-CITE-
    26 USC CHAPTER 24 - COLLECTION OF INCOME TAX AT SOURCE ON
           WAGES                                           01/03/2007

-EXPCITE-
    TITLE 26 - INTERNAL REVENUE CODE
    Subtitle C - Employment Taxes
    CHAPTER 24 - COLLECTION OF INCOME TAX AT SOURCE ON WAGES

-HEAD-
         CHAPTER 24 - COLLECTION OF INCOME TAX AT SOURCE ON WAGES     

-MISC1-
    Sec.                                                     
    3401.       Definitions.                                          
    3402.       Income tax collected at source.                       
    3403.       Liability for tax.                                    
    3404.       Return and payment by governmental employer.          
    3405.       Special rules for pensions, annuities, and certain
                 other deferred income.(!1)                           
    3406.       Backup withholding.                                   
    [3451 to 3456. Repealed.]                                          

                                AMENDMENTS                            
      1983 - Pub. L. 98-67, title I, Secs. 102(a), 104(d)(4), Aug. 5,
    1983, 97 Stat. 369, 380, added item 3406 and repealed amendments
    made by Pub. L. 97-248. See 1982 Amendment note below.
      1982 - Pub. L. 97-248, title III, Secs. 307(b)(4), 308(a), Sept.
    3, 1982, 96 Stat. 590, 591, provided that, applicable to payments
    of interest, dividends, and patronage dividends paid or credited
    after June 30, 1983, the caption of chapter 24 is amended by
    striking out "ON WAGES", items for subchapters A and B are added in
    analysis, and heading "Subchapter A - Withholding From Wages" is
    added. Section 102(a), (b) of Pub. L. 98-67, title I, Aug. 5, 1983,
    97 Stat. 369, repealed subtitle A (Secs. 301-308) of title III of
    Pub. L. 97-248 as of the close of June 30, 1983, and provided that
    the Internal Revenue Code of 1954 [now 1986] [this title] shall be
    applied and administered (subject to certain exceptions) as if such
    subtitle A (and the amendments made by such subtitle A) had not
    been enacted.

-FOOTNOTE-
    (!1) Editorially supplied. Section 3405 added by Pub. L. 97-248
         without corresponding amendment of analysis.

-End-

-CITE-
    26 USC Sec. 3401                                            01/03/2007

-EXPCITE-
    TITLE 26 - INTERNAL REVENUE CODE
    Subtitle C - Employment Taxes
    CHAPTER 24 - COLLECTION OF INCOME TAX AT SOURCE ON WAGES

-HEAD-
    Sec. 3401. Definitions

-STATUTE-
    (a) Wages
      For purposes of this chapter, the term "wages" means all
    remuneration (other than fees paid to a public official) for
    services performed by an employee for his employer, including the
    cash value of all remuneration (including benefits) paid in any
    medium other than cash; except that such term shall not include
    remuneration paid - 
        (1) for active service performed in a month for which such
      employee is entitled to the benefits of section 112 (relating to
      certain combat zone compensation of members of the Armed Forces
      of the United States) to the extent remuneration for such service
      is excludable from gross income under such section; or
        (2) for agricultural labor (as defined in section 3121(g))
      unless the remuneration paid for such labor is wages (as defined
      in section 3121(a)); or
        (3) for domestic service in a private home, local college club,
      or local chapter of a college fraternity or sorority; or
        (4) for service not in the course of the employer's trade or
      business performed in any calendar quarter by an employee, unless
      the cash remuneration paid for such service is $50 or more and
      such service is performed by an individual who is regularly
      employed by such employer to perform such service. For purposes
      of this paragraph, an individual shall be deemed to be regularly
      employed by an employer during a calendar quarter only if - 
          (A) on each of some 24 days during such quarter such
        individual performs for such employer for some portion of the
        day service not in the course of the employer's trade or
        business; or
          (B) such individual was regularly employed (as determined
        under subparagraph (A)) by such employer in the performance of
        such service during the preceding calendar quarter; or

        (5) for services by a citizen or resident of the United States
      for a foreign government or an international organization; or
        (6) for such services, performed by a nonresident alien
      individual, as may be designated by regulations prescribed by the
      Secretary; or
        [(7) Repealed. Pub. L. 89-809, title I, Sec. 103(k), Nov. 13,
      1966, 80 Stat. 1554]
        (8)(A) for services for an employer (other than the United
      States or any agency thereof) - 
          (i) performed by a citizen of the United States if, at the
        time of the payment of such remuneration, it is reasonable to
        believe that such remuneration will be excluded from gross
        income under section 911; or
          (ii) performed in a foreign country or in a possession of the
        United States by such a citizen if, at the time of the payment
        of such remuneration, the employer is required by the law of
        any foreign country or possession of the United States to
        withhold income tax upon such remuneration; or

        (B) for services for an employer (other than the United States
      or any agency thereof) performed by a citizen of the United
      States within a possession of the United States (other than
      Puerto Rico), if it is reasonable to believe that at least 80
      percent of the remuneration to be paid to the employee by such
      employer during the calendar year will be for such services; or
        (C) for services for an employer (other than the United States
      or any agency thereof) performed by a citizen of the United
      States within Puerto Rico, if it is reasonable to believe that
      during the entire calendar year the employee will be a bona fide
      resident of Puerto Rico; or
        (D) for services for the United States (or any agency thereof)
      performed by a citizen of the United States within a possession
      of the United States to the extent the United States (or such
      agency) withholds taxes on such remuneration pursuant to an
      agreement with such possession; or
        (9) for services performed by a duly ordained, commissioned, or
      licensed minister of a church in the exercise of his ministry or
      by a member of a religious order in the exercise of duties
      required by such order; or
        (10)(A) for services performed by an individual under the age
      of 18 in the delivery or distribution of newspapers or shopping
      news, not including delivery or distribution to any point for
      subsequent delivery or distribution; or
        (B) for services performed by an individual in, and at the time
      of, the sale of newspapers or magazines to ultimate consumers,
      under an arrangement under which the newspapers or magazines are
      to be sold by him at a fixed price, his compensation being based
      on the retention of the excess of such price over the amount at
      which the newspapers or magazines are charged to him, whether or
      not he is guaranteed a minimum amount of compensation for such
      services, or is entitled to be credited with the unsold
      newspapers or magazines turned back; or
        (11) for services not in the course of the employer's trade or
      business, to the extent paid in any medium other than cash; or
        (12) to, or on behalf of, an employee or his beneficiary - 
          (A) from or to a trust described in section 401(a) which is
        exempt from tax under section 501(a) at the time of such
        payment unless such payment is made to an employee of the trust
        as remuneration for services rendered as such employee and not
        as a beneficiary of the trust; or
          (B) under or to an annuity plan which, at the time of such
        payment, is a plan described in section 403(a); or
          (C) for a payment described in section 402(h)(1) and (2) if,
        at the time of such payment, it is reasonable to believe that
        the employee will be entitled to an exclusion under such
        section for payment; or
          (D) under an arrangement to which section 408(p) applies; or
          (E) under or to an eligible deferred compensation plan which,
        at the time of such payment, is a plan described in section
        457(b) which is maintained by an eligible employer described in
        section 457(e)(1)(A),(!1) or

        (13) pursuant to any provision of law other than section 5(c)
      or 6(1) of the Peace Corps Act, for service performed as a
      volunteer or volunteer leader within the meaning of such Act; or
        (14) in the form of group-term life insurance on the life of an
      employee; or
        (15) to or on behalf of an employee if (and to the extent that)
      at the time of the payment of such remuneration it is reasonable
      to believe that a corresponding deduction is allowable under
      section 217 (determined without regard to section 274(n)); or
        (16)(A) as tips in any medium other than cash;
        (B) as cash tips to an employee in any calendar month in the
      course of his employment by an employer unless the amount of such
      cash tips is $20 or more; (!2)

        (17) for service described in section 3121(b)(20); (!2)
        (18) for 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, 129, 134(b)(4), or 134(b)(5); (!2)
        (19) for 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; (!2)
        (20) for any medical care reimbursement made to or for the
      benefit of an employee under a self-insured medical reimbursement
      plan (within the meaning of section 105(h)(6)); (!2)
        (21) for 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); or
        (22) 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(d).

    The term "wages" includes any amount includible in gross income of
    an employee under section 409A and payment of such amount shall be
    treated as having been made in the taxable year in which the amount
    is so includible.
    (b) Payroll period
      For purposes of this chapter, the term "payroll period" means a
    period for which a payment of wages is ordinarily made to the
    employee by his employer, and the term "miscellaneous payroll
    period" means a payroll period other than a daily, weekly,
    biweekly, semimonthly, monthly, quarterly, semiannual or annual
    payroll period.
    (c) Employee
      For purposes of this chapter, the term "employee" includes an
    officer, employee, or elected official of the United States, a
    State, or any political subdivision thereof, or the District of
    Columbia, or any agency or instrumentality of any one or more of
    the foregoing. The term "employee" also includes an officer of a
    corporation.
    (d) Employer
      For purposes of this chapter, the term "employer" means the
    person for whom an individual performs or performed any service, of
    whatever nature, as the employee of such person, except that - 
        (1) if the person for whom the individual performs or performed
      the services does not have control of the payment of the wages
      for such services, the term "employer" (except for purposes of
      subsection (a)) means the person having control of the payment of
      such wages, and
        (2) in the case of a person paying wages on behalf of a
      nonresident alien individual, foreign partnership, or foreign
      corporation, not engaged in trade or business within the United
      States, the term "employer" (except for purposes of subsection
      (a)) means such person.
    (e) Number of withholding exemptions claimed
      For purposes of this chapter, the term "number of withholding
    exemptions claimed" means the number of withholding exemptions
    claimed in a withholding exemption certificate in effect under
    section 3402(f), or in effect under the corresponding section of
    prior law, except that if no such certificate is in effect, the
    number of withholding exemptions claimed shall be considered to be
    zero.
    (f) Tips
      For purposes of subsection (a), the term "wages" includes tips
    received by an employee in the course of his employment. Such wages
    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.
    (g) Crew leader rules to apply
      Rules similar to the rules of section 3121(o) shall apply for
    purposes of this chapter.

