business (as defined in paragraph (5)). ence in 2019
With respect to any employer for any In the case of any employer that was not
calendar quarter, if such employer was not in existence in 2019, subparagraph (A) shall
in existence as of the beginning of the be applied by substituting ‘‘2020’’ for ‘‘2019’’
same calendar quarter in calendar year each place it appears.
2019, clause (ii)(II) shall be applied by sub- (C) Severely financially distressed employers
stituting ‘‘2020’’ for ‘‘2019’’. (i) In general
(B) Election to use alternative quarter Notwithstanding subparagraph (A)(i), in
At the election of the employer— the case of a severely financially dis-
Page 2741 TITLE 26—INTERNAL REVENUE CODE § 3134
tressed employer, the term ‘‘qualified the same meaning as when used in such chap-
wages’’ means wages paid by such em- ter.
ployer with respect to an employee during (d) Aggregation rule
any calendar quarter.
All persons treated as a single employer under
(ii) Definition
subsection (a) or (b) of section 52, or subsection
The term ‘‘severely financially dis- (m) or (o) of section 414, shall be treated as one
tressed employer’’ means an eligible em- employer for purposes of this section.
ployer as defined in paragraph (2), deter-
mined by substituting ‘‘less than 10 per- (e) Certain rules to apply
cent’’ for ‘‘less than 80 percent’’ in sub- For purposes of this section, rules similar to
paragraph (A)(ii)(II) thereof. the rules of sections 51(i)(1) and 280C(a) shall
(D) Exception apply.
The term ‘‘qualified wages’’ shall not in- (f) Certain governmental employers
clude any wages taken into account under (1) In general
sections 41, 45A, 45P, 45S, 51, 1396, 3131, and
This credit shall not apply to the Govern-
3132.
ment of the United States, the government of
(4) Wages any State or political subdivision thereof, or
(A) In general any agency or instrumentality of any of the
The term ‘‘wages’’ means wages (as defined foregoing.
in section 3121(a)) and compensation (as de- (2) Exception
fined in section 3231(e)). For purposes of the
preceding sentence, in the case of any orga- Paragraph (1) shall not apply to—
nization or entity described in subsection (A) any organization described in section
(f)(2), wages as defined in section 3121(a) 501(c)(1) and exempt from tax under section
shall be determined without regard to para- 501(a), or
graphs (5), (6), (7), (10), and (13) of section (B) any entity described in paragraph (1)
3121(b) (except with respect to services per- if—
formed in a penal institution by an inmate (i) such entity is a college or university,
thereof). or
(B) Allowance for certain health plan ex- (ii) the principal purpose or function of
penses such entity is providing medical or hos-
pital care.
(i) In general
Such term shall include amounts paid by In the case of any entity described in sub-
the eligible employer to provide and main- paragraph (B), such entity shall be treated
tain a group health plan (as defined in sec- as satisfying the requirements of subsection
tion 5000(b)(1)), but only to the extent that (c)(2)(A)(i).
such amounts are excluded from the gross (g) Election to not take certain wages into ac-
income of employees by reason of section count
106(a). This section shall not apply to so much of the
(ii) Allocation rules qualified wages paid by an eligible employer as
For purposes of this section, amounts such employer elects (at such time and in such
treated as wages under clause (i) shall be manner as the Secretary may prescribe) to not
treated as paid with respect to any em- take into account for purposes of this section.
ployee (and with respect to any period) to (h) Coordination with certain programs
the extent that such amounts are properly
allocable to such employee (and to such (1) In general
period) in such manner as the Secretary This section shall not apply to so much of
may prescribe. Except as otherwise pro- the qualified wages paid by an eligible em-
vided by the Secretary, such allocation ployer as are taken into account as payroll
shall be treated as properly made if made costs in connection with—
on the basis of being pro rata among peri- (A) a covered loan under section 7(a)(37) or
ods of coverage. 7A of the Small Business Act,
(5) Recovery startup business (B) a grant under section 324 of the Eco-
The term ‘‘recovery startup business’’ means nomic Aid to Hard-Hit Small Businesses,
any employer— Non-Profits, and Venues Act, or
(A) which began carrying on any trade or (C) a restaurant revitalization grant under
business after February 15, 2020, and section 5003 of the American Rescue Plan
(B) for which the average annual gross re- Act of 2021.
