U.S Code last checked for updates: Jun 12, 2024
§ 3202.
Deduction of tax from compensation
(a)
Requirement
(b)
Indemnification of employer
(c)
Special rule for tips
(1)
In the case of tips which constitute compensation, subsection (a) shall be applicable only to such tips as are included in a written statement furnished to the employer pursuant to section 6053(a), and only to the extent that collection can be made by the employer, at or after the time such statement is so furnished and before the close of the 10th day following the calendar month (or, if paragraph (3) applies, the 30th day following the quarter) in which the tips were deemed paid, by deducting the amount of the tax from such compensation of the employee (excluding tips, but including funds turned over by the employee to the employer pursuant to paragraph (2)) as are under control of the employer.
(2)
If the taxes imposed by section 3201, with respect to tips which are included in written statements furnished in any month to the employer pursuant to section 6053(a), exceed the compensation of the employee (excluding tips) from which the employer is required to collect the taxes under paragraph (1), the employee may furnish to the employer on or before the 10th day of the following month (or, if paragraph (3) applies, on or before the 30th day of the following quarter) an amount of money equal to the amount of the excess.
(3)
The Secretary may, under regulations prescribed by him, authorize employers—
(A)
to estimate the amount of tips that will be reported by the employee pursuant to section 6053(a) in any quarter of the calendar year,
(B)
to determine the amount to be deducted upon each payment of compensation (exclusive of tips) during such quarter as if the tips so estimated constituted actual tips so reported, and
(C)
to deduct upon any payment of compensation (other than tips, but including funds turned over by the employee to the employer pursuant to paragraph (2)) to such employee during such quarter (and within 30 days thereafter) such amount as may be necessary to adjust the amount actually deducted upon such compensation of the employee during the quarter to the amount required to be deducted in respect of tips included in written statements furnished to the employer during the quarter.
(4)
If the taxes imposed by section 3201 with respect to tips which constitute compensation exceed the portion of such taxes which can be collected by the employer from the compensation of the employee pursuant to paragraph (1) or paragraph (3), such excess shall be paid by the employee.
(d)
Special rule for certain taxable group-term life insurance benefits
(1)
In general
In the case of any payment for group-term life insurance to which this subsection applies—
(A)
subsection (a) shall not apply,
(B)
the employer shall separately include on the statement required under section 6051—
(i)
the portion of the compensation which consists of payments for group-term life insurance to which this subsection applies, and
(ii)
the amount of the tax imposed by section 3201 on such payments, and
(C)
the tax imposed by section 3201 on such payments shall be paid by the employee.
(2)
Benefits to which subsection applies
This subsection shall apply to any payment for group-term life insurance to the extent—
(A)
such payment constitutes compensation, and
(B)
such payment is for coverage for periods during which an employment relationship no longer exists between the employee and the employer.
(Aug. 16, 1954, ch. 736, 68A Stat. 431; Aug. 31, 1954, ch. 1164, pt. II, § 206(a), 68 Stat. 1040; Pub. L. 86–28, pt. II, § 201(b), May 19, 1959, 73 Stat. 29; Pub. L. 88–133, title II, § 202, Oct. 5, 1963,77 Stat. 221; Pub. L. 89–212, §§ 2(a), 4, Sept. 29, 1965, 79 Stat. 858, 861; Pub. L. 89–700, title III, § 301(iii), (v), Oct. 30, 1966, 80 Stat. 1088; Pub. L. 93–69, title I, § 102(b), July 10, 1973, 87 Stat. 162; Pub. L. 94–455, title XIX, §§ 1903(a)(7), 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1807, 1834; Pub. L. 98–76, title II, § 225(a)(2), (c)(1)(A), (B), (2)–(5), Aug. 12, 1983, 97 Stat. 425; Pub. L. 101–508, title V, § 5124(b), Nov. 5, 1990, 104 Stat. 1388–285.)
cite as: 26 USC 3202