-SOURCE-
    (Aug. 16, 1954, ch. 736, 68A Stat. 455; Aug. 9, 1955, ch. 681, 69
    Stat. 616; Pub. L. 87-256, Sec. 110(g)(1), Sept. 21, 1961, 75 Stat.
    537; Pub. L. 87-293, title II, Sec. 201(c), Sept. 22, 1961, 75
    Stat. 625; Pub. L. 87-792, Sec. 7(l), Oct. 10, 1962, 76 Stat. 830;
    Pub. L. 88-272, title II, Secs. 204(b), 213(c), Feb. 26, 1964, 78
    Stat. 36, 52; Pub. L. 89-97, title III, Sec. 313(d)(1), (2), July
    30, 1965, 79 Stat. 383, 384; Pub. L. 89-809, title I, Sec. 103(k),
    Nov. 13, 1966, 80 Stat. 1554; Pub. L. 92-279, Sec. 2, Apr. 26,
    1972, 86 Stat. 125; Pub. L. 93-406, title II, Sec. 2002(g)(7),
    Sept. 2, 1974, 88 Stat. 970; Pub. L. 94-455, title XII, Sec.
    1207(e)(1)(C), title XV, Sec. 1501(b)(7), title XIX, Secs. 1903(c),
    1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1707, 1736, 1810, 1834; Pub.
    L. 95-600, title I, Sec. 164(b)(1), Nov. 6, 1978, 92 Stat. 2813;
    Pub. L. 95-615, Sec. 207(a), Nov. 8, 1978, 92 Stat. 3108; Pub. L.
    96-222, title I, Sec. 103(a)(13)(A), Apr. 1, 1980, 94 Stat. 213;
    Pub. L. 97-34, title I, Secs. 112(b)(5), 124(e)(2)(A), title III,
    Sec. 311(h)(6), Aug. 13, 1981, 95 Stat. 195, 200, 282; Pub. L. 97-
    448, title I, Sec. 103(c)(12)(B), Jan. 12, 1983, 96 Stat. 2377;
    Pub. L. 98-369, div. A, title IV, Sec. 491(d)(38), title V, Sec.
    531(d)(4), July 18, 1984, 98 Stat. 851, 885; Pub. L. 99-514, title
    I, Sec. 122(e)(4), title XII, Sec. 1272(c), Oct. 22, 1986, 100
    Stat. 2112, 2594; Pub. L. 100-647, title I, Secs.
    1001(g)(4)(B)(iii), 1011(f)(9), 1011B(a)(22)(D), (33), Nov. 10,
    1988, 102 Stat. 3352, 3463, 3486, 3488; Pub. L. 101-140, title II,
    Sec. 203(a)(2), Nov. 8, 1989, 103 Stat. 830; Pub. L. 101-239, title
    VII, Sec. 7631(a), (b), Dec. 19, 1989, 103 Stat. 2378; Pub. L. 101-
    508, title XI, Sec. 11703(f)(1), Nov. 5, 1990, 104 Stat. 1388-517;
    Pub. L. 104-117, Sec. 1(c), Mar. 20, 1996, 110 Stat. 828; Pub. L.
    104-188, title I, Secs. 1421(b)(8)(D), 1704(t)(4)(C), Aug. 20,
    1996, 110 Stat. 1798, 1887; Pub. L. 104-191, title III, Sec.
    301(c)(2)(C), Aug. 21, 1996, 110 Stat. 2049; Pub. L. 105-206, title
    VI, Sec. 6023(14), (15), July 22, 1998, 112 Stat. 825; Pub. L. 107-
    16, title VI, Sec. 641(a)(1)(D)(i), June 7, 2001, 115 Stat. 119;
    Pub. L. 108-121, title I, Sec. 106(b)(4), Nov. 11, 2003, 117 Stat.
    1339; Pub. L. 108-173, title XII, Sec. 1201(d)(2)(C), Dec. 8, 2003,
    117 Stat. 2477; Pub. L. 108-357, title III, Sec. 320(b)(4), title
    VIII, Sec. 885(b)(2), Oct. 22, 2004, 118 Stat. 1473, 1639; Pub. L.
    108-375, div. A, title V, Sec. 585(b)(2)(D), Oct. 28, 2004, 118
    Stat. 1932; Pub. L. 109-135, title IV, Sec. 412(tt), Dec. 21, 2005,
    119 Stat. 2640.)

-REFTEXT-
                            REFERENCES IN TEXT                        
      Sections 5(c) and 6(1) of the Peace Corps Act, referred to in
    subsec. (a)(13), are classified to sections 2504(c) and 2505(1),
    respectively, of Title 22, Foreign Relations and Intercourse.

-MISC1-
                                AMENDMENTS                            
      2005 - Subsecs. (g), (h). Pub. L. 109-135 redesignated subsec.
    (h) as (g).
      2004 - Subsec. (a). Pub. L. 108-357, Sec. 885(b)(2), inserted
    concluding provisions.
      Subsec. (a)(18). Pub. L. 108-375 substituted "134(b)(4), or
    134(b)(5)" for "or 134(b)(4)".
      Subsec. (a)(19). Pub. L. 108-357, Sec. 320(b)(4), inserted
    "108(f)(4)," after "74(c),".
      2003 - Subsec. (a)(18). Pub. L. 108-121 substituted ", 129, or
    134(b)(4)" for "or 129".
      Subsec. (a)(22). Pub. L. 108-173 added par. (22).
      2001 - Subsec. (a)(12)(E). Pub. L. 107-16 added subpar. (E).
      1998 - Subsec. (a)(19), (21). Pub. L. 105-206 inserted "for"
    after par. designation.
      1996 - Subsec. (a)(1). Pub. L. 104-188, Sec. 1704(t)(4)(C),
    substituted "combat zone compensation" for "combat pay".
      Pub. L. 104-117 inserted before semicolon "to the extent
    remuneration for such service is excludable from gross income under
    such section".
      Subsec. (a)(12)(D). Pub. L. 104-188, Sec. 1421(b)(8)(D), added
    subpar. (D).
      Subsec. (a)(21). Pub. L. 104-191 added par. (21).
      1990 - Subsec. (a)(20). Pub. L. 101-508 added par. (20).
      1989 - Subsec. (a)(2). Pub. L. 101-239, Sec. 7631(a), amended
    par. (2) generally. Prior to amendment, par. (2) read as follows:
    "for agricultural labor (as defined in section 3121(g)); or".
      Subsec. (g). Pub. L. 101-140 amended this section to read as if
    amendments by Pub. L. 100-647, Sec. 1011B(a)(22)(D), had not been
    enacted, see 1988 Amendment note below.
      Subsec. (h). Pub. L. 101-239, Sec. 7631(b), added subsec. (h).
      1988 - Subsec. (a)(12)(C). Pub. L. 100-647, Sec. 1011(f)(9),
    substituted "section 402(h)(1) and (2)" for "section 219" and "an
    exclusion" for "a deduction".
      Subsec. (a)(15). Pub. L. 100-647, Sec. 1001(g)(4)(B)(iii),
    inserted "(determined without regard to section 274(n))" after
    "section 217".
      Subsec. (a)(19), (20). Pub. L. 100-647, Sec. 1011B(a)(33),
    redesignated par. (20) as (19) and struck out former par. (19)
    which excluded medical care reimbursement made to or for benefit of
    employee under self-insured medical reimbursement plan.
      Subsec. (g). Pub. L. 100-647, Sec. 1011B(a)(22)(D), added subsec.
    (g) relating to benefits provided under certain employee benefit
    plans.
      1986 - Subsec. (a)(8)(D). Pub. L. 99-514, Sec. 1272(c), added
    subpar. (D).
      Subsec. (a)(20). Pub. L. 99-514, Sec. 122(e)(4), inserted
    reference to section 74(c).
      1984 - Subsec. (a). Pub. L. 98-369, Sec. 531(d)(4)(A), inserted
    "(including benefits)" in introductory provisions.
      Subsec. (a)(12). Pub. L. 98-369, Sec. 491(d)(38), struck out
    subpar. (C) which provided: "under or to a bond purchase plan
    which, at the time of such payment, is a qualified bond purchase
    plan described in section 405(a);" and redesignated subpar. (D) as
    (C).
      Subsec. (a)(20). Pub. L. 98-369, Sec. 531(d)(4)(B), added par.
    (20).
      1983 - Subsec. (a)(12)(D). Pub. L. 97-448 substituted "section
    219" for "section 219(a)".
      1981 - Subsec. (a)(12)(D). Pub. L. 97-34, Sec. 311(h)(6),
    substituted "section 219(a)" for "section 219(a) or 220(a)".
      Subsec. (a)(18). Pub. L. 97-34, Sec. 124(e)(2)(A), substituted
    "section 127 or 129" for "section 127".
      Pub. L. 97-34, Sec. 112(b)(5), redesignated par. (19) as (18).
    Former par. (18), relating to remuneration paid to or on behalf of
    an employee if (and to the extent that) at the time of the payment
    of such remuneration it was reasonable to believe that a
    corresponding deduction was allowable under section 913 (relating
    to deduction for certain expenses of living abroad), was struck
    out.
      Subsec. (a)(19), (20). Pub. L. 97-34, Sec. 112(b)(5),
    redesignated par. (20) as (19). Former par. (19) redesignated (18).
      1980 - Subsec. (a)(18) to (20). Pub. L. 96-222 redesignated par.
    (18), added by Pub. L. 95-600, as (19), in par. (19) as so
    redesignated, substituted "section 127; or" for "section 124.", and
    added par. (20).
      1978 - Subsec. (a)(18). Pub. L. 95-615 added par. (18) relating
    to payments or benefits excludable from income under section 124.
      Pub. L. 95-600 added par. (18) relating to remuneration for which
    a corresponding deduction is allowable under section 913.
      1976 - Subsec. (a)(6). Pub. L. 94-455, Sec. 1906(b)(13)(A),
    struck out "or his delegate" after "Secretary".
      Subsec. (a)(12)(D). Pub. L. 94-455, Sec. 1501(b)(7), inserted "or
    220(a)" after "section 219(a)".
      Subsec. (a)(17). Pub. L. 94-455, Sec. 1207(e)(1)(C), added par.
    (17).
      Subsec. (c). Pub. L. 94-455, Sec. 1903(c), struck out "Territory"
    after "a State".
      1974 - Subsec. (a)(12)(D). Pub. L. 93-406 added subpar. (D).
      1972 - Subsec. (a)(1). Pub. L. 92-279 struck out "as a member of
    the Armed Forces of the United States" after "active service",
    substituted "employee" for "member", and parenthetical text
    "(relating to certain combat pay of members of the Armed Forces of
    the United States)".
      1966 - Subsec. (a)(6), (7). Pub. L. 89-809, Sec. 103(k), struck
    out par. (6) dealing with services performed by nonresident alien
    individuals other than residents of contiguous countries who enter
    and leave the United States at frequent intervals, residents of
    Puerto Rico if such services are performed as an employee of the
    United States or any agency thereof, or individuals temporarily
    present in the United States as nonimmigrants under certain
    conditions, redesignated par. (7) as (6), and in par (6) as so
    redesignated, struck out "who is a resident of a contiguous country
    and who enters and leaves the United States at frequent intervals"
    after "nonresident alien individual".
      1965 - Subsec. (a)(16). Pub. L. 89-97, Sec. 313(d)(2), added par.
    (16).
      Subsec. (f). Pub. L. 89-97, Sec. 313(d)(1), added subsec. (f).
      1964 - Subsec. (a)(14). Pub. L. 88-272, Sec. 204(b), added par.
    (14).
      Subsec. (a)(15). Pub. L. 88-272, Sec. 213(c), added par. (15).
      1962 - Subsec. (a)(12)(B), (C). Pub. L. 87-792 substituted "is a
    plan described in section 403(a)" for "meets the requirements of
    section 401(a)(3), (4), (5), and (6)", in subpar. (B), and added
    subpar. (C).
      1961 - Subsec. (a)(6)(C). Pub. L. 87-256 added subpar. (C).
      Subsec. (a)(13). Pub. L. 87-293 added par. (13).
      1955 - Subsec. (a). Act Aug. 9, 1955, excluded from definition of
    wages, remuneration paid for services performed in a possession of
    the United States by a United States citizen if the employer is
    required by the law of the possession to withhold income tax on the
    remuneration.