ceipts of such employer (as determined (2) Application where PPP loans not forgiven
under rules similar to the rules under sec- The Secretary shall issue guidance providing
tion 448(c)(3)) for the 3-taxable-year period that payroll costs paid during the covered pe-
ending with the taxable year which precedes riod shall not fail to be treated as qualified
the calendar quarter for which the credit is wages under this section by reason of para-
determined under subsection (a) does not ex- graph (1) to the extent that—
ceed $1,000,000. (A) a covered loan of the taxpayer under
(6) Other terms section 7(a)(37) of the Small Business Act is
Any term used in this section which is also not forgiven by reason of a decision under
used in this chapter or chapter 22 shall have section 7(a)(37)(J) of such Act, or
§ 3134 TITLE 26—INTERNAL REVENUE CODE Page 2742
(B) a covered loan of the taxpayer under 3221(a) as is attributable to the rate in effect
section 7A of the Small Business Act is not under section 3111(b) (whichever is applica-
forgiven by reason of a decision under sec- ble) for the calendar quarter shall be in-
tion 7A(g) of such Act. creased by the amount of such excess.
Terms used in the preceding sentence which (k) Treatment of deposits
are also used in section 7A(g) or 7(a)(37)(J) of The Secretary shall waive any penalty under
the Small Business Act shall, when applied in section 6656 for any failure to make a deposit of
connection with either such section, have the any applicable employment taxes if the Sec-
same meaning as when used in such section, retary determines that such failure was due to
respectively. the reasonable anticipation of the credit allowed
(i) Third party payors under this section.
(l) Extension of limitation on assessment
Any credit allowed under this section shall be
treated as a credit described in section 3511(d)(2). Notwithstanding section 6501, the limitation
on the time period for the assessment of any
(j) Advance payments amount attributable to a credit claimed under
(1) In general this section shall not expire before the date that
Except as provided in paragraph (2), no ad- is 5 years after the later of—
vance payment of the credit under subsection (1) the date on which the original return
(a) shall be allowed. which includes the calendar quarter with re-
spect to which such credit is determined is
(2) Advance payments to small employers filed, or
(A) In general (2) the date on which such return is treated
Under rules provided by the Secretary, an as filed under section 6501(b)(2).
eligible employer for which the average (m) Regulations and guidance
number of full-time employees (within the The Secretary shall issue such forms, instruc-
meaning of section 4980H) employed by such tions, regulations, and other guidance as are
eligible employer during 2019 was not great- necessary—
er than 500 may elect for any calendar quar- (1) to allow the advance payment of the
ter to receive an advance payment of the credit under subsection (a) as provided in sub-
credit under subsection (a) for such quarter section (j)(2), subject to the limitations pro-
in an amount not to exceed 70 percent of the vided in this section, based on such informa-
average quarterly wages paid by the em- tion as the Secretary shall require,
ployer in calendar year 2019. (2) with respect to the application of the
credit under subsection (a) to third party
(B) Special rule for seasonal employers
payors (including professional employer orga-
In the case of any employer who employs nizations, certified professional employer or-
seasonal workers (as defined in section ganizations, or agents under section 3504), in-
45R(d)(5)(B)), the employer may elect to cluding regulations or guidance allowing such
apply subparagraph (A) by substituting ‘‘the payors to submit documentation necessary to
wages for the calendar quarter in 2019 which substantiate the eligible employer status of
corresponds to the calendar quarter to which employers that use such payors, and
the election relates’’ for ‘‘the average quar- (3) to prevent the avoidance of the purposes
terly wages paid by the employer in calendar of the limitations under this section, includ-
year 2019’’. ing through the leaseback of employees.
(C) Special rule for employers not in exist- Any forms, instructions, regulations, or other
ence in 2019 guidance described in paragraph (2) shall require
In the case of any employer that was not the customer to be responsible for the account-
in existence in 2019, subparagraphs (A) and ing of the credit and for any liability for im-
(B) shall each be applied by substituting properly claimed credits and shall require the
‘‘2020’’ for ‘‘2019’’ each place it appears. certified professional employer organization or
other third party payor to accurately report
(3) Reconciliation of credit with advance pay- such tax credits based on the information pro-
ments vided by the customer.
