26 USC 3231 - Definitions

View all text of Subchapter D [§ 3231 - § 3233]

§ 3231. Definitions

(a) Employer

(b) Employee

(d) ServiceFor 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;

(e) CompensationFor 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

(ii) Remuneration not treated as compensation excluded

(iii) Hospital insurance taxesClause (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) as does not exceed the rate of tax in effect under section 1401(b).

(B) Applicable base

(i) Tier 1 taxes

(ii) Tier 2 taxes, etc.For purposes of—(I) the taxes imposed by sections 3201(b), 3211(b), 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 employersFor 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), 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), 108(f)(4), 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) Repealed. Pub. L. 113–295, div. A, title II, § 221(a)(19)(B)(v), Dec. 19, 2014, 128 Stat. 4040.]

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

(A) Certain employer contributions treated as compensation

(B) Treatment of certain nonqualified deferred compensation

(9) Meals and lodging

(10) Archer MSA contributions

(11) Health savings account contributions

(12) Qualified stock optionsThe term “compensation” shall not include any remuneration on account of—

(A) a transfer of a share of stock to any individual pursuant to an exercise of an incentive stock option (as defined in section 422(b)) or under an employee stock purchase plan (as defined in section 423(b)), or

(B) any disposition by the individual of such stock.

(f) Company

(g) Carrier

(h) Tips constituting compensation, time deemed paid

(i) Concurrent employment by 2 or more employers

(Aug. 16, 1954, ch. 736, 68A Stat. 434; Aug. 31, 1954, ch. 1164, pt. II, § 206(b), 68 Stat. 1040; Pub. L. 89–212, § 2(b), Sept. 29, 1965, 79 Stat. 859; Pub. L. 90–624, § 1, Oct. 22, 1968, 82 Stat. 1316; Pub. L. 94–92, title II, § 203(b), Aug. 9, 1975, 89 Stat. 465; Pub. L. 94–93, title II, §§ 204–206, Aug. 9, 1975, 89 Stat. 466; Pub. L. 94–455, title XIX, §§ 1903(a)(10), 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1808, 1834; Pub. L. 94–547, § 4(b), Oct. 18, 1976, 90 Stat. 2526; Pub. L. 95–473, § 2(a)(2)(G), Oct. 17, 1978, 92 Stat. 1465; Pub. L. 97–34, title VII, §§ 741(d)(2), 743(a)–(c), Aug. 13, 1981, 95 Stat. 347, 348; Pub. L. 97–123, § 3(c), Dec. 29, 1981, 95 Stat. 1662; Pub. L. 98–76, title II, § 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, § 531(d)(2), July 18, 1984, 98 Stat. 884; Pub. L. 98–611, § 1(f), Oct. 31, 1984, 98 Stat. 3178; Pub. L. 98–612, § 1(c), Oct. 31, 1984, 98 Stat. 3181; Pub. L. 99–514, title I, § 122(e)(2), title XVIII, § 1899A(41), Oct. 22, 1986, 100 Stat. 2112, 2960; Pub. L. 100–647, title I, §§ 1001(d)(2)(C)(ii), 1011B(a)(22)(B), Nov. 10, 1988, 102 Stat. 3351, 3486; Pub. L. 101–140, title II, § 203(a)(2), Nov. 8, 1989, 103 Stat. 830; Pub. L. 101–239, title X, §§ 10205(a), 10206(a), (b), 10207(a), (b), Dec. 19, 1989, 103 Stat. 2474–2476; Pub. L. 101–508, title XI, §§ 11331(c), 11704(a)(19), Nov. 5, 1990, 104 Stat. 1388–468, 1388–519; Pub. L. 103–66, title XIII, § 13207(c), Aug. 10, 1993, 107 Stat. 468; Pub. L. 103–296, title III, § 320(a)(1)(D), Aug. 15, 1994, 108 Stat. 1535; Pub. L. 104–88, title III, § 304(d), Dec. 29, 1995, 109 Stat. 944; Pub. L. 104–191, title III, § 301(c)(2)(A), Aug. 21, 1996, 110 Stat. 2049; Pub. L. 106–554, § 1(a)(7) [title II, § 202(b)(5)], Dec. 21, 2000, 114 Stat. 2763, 2763A–629; Pub. L. 107–90, title II, § 204(e)(3), (4), Dec. 21, 2001, 115 Stat. 893; Pub. L. 108–173, title XII, § 1201(d)(2)(A), Dec. 8, 2003, 117 Stat. 2477; Pub. L. 108–357, title II, § 251(a)(2), title III, § 320(b)(2), Oct. 22, 2004, 118 Stat. 1458, 1473; Pub. L. 113–295, div. A, title II, § 221(a)(19)(B)(v), (100)(D), Dec. 19, 2014, 128 Stat. 4040, 4052.)