                     EFFECTIVE DATE OF 2004 AMENDMENTS                 
      Amendment by Pub. L. 108-375 applicable to travel benefits
    provided after Oct. 28, 2004, see section 585(b)(3) of Pub. L. 108-
    375, set out as a note under section 134 of this title.
      Amendment by section 320(b)(4) of Pub. L. 108-357 applicable to
    amounts received by an individual in taxable years beginning after
    Dec. 31, 2003, see section 320(c) of Pub. L. 108-357, set out as a
    note under section 108 of this title.
      Amendment by section 885(b)(2) of Pub. L. 108-357 applicable to
    amounts deferred after Dec. 31, 2004, with special rules relating
    to earnings and material modifications and exception for
    nonelective deferred compensation, see section 885(d) of Pub. L.
    108-357, set out as an Effective Date note under section 409A of
    this title.

                     EFFECTIVE DATE OF 2003 AMENDMENTS                 
      Amendment by Pub. L. 108-173 applicable to taxable years
    beginning after Dec. 31, 2003, see section 1201(k) of Pub. L. 108-
    173, set out as a note under section 62 of this title.
      Amendment by Pub. L. 108-121 applicable to taxable years
    beginning after Dec. 31, 2002, see section 106(c) of Pub. L. 108-
    121, set out as a note under section 134 of this title.

                     EFFECTIVE DATE OF 2001 AMENDMENT                 
      Amendment by Pub. L. 107-16 applicable to distributions after
    Dec. 31, 2001, see section 641(f)(1) of Pub. L. 107-16, set out as
    a note under section 402 of this title.

                     EFFECTIVE DATE OF 1996 AMENDMENTS                 
      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.
      Amendment by section 1421(b)(8)(D) of Pub. L. 104-188 applicable
    to taxable years beginning after Dec. 31, 1996, see section 1421(e)
    of Pub. L. 104-188, set out as a note under section 72 of this
    title.
      Amendment by Pub. L. 104-117 applicable to remuneration paid
    after Mar. 20, 1996, see section 1(e) of Pub. L. 104-117, set out
    in a Treatment of Certain Individuals Performing Services in
    Certain Hazardous Duty Areas; Effective Date note under section 112
    of this title.

                     EFFECTIVE DATE OF 1990 AMENDMENT                 
      Section 11703(f)(2) of Pub. L. 101-508 provided that: "The
    amendment made by paragraph (1) [amending this section] shall apply
    as if included in the amendments made by section 1151 of the Tax
    Reform Act of 1986 [Pub. L. 99-514, see Effective Date of 1986
    Amendment note set out under section 79 of this title] but shall
    not apply to any amount paid before the date of the enactment of
    this Act [Nov. 5, 1990] which the employer treated as wages for
    purposes of chapter 24 of the Internal Revenue Code of 1986 when
    paid."

                     EFFECTIVE DATE OF 1989 AMENDMENTS                 
      Section 7631(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 sections 1001(g)(4)(B)(iii), 1011(f)(9), and
    1011B(a)(33) 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)(D) 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)(4) 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.
      Amendment by section 1272(c) of Pub. L. 99-514 applicable to
    taxable years beginning after Dec. 31, 1986, with certain
    exceptions and qualifications, see section 1277 of Pub. L. 99-514,
    set out as a note under section 931 of this title.

                     EFFECTIVE DATE OF 1984 AMENDMENT                 
      Amendment by section 491(d)(38) of Pub. L. 98-369 applicable to
    obligations issued after Dec. 31, 1983, see section 491(f)(1) of
    Pub. L. 98-369, set out as a note under section 62 of this title.
      Amendment by section 531(d)(4) of 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. 97-448 effective, except as otherwise
    provided, as if it had been included in the provision of the
    Economic Recovery Tax Act of 1981, Pub. L. 97-34, to which such
    amendment relates, see section 109 of Pub. L. 97-448, set out as a
    note under section 1 of this title.

                     EFFECTIVE DATE OF 1981 AMENDMENT                 
      Amendment by section 112(b)(5) of Pub. L. 97-34 applicable with
    respect to taxable years beginning after Dec. 31, 1981, see section
    115 of Pub. L. 97-34, set out as a note under section 911 of this
    title.
      Amendment by section 124(e)(2)(A) of Pub. L. 97-34 applicable to
    remuneration paid after Dec. 31, 1981, see section 124(f)(2) of
    Pub. L. 97-34, set out as a note under section 21 of this title.
      Amendment by section 311(h)(6) of Pub. L. 97-34 applicable to
    taxable years beginning after Dec. 31, 1981, see section 311(i)(1)
    of Pub. L. 97-34, set out as a note under section 219 of this
    title.

                     EFFECTIVE DATE OF 1980 AMENDMENT                 
      Amendment by Pub. L. 96-222 effective, except as otherwise
    provided, as if it had been included in the provisions of the
    Revenue Act of 1978, Pub. L. 95-600, to which such amendment
    relates, see section 201 of Pub. L. 96-222, set out as a note under
    section 32 of this title.

                     EFFECTIVE DATE OF 1978 AMENDMENTS                 
      Amendment by Pub. L. 95-615 applicable to remuneration paid after
    Nov. 8, 1978, but with taxpayers allowed to elect not to have the
    amendment apply with respect to any taxable year beginning after
    Dec. 31, 1977, and before Jan. 1, 1979, see section 209(b), (c) of
    Pub. L. 95-615, set out as a note under section 911 of this title.
      Amendment by Pub. L. 95-600 applicable with respect to taxable
    years beginning after Dec. 31, 1978, see section 164(d) of Pub. L.
    95-600, set out as a note under section 127 of this title.

                     EFFECTIVE DATE OF 1976 AMENDMENT                 
      Amendment by section 1501(b)(7) of Pub. L. 94-455 effective for
    taxable years beginning after Dec. 31, 1976, see section 1501(d) of
    Pub. L. 94-455, set out as a note under section 62 of this title.

                     EFFECTIVE DATE OF 1974 AMENDMENT                 
      Amendment by Pub. L. 93-406 effective on Jan. 1, 1975, see
    section 2002(i)(2) of Pub. L. 93-406, set out as an Effective Date
    note under section 4973 of this title.

                     EFFECTIVE DATE OF 1972 AMENDMENT                 
      Section 3(b) of Pub. L. 92-279 provided that: "The amendments
    made by section 2 [amending this section] shall apply to wages paid
    on or after the first day of the first calendar month which begins
    more than 30 days after the date of the enactment of this Act [Apr.
    26, 1972]."

                     EFFECTIVE DATE OF 1966 AMENDMENT                 
      Amendment by Pub. L. 89-809 applicable with respect to
    remuneration paid after Dec. 31, 1966, see section 103(n)(4) of
    Pub. L. 89-809, set out as a note under section 871 of this title.

                     EFFECTIVE DATE OF 1965 AMENDMENT                 
      Amendment by section 313(d)(1), (2) of Pub. L. 89-97 applicable
    only with respect to tips received by employees after 1965, see
    section 313(f) of Pub. L. 89-97, set out as a note under section
    6053 of this title.

                     EFFECTIVE DATE OF 1964 AMENDMENT                 
      Amendment by section 204(b) of Pub. L. 88-272 applicable to
    remuneration paid after Dec. 31, 1963, in the form of group-term
    life insurance provided after such date, see section 204(d) of Pub.
    L. 88-272, set out as an Effective Date note under section 79 of
    this title.
      Amendment by section 213(c) of Pub. L. 88-272 applicable to
    remuneration paid after the seventh day following Feb. 26, 1964,
    see section 213(d) of Pub. L. 88-272, set out as a note under
    section 62 of this title.

                     EFFECTIVE DATE OF 1962 AMENDMENT                 
      Amendment by Pub. L. 87-792 applicable to taxable years beginning
    after Dec. 31, 1962, see section 8 of Pub. L. 87-792, set out as a
    note under section 22 of this title.

                     EFFECTIVE DATE OF 1961 AMENDMENTS                 
      Amendment by Pub. L. 87-293 applicable with respect to
    remuneration paid after Sept. 22, 1961, see section 201(d) of Pub.
    L. 87-293, set out as a note under section 912 of this title.
      Section 110(h)(4) of Pub. L. 87-256 provided that: "The
    amendments made by subsection (g) of this section [amending this
    section and section 3402 of this title] shall apply with respect to
    wages paid after December 31, 1961."