(A) In general (n) Application
The amount of credit which would (but for This section shall only apply to wages paid
this subsection) be allowed under this sec- after June 30, 2021, and before October 1, 2021 (or,
tion shall be reduced (but not below zero) by in the case of wages paid by an eligible employer
the aggregate payment allowed to the tax- which is a recovery startup business, January 1,
payer under paragraph (2). Any failure to so 2022).
reduce the credit shall be treated as arising (Added Pub. L. 117–2, title IX, § 9651(a), Mar. 11,
out of a mathematical or clerical error and 2021, 135 Stat. 177; amended Pub. L. 117–58, div.
assessed according to section 6213(b)(1). H, title VI, § 80604(a), Nov. 15, 2021, 135 Stat.
(B) Excess advance payments 1341.)
If the advance payments to a taxpayer
Editorial Notes
under paragraph (2) for a calendar quarter
exceed the credit allowed by this section (de- REFERENCES IN TEXT
termined without regard to subparagraph Section 7 of the Small Business Act, referred to in
(A)), the tax imposed under section 3111(b) or subsec. (h)(1)(A), (2), is classified to section 636 of Title
so much of the tax imposed under section 15, Commerce and Trade.
Page 2743 TITLE 26—INTERNAL REVENUE CODE § 3201
Section 7A of the Small Business Act, referred to in equal to the percentage determined under sec-
subsec. (h)(1)(A), (2), is classified to section 636m of tion 3241 for any calendar year of the compensa-
Title 15, Commerce and Trade. tion received during such calendar year by such
Section 324 of the Economic Aid to Hard-Hit Small
Businesses, Non-Profits, and Venues Act, referred to in
employee for services rendered by such em-
subsec. (h)(1)(B), is classified to section 9009a of Title ployee.
15, Commerce and Trade. (c) Cross reference
Section 5003 of the American Rescue Plan Act of 2021,
For application of different contribution bases
referred to in subsec. (h)(1)(C), is classified to section
with respect to the taxes imposed by subsections (a)
9009c of Title 15, Commerce and Trade.
and (b), see section 3231(e)(2).
AMENDMENTS (Aug. 16, 1954, ch. 736, 68A Stat. 431; Aug. 31, 1954,
2021—Subsec. (c)(5)(C). Pub. L. 117–58, § 80604(a)(1), ch. 1164, pt. II, § 206(a), 68 Stat. 1040; Pub. L.
struck out subpar. (C) which read as follows: ‘‘which, 86–28, pt. II, § 201(a), May 19, 1959, 73 Stat. 28;
with respect to such calendar quarter, is not described Pub. L. 88–133, title II, § 201, Oct. 5, 1963, 77 Stat.
in subclause (I) or (II) of paragraph (2)(A)(ii).’’. 221; Pub. L. 89–97, title I, §§ 105(b)(1), 111(c)(1),
Subsec. (n). Pub. L. 117–58, § 80604(a)(2), substituted
‘‘October 1, 2021 (or, in the case of wages paid by an eli-
July 30, 1965, 79 Stat. 335, 342; Pub. L. 89–212, §§ 4,
gible employer which is a recovery startup business, 5(a), Sept. 29, 1965, 79 Stat. 861; Pub. L. 89–699,
January 1, 2022)’’ for ‘‘January 1, 2022’’. title III, § 301(a), Oct. 30, 1966, 80 Stat. 1078; Pub.
L. 89–700, title III, § 301(v), (vi), Oct. 30, 1966, 80
Statutory Notes and Related Subsidiaries Stat. 1088, 1089; Pub. L. 93–69, title I, § 102(a),
July 10, 1973, 87 Stat. 162; Pub. L. 94–93, title II,
EFFECTIVE DATE OF 2021 AMENDMENT § 201, Aug. 9, 1975, 89 Stat. 466; Pub. L. 94–455,
Pub. L. 117–58, div. H, title VI, § 80604(b), Nov. 15, 2021, title XIX, § 1903(a)(6), Oct. 4, 1976, 90 Stat. 1807;
135 Stat. 1341, provided that: ‘‘The amendments made Pub. L. 97–34, title VII, § 741(a), Aug. 13, 1981, 95
by this section [amending this section] shall apply to Stat. 347; Pub. L. 98–76, title II, §§ 211(a), 221,
calendar quarters beginning after September 30, 2021.’’ Aug. 12, 1983, 97 Stat. 419, 420; Pub. L. 100–203,
EFFECTIVE DATE title IX, § 9031(a), Dec. 22, 1987, 101 Stat. 1330–296;
Pub. L. 101–508, title V, § 5125(a), Nov. 5, 1990, 104
Pub. L. 117–2, title IX, § 9651(d), Mar. 11, 2021, 135 Stat.