                       SHORT TITLE OF 1966 AMENDMENT                   
      Pub. L. 89-368, Sec. 1, Mar. 15, 1966, 80 Stat. 38, provided
    that: "This Act [enacting sections 276 and 6682 of this title and
    section 428 of Title 42, The Public Health and Welfare, amending
    sections 1402, 1403, 3402, 4061, 4251, 4253, 6015, 6154, 6211,
    6412, 6654, 7205, and 7701 of this title and section 1202 of Title
    19, Customs Duties, and enacting provisions set out as notes under
    sections 276, 3402, 4061, 4251, 6154, and 6654 of this title and
    section 428 of Title 42] may be cited as the 'Tax Adjustment Act of
    1966'."

       REPEALS; AMENDMENTS AND APPLICATION OF AMENDMENTS UNAFFECTED   
      Section 201(c) of Pub. L. 87-293, cited as a credit to this
    section, was repealed by Pub. L. 89-572, Sec. 5(a), Sept. 13, 1966,
    80 Stat. 765. Such repeal not deemed to affect amendments to this
    section contained in such provisions, and continuation in full
    force and effect until modified by appropriate authority of all
    determinations, authorization, regulations, orders, contracts,
    agreements, and other actions issued, undertaken, or entered into
    under authority of the repealed provisions, see section 5(b) of
    Pub. L. 89-572, set out as a note under former section 2515 of
    Title 22, Foreign Relations and Intercourse.

        NO INFERENCE TO BE DRAWN FROM AMENDMENT BY PUB. L. 108-121    
      No inference to be drawn from amendment to subsec. (a)(18) of
    this section by section 106 of Pub. L. 108-121 with respect to tax
    treatment of any amounts under program described in section
    134(b)(4) of this title for any taxable year beginning before Jan.
    1, 2003, see section 106(d) of Pub. L. 108-121, set out as a note
    under section 134 of this title.

            PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1998        
      For provisions directing that if any amendments made by subtitle
    D [Secs. 1401-1465] of title I of Pub. L. 104-188 require an
    amendment to any plan or annuity contract, such amendment shall not
    be required to be made before the first day of the first plan year
    beginning on or after Jan. 1, 1998, see section 1465 of Pub. L. 104-
    188, set out as a note under section 401 of this title.

       CONTROVERSIES INVOLVING WHETHER INDIVIDUALS ARE EMPLOYEES FOR
                       PURPOSES OF EMPLOYMENT TAXES
      Pub. L. 95-600, title V, Sec. 530, Nov. 6, 1978, 92 Stat. 2885,
    as amended by Pub. L. 96-167, Sec. 9(d), Dec. 29, 1979, 93 Stat.
    1278; Pub. L. 96-541, Sec. 1, Dec. 17, 1980, 94 Stat. 3204; Pub. L.
    97-248, title II, Sec. 269(c)(1), (2), 96 Stat. 552; Pub. L. 99-
    514, Sec. 2, title XVII, Sec. 1706(a), Oct. 22, 1986, 100 Stat.
    2095, 2781; Pub. L. 104-188, title I, Sec. 1122(a), Aug. 20, 1996,
    110 Stat. 1766; Pub. L. 109-280, title VIII, Sec. 864(a), Aug. 17,
    2006, 120 Stat. 1024, provided that:
      "(a) Termination of Certain Employment Tax Liability. - 
        "(1) In general. - If - 
          "(A) for purposes of employment taxes, the taxpayer did not
        treat an individual as an employee for any period, and
          "(B) in the case of periods after December 31, 1978, all
        Federal tax returns (including information returns) required to
        be filed by the taxpayer with respect to such individual for
        such period are filed on a basis consistent with the taxpayer's
        treatment of such individual as not being an employee,
      then, for purposes of applying such taxes for such period with
      respect to the taxpayer, the individual shall be deemed not to be
      an employee unless the taxpayer had no reasonable basis for not
      treating such individual as an employee.
        "(2) Statutory standards providing one method of satisfying the
      requirements of paragraph (1). - For purposes of paragraph (1), a
      taxpayer shall in any case be treated as having a reasonable
      basis for not treating an individual as an employee for a period
      if the taxpayer's treatment of such individual for such period
      was in reasonable reliance on any of the following:
          "(A) judicial precedent, published rulings, technical advice
        with respect to the taxpayer, or a letter ruling to the
        taxpayer;
          "(B) a past Internal Revenue Service audit of the taxpayer in
        which there was no assessment attributable to the treatment
        (for employment tax purposes) of the individuals holding
        positions substantially similar to the position held by this
        individual; or
          "(C) long-standing recognized practice of a significant
        segment of the industry in which such individual was engaged.
        "(3) Consistency required in the case of prior tax treatment. -
      Paragraph (1) shall not apply with respect to the treatment of
      any individual for employment tax purposes for any period ending
      after December 31, 1978, if the taxpayer (or a predecessor) has
      treated any individual holding a substantially similar position
      as an employee for purposes of the employment taxes for any
      period beginning after December 31, 1977.
        "(4) Refund or credit of overpayment. - If refund or credit of
      any overpayment of an employment tax resulting from the
      application of paragraph (1) is not barred on the date of the
      enactment of this Act [Nov. 6, 1978] by any law or rule of law,
      the period for filing a claim for refund or credit of such
      overpayment (to the extent attributable to the application of
      paragraph (1)) shall not expire before the date 1 year after the
      date of the enactment of this Act.
      "(b) Prohibition Against Regulations and Rulings on Employment
    Status. - No regulation or Revenue Ruling shall be published on or
    after the date of the enactment of this Act [Nov. 6, 1978] and
    before the effective date of any law hereafter enacted clarifying
    the employment status of individuals for purposes of the employment
    taxes by the Department of the Treasury (including the Internal
    Revenue Service) with respect to the employment status of any
    individual for purposes of the employment taxes.
      "(c) Definitions. - For purposes of this section - 
        "(1) Employment tax. - The term 'employment tax' means any tax
      imposed by subtitle C of the Internal Revenue Code of 1986
      [formerly I.R.C. 1954, section 3101 et seq. of this title].
        "(2) Employment status. - The term 'employment status' means
      the status of an individual, under the usual common law rules
      applicable in determining the employer-employee relationship, as
      an employee or as an independent contractor (or other individual
      who is not an employee).
      "(d) Exception. - This section shall not apply in the case of an
    individual who, pursuant to an arrangement between the taxpayer and
    another person, provides services for such other person as an
    engineer, designer, drafter, computer programmer, systems analyst,
    or other similarly skilled worker engaged in a similar line of
    work.
      "(e) Special Rules for Application of Section. - 
        "(1) Notice of availability of section. - An officer or
      employee of the Internal Revenue Service shall, before or at the
      commencement of any audit inquiry relating to the employment
      status of one or more individuals who perform services for the
      taxpayer, provide the taxpayer with a written notice of the
      provisions of this section.
        "(2) Rules relating to statutory standards. - For purposes of
      subsection (a)(2) - 
          "(A) a taxpayer may not rely on an audit commenced after
        December 31, 1996, for purposes of subparagraph (B) thereof
        unless such audit included an examination for employment tax
        purposes of whether the individual involved (or any individual
        holding a position substantially similar to the position held
        by the individual involved) should be treated as an employee of
        the taxpayer,
          "(B) in no event shall the significant segment requirement of
        subparagraph (C) thereof be construed to require a reasonable
        showing of the practice of more than 25 percent of the industry
        (determined by not taking into account the taxpayer), and
          "(C) in applying the long-standing recognized practice
        requirement of subparagraph (C) thereof - 
            "(i) such requirement shall not be construed as requiring
          the practice to have continued for more than 10 years, and
            "(ii) a practice shall not fail to be treated as long-
          standing merely because such practice began after 1978.
        "(3) Availability of safe harbors. - Nothing in this section
      shall be construed to provide that subsection (a) only applies
      where the individual involved is otherwise an employee of the
      taxpayer.
        "(4) Burden of proof. - 
          "(A) In general. - If - 
            "(i) a taxpayer establishes a prima facie case that it was
          reasonable not to treat an individual as an employee for
          purposes of this section, and
            "(ii) the taxpayer has fully cooperated with reasonable
          requests from the Secretary of the Treasury or his delegate,
      then the burden of proof with respect to such treatment shall be
      on the Secretary.
          "(B) Exception for other reasonable basis. - In the case of
        any issue involving whether the taxpayer had a reasonable basis
        not to treat an individual as an employee for purposes of this
        section, subparagraph (A) shall only apply for purposes of
        determining whether the taxpayer meets the requirements of
        subparagraph (A), (B), or (C) of subsection (a)(2).
        "(5) Preservation of prior period safe harbor. - If - 
          "(A) an individual would (but for the treatment referred to
        in subparagraph (B)) be deemed not to be an employee of the
        taxpayer under subsection (a) for any prior period, and
          "(B) such individual is treated by the taxpayer as an
        employee for employment tax purposes for any subsequent period,
      then, for purposes of applying such taxes for such prior period
      with respect to the taxpayer, the individual shall be deemed not
      to be an employee.
        "(6) Substantially similar position. - For purposes of this
      section, the determination as to whether an individual holds a
      position substantially similar to a position held by another
      individual shall include consideration of the relationship
      between the taxpayer and such individuals.
      "(f) Treatment of Test Room Supervisors and Proctors Who Assist
    in the Administration of College Entrance and Placement Exams. - 
        "(1) In general. - In the case of an individual described in
      paragraph (2) who is providing services as a test proctor or room
      supervisor by assisting in the administration of college entrance
      or placement examinations, this section shall be applied to such
      services performed after December 31, 2006 (and remuneration paid
      for such services) without regard to subsection (a)(3) thereof.
        "(2) Applicability. - An individual is described in this
      paragraph if the individual - 
          "(A) is providing the services described in subsection (a) to
        an organization described in section 501(c), and exempt from
        tax under section 501(a), of the Internal Revenue Code of 1986,
        and
          "(B) is not otherwise treated as an employee of such
        organization for purposes of subtitle C of such Code (relating
        to employment taxes)."
      [Pub. L. 109-280, title VIII, Sec. 864(b), Aug. 17, 2006, 120
    Stat. 1024, provided that: "The amendment made by this section
    [amending section 530 of Pub. L. 95-600, set out above] shall apply
    to remuneration for services performed after December 31, 2006."]
      [Section 1122(b) of Pub. L. 104-188 provided that:
      ["(1) In general. - The amendment made by this section [amending
    section 530 of Pub. L. 95-600, set out above] shall apply to
    periods after December 31, 1996.
      ["(2) Notice by internal revenue service. - Section 530(e)(1) of
    the Revenue Act of 1978 [Pub. L. 95-600] (as added by subsection
    (a)) shall apply to audits which commence after December 31, 1996.
      ["(3) Burden of proof. - 
        ["(A) In general. - Section 530(e)(4) of the Revenue Act of
      1978 (as added by subsection (a)) shall apply to disputes
      involving periods after December 31, 1996.
        ["(B) No inference. - Nothing in the amendments made by this
      section shall be construed to infer the proper treatment of the
      burden of proof with respect to disputes involving periods before
      January 1, 1997."]
      [Section 1706(b) of Pub. L. 99-514 provided that: "The amendment
    made by this section [amending section 530 of Pub. L. 95-600, set
    out above] shall apply to remuneration paid and services rendered
    after December 31, 1986."]

-FOOTNOTE-
    (!1) So in original. The comma probably should be a semicolon.

               

    (!2) So in original. Probably should be followed by "or".

-End-

-CITE-
    26 USC Sec. 3402                                            01/03/2007

-EXPCITE-
    TITLE 26 - INTERNAL REVENUE CODE
    Subtitle C - Employment Taxes
    CHAPTER 24 - COLLECTION OF INCOME TAX AT SOURCE ON WAGES

-HEAD-
    Sec. 3402. Income tax collected at source

-STATUTE-
    (a) Requirement of withholding
      (1) In general
        Except as otherwise provided in this section, every employer
      making payment of wages shall deduct and withhold upon such wages
      a tax determined in accordance with tables or computational
      procedures prescribed by the Secretary. Any tables or procedures
      prescribed under this paragraph shall - 
          (A) apply with respect to the amount of wages paid during
        such periods as the Secretary may prescribe, and
          (B) be in such form, and provide for such amounts to be
        deducted and withheld, as the Secretary determines to be most
        appropriate to carry out the purposes of this chapter and to
        reflect the provisions of chapter 1 applicable to such periods.
      (2) Amount of wages
        For purposes of applying tables or procedures prescribed under
      paragraph (1), the term "the amount of wages" means the amount by
      which the wages exceed the number of withholding exemptions
      claimed multiplied by the amount of one such exemption. The
      amount of each withholding exemption shall be equal to the amount
      of one personal exemption provided in section 151(b), prorated to
      the payroll period. The maximum number of withholding exemptions
      permitted shall be calculated in accordance with regulations
      prescribed by the Secretary under this section, taking into
      account any reduction in withholding to which an employee is
      entitled under this section.
    (b) Percentage method of withholding
      (1) If wages are paid with respect to a period which is not a
    payroll period, the withholding exemption allowable with respect to
    each payment of such wages shall be the exemption allowed for a
    miscellaneous payroll period containing a number of days (including
    Sundays and holidays) equal to the number of days in the period
    with respect to which such wages are paid.
      (2) In any case in which wages are paid by an employer without
    regard to any payroll period or other period, the withholding
    exemption allowable with respect to each payment of such wages
    shall be the exemption allowed for a miscellaneous payroll period
    containing a number of days equal to the number of days (including
    Sundays and holidays) which have elapsed since the date of the last
    payment of such wages by such employer during the calendar year, or
    the date of commencement of employment with such employer during
    such year, or January 1 of such year, whichever is the later.
      (3) In any case in which the period, or the time described in
    paragraph (2), in respect of any wages is less than one week, the
    Secretary, under regulations prescribed by him, may authorize an
    employer to compute the tax to be deducted and withheld as if the
    aggregate of the wages paid to the employee during the calendar
    week were paid for a weekly payroll period.
      (4) In determining the amount to be deducted and withheld under
    this subsection, the wages may, at the election of the employer, be
    computed to the nearest dollar.
    (c) Wage bracket withholding
      (1) At the election of the employer with respect to any employee,
    the employer shall deduct and withhold upon the wages paid to such
    employee a tax (in lieu of the tax required to be deducted and
    withheld under subsection (a)) determined in accordance with tables
    prescribed by the Secretary in accordance with paragraph (6).
      (2) If wages are paid with respect to a period which is not a
    payroll period, the amount to be deducted and withheld shall be
    that applicable in the case of a miscellaneous payroll period
    containing a number of days (including Sundays and holidays) equal
    to the number of days in the period with respect to which such
    wages are paid.
      (3) In any case in which wages are paid by an employer without
    regard to any payroll period or other period, the amount to be
    deducted and withheld shall be that applicable in the case of a
    miscellaneous payroll period containing a number of days equal to
    the number of days (including Sundays and holidays) which have
    elapsed since the date of the last payment of such wages by such
    employer during the calendar year, or the date of commencement of
    employment with such employer during such year, or January 1 of
    such year, whichever is the later.
      (4) In any case in which the period, or the time described in
    paragraph (3), in respect of any wages is less than one week, the
    Secretary, under regulations prescribed by him, may authorize an
    employer to determine the amount to be deducted and withheld under
    the tables applicable in the case of a weekly payroll period, in
    which case the aggregate of the wages paid to the employee during
    the calendar week shall be considered the weekly wages.
      (5) If the wages exceed the highest wage bracket, in determining
    the amount to be deducted and withheld under this subsection, the
    wages may, at the election of the employer, be computed to the
    nearest dollar.
      (6) In the case of wages paid after December 31, 1969, the amount
    deducted and withheld under paragraph (1) shall be determined in
    accordance with tables prescribed by the Secretary. In the tables
    so prescribed, the amounts set forth as amounts of wages and
    amounts of income tax to be deducted and withheld shall be computed
    on the basis of the table for an annual payroll period prescribed
    pursuant to subsection (a).
    (d) Tax paid by recipient
      If the employer, in violation of the provisions of this chapter,
    fails to deduct and withhold the tax under this chapter, and
    thereafter the tax against which such tax may be credited is paid,
    the tax so required to be deducted and withheld shall not be
    collected from the employer; but this subsection shall in no case
    relieve the employer from liability for any penalties or additions
    to the tax otherwise applicable in respect of such failure to
    deduct and withhold.
    (e) Included and excluded wages
      If the remuneration paid by an employer to an employee for
    services performed during one-half or more of any payroll period of
    not more than 31 consecutive days constitutes wages, all the
    remuneration paid by such employer to such employee for such period
    shall be deemed to be wages; but if the remuneration paid by an
    employer to an employee for services performed during more than one-
    half of any such payroll period does not constitute wages, then
    none of the remuneration paid by such employer to such employee for
    such period shall be deemed to be wages.
    (f) Withholding exemptions
      (1) In general
        An employee receiving wages shall on any day be entitled to the
      following withholding exemptions:
          (A) an exemption for himself unless he is an individual
        described in section 151(d)(2);
          (B) if the employee is married, any exemption to which his
        spouse is entitled, or would be entitled if such spouse were an
        employee receiving wages, under subparagraph (A) or (D), but
        only if such spouse does not have in effect a withholding
        exemption certificate claiming such exemption;
          (C) an exemption for each individual with respect to whom, on
        the basis of facts existing at the beginning of such day, there
        may reasonably be expected to be allowable an exemption under
        section 151(c) for the taxable year under subtitle A in respect
        of which amounts deducted and withheld under this chapter in
        the calendar year in which such day falls are allowed as a
        credit;
          (D) any allowance to which he is entitled under subsection
        (m), but only if his spouse does not have in effect a
        withholding exemption certificate claiming such allowance; and
          (E) a standard deduction allowance which shall be an amount
        equal to one exemption (or more than one exemption if so
        prescribed by the Secretary) unless (i) he is married (as
        determined under section 7703) and his spouse is an employee
        receiving wages subject to withholding or (ii) he has
        withholding exemption certificates in effect with respect to
        more than one employer.