182, provided that: ‘‘The amendments made by this sec- Stat. 1388–285; Pub. L. 107–90, title II, § 204(c),
tion [enacting this section and amending section 1324 of Dec. 21, 2001, 115 Stat. 892; Pub. L. 113–295, div. A,
Title 31, Money and Finance] shall apply to calendar title II, § 221(a)(100)(A), Dec. 19, 2014, 128 Stat.
quarters beginning after June 30, 2021.’’ 4052.)
CHAPTER 22—RAILROAD RETIREMENT TAX Editorial Notes
ACT
AMENDMENTS
Subchapter Sec.1 2014—Subsec. (b). Pub. L. 113–295 amended subsec. (b)
A. Tax on employees .................................. 3201 generally. Prior to amendment, subsec. (b) consisted of
B. Tax on employee representatives .......... 3211 pars. (1) and (2) establishing the tier 2 tax and its appli-
C. Tax on employers .................................. 3221 cable percentage.
D. General provisions ................................. 3231 2001—Subsec. (b). Pub. L. 107–90 amended heading and
E. Tier 2 tax rate determination. ............... 3241 text of subsec. (b) generally. Prior to amendment, text
read as follows: ‘‘In addition to other taxes, there is
Editorial Notes hereby imposed on the income of each employee a tax
equal to 4.90 percent of the compensation received dur-
AMENDMENTS
ing any calendar year by such employee for services
2001—Pub. L. 107–90, title II, § 204(e)(5), Dec. 21, 2001, rendered by such employee.’’
115 Stat. 893, added item for subchapter E. 1990—Subsec. (a). Pub. L. 101–508 substituted ‘‘appli-
cable’’ for ‘‘following’’ before ‘‘percentage of the’’ and
Subchapter A—Tax on Employees provision defining the term ‘‘applicable percentage’’ for
provision specifying that in the case of compensation
Sec. received during 1985 the rate of tax was 7.05 percent, for
3201. Rate of tax. 1986 or 1987 the rate was 7.15 percent, for 1988 or 1989 the
3202. Deduction of tax from compensation. rate was 7.51 percent, and 1990 or thereafter the rate
was 7.65 percent.
§ 3201. Rate of tax 1987—Subsec. (b). Pub. L. 100–203 amended subsec. (b)
(a) Tier 1 tax generally. Prior to amendment, subsec. (b) read as fol-
lows: ‘‘In addition to other taxes, there is hereby im-
In addition to other taxes, there is hereby im- posed on the income of each employee a tax equal to
posed on the income of each employee a tax the following percentage of the compensation received
equal to the applicable percentage of the com- during any calendar year by such employee for services
pensation received during any calendar year by rendered by such employee:
such employee for services rendered by such em- ‘‘In the case of compensation received
ployee. For purposes of the preceding sentence, The rate shall be:
during:
the term ‘‘applicable percentage’’ means the
1985 ............................................................. 3.50
percentage equal to the sum of the rates of tax 1986 or thereafter ........................................ 4.25.’’
in effect under subsections (a) and (b) of section
1983—Pub. L. 98–76, § 221, amended section generally,
3101 for the calendar year.
substituting a two tiered tax system with accom-
(b) Tier 2 tax panying tax rate tables and a cross reference to section
In addition to other taxes, there is hereby im- 3231 of this title, for provisions which had taxed an em-
ployee at 2.75 percent of so much of the compensation
posed on the income of each employee a tax paid in any calendar month to such employee for serv-
ices rendered by him as was not in excess of an amount
1 Section numbers editorially supplied. equal to one-twelfth of the current maximum annual
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