      For purposes of this title, any standard deduction allowance
      under subparagraph (E) shall be treated as if it were denominated
      a withholding exemption.
      (2) Exemption certificates
        (A) On commencement of employment
          On or before the date of the commencement of employment with
        an employer, the employee shall furnish the employer with a
        signed withholding exemption certificate relating to the number
        of withholding exemptions which he claims, which shall in no
        event exceed the number to which he is entitled.
        (B) Change of status
          If, on any day during the calendar year, the number of
        withholding exemptions to which the employee is entitled is
        less than the number of withholding exemptions claimed by the
        employee on the withholding exemption certificate then in
        effect with respect to him, the employee shall within 10 days
        thereafter furnish the employer with a new withholding
        exemption certificate relating to the number of withholding
        exemptions which the employee then claims, which shall in no
        event exceed the number to which he is entitled on such day.
        If, on any day during the calendar year, the number of
        withholding exemptions to which the employee is entitled is
        greater than the number of withholding exemptions claimed, the
        employee may furnish the employer with a new withholding
        exemption certificate relating to the number of withholding
        exemptions which the employee then claims, which shall in no
        event exceed the number to which he is entitled on such day.
        (C) Change of status which affects next calendar year
          If on any day during the calendar year the number of
        withholding exemptions to which the employee will be, or may
        reasonably be expected to be, entitled at the beginning of his
        next taxable year under subtitle A is different from the number
        to which the employee is entitled on such day, the employee
        shall, in such cases and at such times as the Secretary may by
        regulations prescribe, furnish the employer with a withholding
        exemption certificate relating to the number of withholding
        exemptions which he claims with respect to such next taxable
        year, which shall in no event exceed the number to which he
        will be, or may reasonably be expected to be, so entitled.
      (3) When certificate takes effect
        (A) First certificate furnished
          A withholding exemption certificate furnished the employer in
        cases in which no previous such certificate is in effect shall
        take effect as of the beginning of the first payroll period
        ending, or the first payment of wages made without regard to a
        payroll period, on or after the date on which such certificate
        is so furnished.
        (B) Furnished to take place of existing certificate
          (i) In general
            Except as provided in clauses (ii) and (iii), a withholding
          exemption certificate furnished to the employer in cases in
          which a previous such certificate is in effect shall take
          effect as of the beginning of the 1st payroll period ending
          (or the 1st payment of wages made without regard to a payroll
          period) on or after the 30th day after the day on which such
          certificate is so furnished.
          (ii) Employer may elect earlier effective date
            At the election of the employer, a certificate described in
          clause (i) may be made effective beginning with any payment
          of wages made on or after the day on which the certificate is
          so furnished and before the 30th day referred to in clause
          (i).
          (iii) Change of status which affects next year
            Any certificate furnished pursuant to paragraph (2)(C)
          shall not take effect, and may not be made effective, with
          respect to any payment of wages made in the calendar year in
          which the certificate is furnished.
      (4) Period during which certificate remains in effect
        A withholding exemption certificate which takes effect under
      this subsection, or which on December 31, 1954, was in effect
      under the corresponding subsection of prior law, shall continue
      in effect with respect to the employer until another such
      certificate takes effect under this subsection.
      (5) Form and contents of certificate
        Withholding exemption certificates shall be in such form and
      contain such information as the Secretary may by regulations
      prescribe.
      (6) Exemption of certain nonresident aliens
        Notwithstanding the provisions of paragraph (1), a nonresident
      alien individual (other than an individual described in section
      3401(a)(6)(A) or (B)) shall be entitled to only one withholding
      exemption.
      (7) Exemption where certificate with another employer is in
        effect
        If a withholding exemption certificate is in effect with
      respect to one employer, an employee shall not be entitled under
      a certificate in effect with any other employer to any
      withholding exemption which he has claimed under such first
      certificate.
    (g) Overlapping pay periods, and payment by agent or fiduciary
      If a payment of wages is made to an employee by an employer - 
        (1) with respect to a payroll period or other period, any part
      of which is included in a payroll period or other period with
      respect to which wages are also paid to such employee by such
      employer, or
        (2) without regard to any payroll period or other period, but
      on or prior to the expiration of a payroll period or other period
      with respect to which wages are also paid to such employee by
      such employer, or
        (3) with respect to a period beginning in one and ending in
      another calendar year, or
        (4) through an agent, fiduciary, or other person who also has
      the control, receipt, custody, or disposal of, or pays, the wages
      payable by another employer to such employee,

    the manner of withholding and the amount to be deducted and
    withheld under this chapter shall be determined in accordance with
    regulations prescribed by the Secretary under which the withholding
    exemption allowed to the employee in any calendar year shall
    approximate the withholding exemption allowable with respect to an
    annual payroll period.
    (h) Alternative methods of computing amount to be withheld
      The Secretary may, under regulations prescribed by him, authorize
    - 
      (1) Withholding on basis of average wages
        An employer - 
          (A) to estimate the wages which will be paid to any employee
        in any quarter of the calendar year,
          (B) to determine the amount to be deducted and withheld upon
        each payment of wages to such employee during such quarter as
        if the appropriate average of the wages so estimated
        constituted the actual wages paid, and
          (C) to deduct and withhold upon any payment of wages to such
        employee during such quarter (and, in the case of tips referred
        to in subsection (k), within 30 days thereafter) such amount as
        may be necessary to adjust the amount actually deducted and
        withheld upon the wages of such employee during such quarter to
        the amount required to be deducted and withheld during such
        quarter without regard to this subsection.
      (2) Withholding on basis of annualized wages
        An employer to determine the amount of tax to be deducted and
      withheld upon a payment of wages to an employee for a payroll
      period by - 
          (A) multiplying the amount of an employee's wages for a
        payroll period by the number of such payroll periods in the
        calendar year,
          (B) determining the amount of tax which would be required to
        be deducted and withheld upon the amount determined under
        subparagraph (A) if such amount constituted the actual wages
        for the calendar year and the payroll period of the employee
        were an annual payroll period, and
          (C) dividing the amount of tax determined under subparagraph
        (B) by the number of payroll periods (described in subparagraph
        (A)) in the calendar year.
      (3) Withholding on basis of cumulative wages
        An employer, in the case of any employee who requests to have
      the amount of tax to be withheld from his wages computed on the
      basis of his cumulative wages, to - 
          (A) add the amount of the wages to be paid to the employee
        for the payroll period to the total amount of wages paid by the
        employer to the employee during the calendar year,
          (B) divide the aggregate amount of wages computed under
        subparagraph (A) by the number of payroll periods to which such
        aggregate amount of wages relates,
          (C) compute the total amount of tax that would have been
        required to be deducted and withheld under subsection (a) if
        the average amount of wages (as computed under subparagraph
        (B)) had been paid to the employee for the number of payroll
        periods to which the aggregate amount of wages (computed under
        subparagraph (A)) relates,
          (D) determine the excess, if any, of the amount of tax
        computed under subparagraph (C) over the total amount of tax
        deducted and withheld by the employer from wages paid to the
        employee during the calendar year, and
          (E) deduct and withhold upon the payment of wages (referred
        to in subparagraph (A)) to the employee an amount equal to the
        excess (if any) computed under subparagraph (D).
      (4) Other methods
        An employer to determine the amount of tax to be deducted and
      withheld upon the wages paid to an employee by any other method
      which will require the employer to deduct and withhold upon such
      wages substantially the same amount as would be required to be
      deducted and withheld by applying subsection (a) or (c), either
      with respect to a payroll period or with respect to the entire
      taxable year.
    (i) Changes in withholding
      (1) In general
        The Secretary may by regulations provide for increases in the
      amount of withholding otherwise required under this section in
      cases where the employee requests such changes.
      (2) Treatment as tax
        Any increased withholding under paragraph (1) shall for all
      purposes be considered tax required to be deducted and withheld
      under this chapter.
    (j) Noncash remuneration to retail commission salesman
      In the case of remuneration paid in any medium other than cash
    for services performed by an individual as a retail salesman for a
    person, where the service performed by such individual for such
    person is ordinarily performed for remuneration solely by way of
    cash commission an employer shall not be required to deduct or
    withhold any tax under this subchapter with respect to such
    remuneration, provided that such employer files with the Secretary
    such information with respect to such remuneration as the Secretary
    may by regulation prescribe.
    (k) Tips
      In the case of tips which constitute wages, subsection (a) shall
    be applicable only to such tips as are included in a written
    statement furnished to the employer pursuant to section 6053(a),
    and only to the extent that the tax can be deducted and withheld by
    the employer, at or after the time such statement is so furnished
    and before the close of the calendar year in which such statement
    is furnished, from such wages of the employee (excluding tips, but
    including funds turned over by the employee to the employer for the
    purpose of such deduction and withholding) as are under the control
    of the employer; and an employer who is furnished by an employee a
    written statement of tips (received in a calendar month) pursuant
    to section 6053(a) to which paragraph (16)(B) of section 3401(a) is
    applicable may deduct and withhold the tax with respect to such
    tips from any wages of the employee (excluding tips) under his
    control, even though at the time such statement is furnished the
    total amount of the tips included in statements furnished to the
    employer as having been received by the employee in such calendar
    month in the course of his employment by such employer is less than
    $20. Such tax shall not at any time be deducted and withheld in an
    amount which exceeds the aggregate of such wages and funds
    (including funds turned over under section 3102(c)(2) or section
    3202(c)(2)) minus any tax required by section 3102(a) or section
    3202(a) to be collected from such wages and funds.
    (l) Determination and disclosure of marital status
      (1) Determination of status by employer
        For purposes of applying the tables in subsections (a) and (c)
      to a payment of wages, the employer shall treat the employee as a
      single person unless there is in effect with respect to such
      payment of wages a withholding exemption certificate furnished to
      the employer by the employee after the date of the enactment of
      this subsection indicating that the employee is married.
      (2) Disclosure of status by employee
        An employee shall be entitled to furnish the employer with a
      withholding exemption certificate indicating he is married only
      if, on the day of such furnishing, he is married (determined with
      the application of the rules in paragraph (3)). An employee whose
      marital status changes from married to single shall, at such time
      as the Secretary may by regulations prescribe, furnish the
      employer with a new withholding exemption certificate.
      (3) Determination of marital status
        For purposes of paragraph (2), an employee shall on any day be
      considered - 
          (A) as not married, if (i) he is legally separated from his
        spouse under a decree of divorce or separate maintenance, or
        (ii) either he or his spouse is, or on any preceding day within
        the calendar year was, a nonresident alien; or
          (B) as married, if (i) his spouse (other than a spouse
        referred to in subparagraph (A)) died within the portion of his
        taxable year which precedes such day, or (ii) his spouse died
        during one of the two taxable years immediately preceding the
        current taxable year and, on the basis of facts existing at the
        beginning of such day, the employee reasonably expects, at the
        close of his taxable year, to be a surviving spouse (as defined
        in section 2(a)).
    (m) Withholding allowances
      Under regulations prescribed by the Secretary, an employee shall
    be entitled to additional withholding allowances or additional
    reductions in withholding under this subsection. In determining the
    number of additional withholding allowances or the amount of
    additional reductions in withholding under this subsection, the
    employee may take into account (to the extent and in the manner
    provided by such regulations) - 
        (1) estimated itemized deductions allowable under chapter 1
      (other than the deductions referred to in section 151 and other
      than the deductions required to be taken into account in
      determining adjusted gross income under section 62(a) (other than
      paragraph (10) thereof)),
        (2) estimated tax credits allowable under chapter 1, and
        (3) such additional deductions (including the additional
      standard deduction under section 63(c)(3) for the aged and blind)
      and other items as may be specified by the Secretary in
      regulations.
    (n) Employees incurring no income tax liability
      Notwithstanding any other provision of this section, an employer
    shall not be required to deduct and withhold any tax under this
    chapter upon a payment of wages to an employee if there is in
    effect with respect to such payment a withholding exemption
    certificate (in such form and containing such other information as
    the Secretary may prescribe) furnished to the employer by the
    employee certifying that the employee - 
        (1) incurred no liability for income tax imposed under subtitle
      A for his preceding taxable year, and
        (2) anticipates that he will incur no liability for income tax
      imposed under subtitle A for his current taxable year.

    The Secretary shall by regulations provide for the coordination of
    the provisions of this subsection with the provisions of subsection
    (f).
    (o) Extension of withholding to certain payments other than wages
      (1) General rule
        For purposes of this chapter (and so much of subtitle F as
      relates to this chapter) - 
          (A) any supplemental unemployment compensation benefit paid
        to an individual,
          (B) any payment of an annuity to an individual, if at the
        time the payment is made a request that such annuity be subject
        to withholding under this chapter is in effect, and
          (C) any payment to an individual of sick pay which does not
        constitute wages (determined without regard to this
        subsection), if at the time the payment is made a request that
        such sick pay be subject to withholding under this chapter is
        in effect,

      shall be treated as if it were a payment of wages by an employer
      to an employee for a payroll period.
      (2) Definitions
        (A) Supplemental unemployment compensation benefits
          For purposes of paragraph (1), the term "supplemental
        unemployment compensation benefits" means amounts which are
        paid to an employee, pursuant to a plan to which the employer
        is a party, because of an employee's involuntary separation
        from employment (whether or not such separation is temporary),
        resulting directly from a reduction in force, the
        discontinuance of a plant or operation, or other similar
        conditions, but only to the extent such benefits are includible
        in the employee's gross income.
        (B) Annuity
          For purposes of this subsection, the term "annuity" means any
        amount paid to an individual as a pension or annuity.
        (C) Sick pay
          For purposes of this subsection, the term "sick pay" means
        any amount which - 
            (i) is paid to an employee pursuant to a plan to which the
          employer is a party, and
            (ii) constitutes remuneration or a payment in lieu of
          remuneration for any period during which the employee is
          temporarily absent from work on account of sickness or
          personal injuries.
      (3) Amount withheld from annuity payments or sick pay
        If a payee makes a request that an annuity or any sick pay be
      subject to withholding under this chapter, the amount to be
      deducted and withheld under this chapter from any payment to
      which such request applies shall be an amount (not less than a
      minimum amount determined under regulations prescribed by the
      Secretary) specified by the payee in such request. The amount
      deducted and withheld with respect to a payment which is greater
      or less than a full payment shall bear the same relation to the
      specified amount as such payment bears to a full payment.
      (4) Request for withholding
        A request that an annuity or any sick pay be subject to
      withholding under this chapter - 
          (A) shall be made by the payee in writing to the person
        making the payments and shall contain the social security
        number of the payee,
          (B) shall specify the amount to be deducted and withheld from
        each full payment, and
          (C) shall take effect - 
            (i) in the case of sick pay, with respect to payments made
          more than 7 days after the date on which such request is
          furnished to the payor, or
            (ii) in the case of an annuity, at such time (after the
          date on which such request is furnished to the payor) as the
          Secretary shall by regulations prescribe.

      Such a request may be changed or terminated by furnishing to the
      person making the payments a written statement of change or
      termination which shall take effect in the same manner as
      provided in subparagraph (C). At the election of the payor, any
      such request (or statement of change or revocation) may take
      effect earlier than as provided in subparagraph (C).
      (5) Special rule for sick pay paid pursuant to certain collective-
        bargaining agreements
        In the case of any sick pay paid pursuant to a collective-
      bargaining agreement between employee representatives and one or
      more employers which contains a provision specifying that this
      paragraph is to apply to sick pay paid pursuant to such agreement
      and contains a provision for determining the amount to be
      deducted and withheld from each payment of such sick pay - 
          (A) the requirement of paragraph (1)(C) that a request for
        withholding be in effect shall not apply, and
          (B) except as provided in subsection (n), the amounts to be
        deducted and withheld under this chapter shall be determined in
        accordance with such agreement.

      The preceding sentence shall not apply with respect to sick pay
      paid pursuant to any agreement to any individual unless the
      social security number of such individual is furnished to the
      payor and the payor is furnished with such information as is
      necessary to determine whether the payment is pursuant to the
      agreement and to determine the amount to be deducted and
      withheld.
      (6) Coordination with withholding on designated distributions
        under section 3405
        This subsection shall not apply to any amount which is a
      designated distribution (within the meaning of section
      3405(e)(1)).
    (p) Voluntary withholding agreements
      (1) Certain Federal payments
        (A) In general
          If, at the time a specified Federal payment is made to any
        person, a request by such person is in effect that such payment
        be subject to withholding under this chapter, then for purposes
        of this chapter and so much of subtitle F as relates to this
        chapter, such payment shall be treated as if it were a payment
        of wages by an employer to an employee.
        (B) Amount withheld
          The amount to be deducted and withheld under this chapter
        from any payment to which any request under subparagraph (A)
        applies shall be an amount equal to the percentage of such
        payment specified in such request. Such a request shall apply
        to any payment only if the percentage specified is 7 percent,
        any percentage applicable to any of the 3 lowest income
        brackets in the table under section 1(c), or such other
        percentage as is permitted under regulations prescribed by the
        Secretary.
        (C) Specified Federal payments
          For purposes of this paragraph, the term "specified Federal
        payment" means - 
            (i) any payment of a social security benefit (as defined in
          section 86(d)),
            (ii) any payment referred to in the second sentence of
          section 451(d) which is treated as insurance proceeds,
            (iii) any amount which is includible in gross income under
          section 77(a), and
            (iv) any other payment made pursuant to Federal law which
          is specified by the Secretary for purposes of this paragraph.
        (D) Requests for withholding
          Rules similar to the rules that apply to annuities under
        subsection (o)(4) shall apply to requests under this paragraph
        and paragraph (2).
      (2) Voluntary withholding on unemployment benefits
        If, at the time a payment of unemployment compensation (as
      defined in section 85(b)) is made to any person, a request by
      such person is in effect that such payment be subject to
      withholding under this chapter, then for purposes of this chapter
      and so much of subtitle F as relates to this chapter, such
      payment shall be treated as if it were a payment of wages by an
      employer to an employee. The amount to be deducted and withheld
      under this chapter from any payment to which any request under
      this paragraph applies shall be an amount equal to 10 percent of
      such payment.
      (3) Authority for other voluntary withholding
        The Secretary is authorized by regulations to provide for
      withholding - 
          (A) from remuneration for services performed by an employee
        for the employee's employer which (without regard to this
        paragraph) does not constitute wages, and
          (B) from any other type of payment with respect to which the
        Secretary finds that withholding would be appropriate under the
        provisions of this chapter,

      if the employer and employee, or the person making and the person
      receiving such other type of payment, agree to such withholding.
      Such agreement shall be in such form and manner as the Secretary
      may by regulations prescribe. For purposes of this chapter (and
      so much of subtitle F as relates to this chapter), remuneration
      or other payments with respect to which such agreement is made
      shall be treated as if they were wages paid by an employer to an
      employee to the extent that such remuneration is paid or other
      payments are made during the period for which the agreement is in
      effect.
    (q) Extension of withholding to certain gambling winnings
      (1) General rule
        Every person, including the Government of the United States, a
      State, or a political subdivision thereof, or any
      instrumentalities of the foregoing, making any payment of
      winnings which are subject to withholding shall deduct and
      withhold from such payment a tax in an amount equal to the
      product of the third lowest rate of tax applicable under section
      1(c) and such payment.
      (2) Exemption where tax otherwise withheld
        In the case of any payment of winnings which are subject to
      withholding made to a nonresident alien individual or a foreign
      corporation, the tax imposed under paragraph (1) shall not apply
      to any such payment subject to tax under section 1441(a)
      (relating to withholding on nonresident aliens) or tax under
      section 1442(a) (relating to withholding on foreign
      corporations).
      (3) Winnings which are subject to withholding
        For purposes of this subsection, the term "winnings which are
      subject to withholding" means proceeds from a wager determined in
      accordance with the following:
        (A) In general
          Except as provided in subparagraphs (B) and (C), proceeds of
        more than $5,000 from a wagering transaction, if the amount of
        such proceeds is at least 300 times as large as the amount
        wagered.
        (B) State-conducted lotteries
          Proceeds of more than $5,000 from a wager placed in a lottery
        conducted by an agency of a State acting under authority of
        State law, but only if such wager is placed with the State
        agency conducting such lottery, or with its authorized
        employees or agents.
        (C) Sweepstakes, wagering pools, certain parimutuel pools, jai
          alai, and lotteries
          Proceeds of more than $5,000 from - 
            (i) a wager placed in a sweepstakes, wagering pool, or
          lottery (other than a wager described in subparagraph (B)),
          or
            (ii) a wagering transaction in a parimutuel pool with
          respect to horse races, dog races, or jai alai if the amount
          of such proceeds is at least 300 times as large as the amount
          wagered.
      (4) Rules for determining proceeds from a wager
        For purposes of this subsection - 
          (A) proceeds from a wager shall be determined by reducing the
        amount received by the amount of the wager, and
          (B) proceeds which are not money shall be taken into account
        at their fair market value.
      (5) Exception for bingo, keno, and slot machines
        The tax imposed under paragraph (1) shall not apply to winnings
      from a slot machine, keno, and bingo.
      (6) Statement by recipient
        Every person who is to receive a payment of winnings which are
      subject to withholding shall furnish the person making such
      payment a statement, made under the penalties of perjury,
      containing the name, address, and taxpayer identification number
      of the person receiving the payment and of each person entitled
      to any portion of such payment.
      (7) Coordination with other sections
        For purposes of sections 3403 and 3404 and for purposes of so
      much of subtitle F (except section 7205) as relates to this
      chapter, payments to any person of winnings which are subject to
      withholding shall be treated as if they were wages paid by an
      employer to an employee.
    (r) Extension of withholding to certain taxable payments of Indian
      casino profits
      (1) In general
        Every person, including an Indian tribe, making a payment to a
      member of an Indian tribe from the net revenues of any class II
      or class III gaming activity conducted or licensed by such tribe
      shall deduct and withhold from such payment a tax in an amount
      equal to such payment's proportionate share of the annualized
      tax.
      (2) Exception
        The tax imposed by paragraph (1) shall not apply to any payment
      to the extent that the payment, when annualized, does not exceed
      an amount equal to the sum of - 
          (A) the basic standard deduction (as defined in section
        63(c)) for an individual to whom section 63(c)(2)(C) (!1)
        applies, and

          (B) the exemption amount (as defined in section 151(d)).
      (3) Annualized tax
        For purposes of paragraph (1), the term "annualized tax" means,
      with respect to any payment, the amount of tax which would be
      imposed by section 1(c) (determined without regard to any rate of
      tax in excess of the fourth lowest rate of tax applicable under
      section 1(c)) on an amount of taxable income equal to the excess
      of - 
          (A) the annualized amount of such payment, over
          (B) the amount determined under paragraph (2).
      (4) Classes of gaming activities, etc.
        For purposes of this subsection, terms used in paragraph (1)
      which are defined in section 4 of the Indian Gaming Regulatory
      Act (25 U.S.C. 2701 et seq.), as in effect on the date of the
      enactment of this subsection, shall have the respective meanings
      given such terms by such section.
      (5) Annualization
        Payments shall be placed on an annualized basis under
      regulations prescribed by the Secretary.
      (6) Alternate withholding procedures
        At the election of an Indian tribe, the tax imposed by this
      subsection on any payment made by such tribe shall be determined
      in accordance with such tables or computational procedures as may
      be specified in regulations prescribed by the Secretary (in lieu
      of in accordance with paragraphs (2) and (3)).
      (7) Coordination with other sections
        For purposes of this chapter and so much of subtitle F as
      relates to this chapter, payments to any person which are subject
      to withholding under this subsection shall be treated as if they
      were wages paid by an employer to an employee.
    (s) Exemption from withholding for any vehicle fringe benefit
      (1) Employer election not to withhold
        The employer may elect not to deduct and withhold any tax under
      this chapter with respect to any vehicle fringe benefit provided
      to any employee if such employee is notified by the employer of
      such election (at such time and in such manner as the Secretary
      shall by regulations prescribe). The preceding sentence shall not
      apply to any vehicle fringe benefit unless the amount of such
      benefit is included by the employer on a statement timely
      furnished under section 6051.
      (2) Employer must furnish W-2
        Any vehicle fringe benefit shall be treated as wages from which
      amounts are required to be deducted and withheld under this
      chapter for purposes of section 6051.
      (3) Vehicle fringe benefit
        For purposes of this subsection, the term "vehicle fringe
      benefit" means any fringe benefit - 
          (A) which constitutes wages (as defined in section 3401), and
          (B) which consists of providing a highway motor vehicle for
        the use of the employee.
    (t) Extension of withholding to certain payments made by Government
      entities
      (1) General rule
        The Government of the United States, every State, every
      political subdivision thereof, and every instrumentality of the
      foregoing (including multi-State agencies) making any payment to
      any person providing any property or services (including any
      payment made in connection with a government voucher or
      certificate program which functions as a payment for property or
      services) shall deduct and withhold from such payment a tax in an
      amount equal to 3 percent of such payment.
      (2) Property and services subject to withholding
        Paragraph (1) shall not apply to any payment - 
          (A) except as provided in subparagraph (B), which is subject
        to withholding under any other provision of this chapter or
        chapter 3,
          (B) which is subject to withholding under section 3406 and
        from which amounts are being withheld under such section,
          (C) of interest,
          (D) for real property,
          (E) to any governmental entity subject to the requirements of
        paragraph (1), any tax-exempt entity, or any foreign
        government,
          (F) made pursuant to a classified or confidential contract
        described in section 6050M(e)(3),
          (G) made by a political subdivision of a State (or any
        instrumentality thereof) which makes less than $100,000,000 of
        such payments annually,
          (H) which is in connection with a public assistance or public
        welfare program for which eligibility is determined by a needs
        or income test, and
          (I) to any government employee not otherwise excludable with
        respect to their services as an employee.
      (3) Coordination with other sections
        For purposes of sections 3403 and 3404 and for purposes of so
      much of subtitle F (except section 7205) as relates to this
      chapter, payments to any person for property or services which
      are subject to withholding shall be treated as if such payments
      were wages paid by an employer to an employee.

-SOURCE-
    (Aug. 16, 1954, ch. 736, 68A Stat. 457; Aug. 9, 1955, ch. 666, Sec.
    2, 69 Stat. 605; Pub. L. 87-256, Sec. 110(g)(2), Sept. 21, 1961, 75
    Stat. 537; Pub. L. 88-272, title III, Sec. 302(a), (b), Feb. 26,
    1964, 78 Stat. 140; Pub. L. 89-97, title III, Sec. 313(d)(3)-(5),
    July 30, 1965, 79 Stat. 384; Pub. L. 89-212, Sec. 2(c), Sept. 29,
    1965, 79 Stat. 859; Pub. L. 89-368, title I, Sec. 101(a)-(e)(3),
    Mar. 15, 1966, 80 Stat. 38-61; Pub. L. 90-364, title I, Sec.
    102(c), June 28, 1968, 82 Stat. 256; Pub. L. 91-36, Sec. 2(a), June
    30, 1969, 83 Stat. 42; Pub. L. 91-53, Sec. 6(a), Aug. 7, 1969, 83
    Stat. 96; Pub. L. 91-172, title VIII, Sec. 805(a)-(e), (f)(1), (g),
    Dec. 30, 1969, 83 Stat. 686, 704-708; Pub. L. 92-178, title II,
    Sec. 208(a), (b)(1), (c)-(h)(1), Dec. 10, 1971, 85 Stat. 512-517;
    Pub. L. 94-12, title II, Secs. 202(b), 205, Mar. 29, 1975, 89 Stat.
    29, 32; Pub. L. 94-164, Secs. 2(b)(2), 5(a)(1), Dec. 23, 1975, 89
    Stat. 971, 975; Pub. L. 94-331, Sec. 3(a)(1), June 30, 1976, 90
    Stat. 782; Pub. L. 94-396, Sec. 2(a)(1), Sept. 3, 1976, 90 Stat.
    1201; Pub. L. 94-414, Sec. 3(a)(1), Sept. 17, 1976, 90 Stat. 1273;
    Pub. L. 94-455, title IV, Sec. 401(d), title V, Secs. 502(b),
    504(c)(3), title XII, Sec. 1207(d), title XIX, Secs. 1903(a)(17),
    1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1557, 1559, 1566, 1705,
    1810, 1834; Pub. L. 95-30, title I, Sec. 105, title IV, Sec.
    405(a), May 23, 1977, 91 Stat. 140, 156; Pub. L. 95-600, title I,
    Secs. 101(e), 102(c), title VI, Sec. 601(b)(2), Nov. 6, 1978, 92
    Stat. 2770, 2771, 2896; Pub. L. 96-601, Sec. 4(a)-(d), Dec. 24,
    1980, 94 Stat. 3496, 3497; Pub. L. 97-34, title I, Sec. 101(e),
    Aug. 13, 1981, 95 Stat. 184; Pub. L. 97-248, title III, Secs.
    317(a), 334(d), Sept. 3, 1982, 96 Stat. 607, 627; Pub. L. 98-67,
    title I, Sec. 104(d)(3), Aug. 5, 1983, 97 Stat. 380; Pub. L. 99-44,
    Sec. 3, May 24, 1985, 99 Stat. 77; Pub. L. 99-514, title I, Sec.
    104(b)(15), title XIII, Secs. 1301(j)(8), 1303(b)(4), title XV,
    Sec. 1581(b), Oct. 22, 1986, 100 Stat. 2106, 2658, 2766; Pub. L.
    100-203, title X, Sec. 10302(a), Dec. 22, 1987, 101 Stat. 1330-429;
    Pub. L. 100-647, title I, Sec. 1003(a)(2), Nov. 10, 1988, 102 Stat.
    3382; Pub. L. 101-508, title XI, Sec. 11801(a)(41), Nov. 5, 1990,
    104 Stat. 1388-521; Pub. L. 102-318, title V, Sec. 522(b)(2)(D),
    July 3, 1992, 106 Stat. 314; Pub. L. 102-486, title XIX, Secs.
    1934(a), 1942(a), Oct. 24, 1992, 106 Stat. 3031, 3036; Pub. L. 103-
    465, title VII, Secs. 701(a), 702(a), Dec. 8, 1994, 108 Stat.
    4995, 4996; Pub. L. 107-16, title I, Sec. 101(c)(6)-(9), June 7,
    2001, 115 Stat. 43, 44; Pub. L. 109-222, title V, Sec. 511(a), May
    17, 2006, 120 Stat. 364.)

-STATAMEND-
                           AMENDMENT OF SECTION                       
      For termination of amendment by section 901 of Pub. L. 107-16,
    see Effective and Termination Dates of 2001 Amendment note below.

-REFTEXT-
                            REFERENCES IN TEXT                        
      The date of the enactment of this subsection, referred to in
    subsec. (l)(1), is the date of enactment of Pub. L. 89-368, which
    was approved Mar. 15, 1966.
      Section 63(c)(2)(C), referred to in subsec. (r)(2)(A), was
    redesignated section 63(c)(2)(D), and a new section 63(c)(2)(C) was
    added, by Pub. L. 107-147, title IV, Sec. 411(e)(1)(C), (D), Mar.
    9, 2002, 116 Stat. 46.
      Section 4 of the Indian Gaming Regulatory Act, referred to in
    subsec. (r)(4), is classified to section 2703 of Title 25, Indians.
      The date of the enactment of this subsection, referred to in
    subsec. (r)(4), is the date of enactment of Pub. L. 103-465, which
    was approved Dec. 8, 1994.

-MISC1-
                                AMENDMENTS                            
      2006 - Subsec. (t). Pub. L. 109-222 added subsec. (t).
      2001 - Subsec. (p)(1)(B). Pub. L. 107-16, Secs. 101(c)(6), 901,
    temporarily substituted "7 percent, any percentage applicable to
    any of the 3 lowest income brackets in the table under section
    1(c)," for "7, 15, 28, or 31 percent". See Effective and
    Termination Dates of 2001 Amendment note below.
      Subsec. (p)(2). Pub. L. 107-16, Secs. 101(c)(7), 901, temporarily
    substituted "10 percent" for "15 percent". See Effective and
    Termination Dates of 2001 Amendment note below.
      Subsec. (q)(1). Pub. L. 107-16, Secs. 101(c)(8), 901, temporarily
    substituted "equal to the product of the third lowest rate of tax
    applicable under section 1(c) and such payment" for "equal to 28
    percent of such payment". See Effective and Termination Dates of
    2001 Amendment note below.
      Subsec. (r)(3). Pub. L. 107-16, Secs. 101(c)(9), 901, temporarily
    substituted "the fourth lowest rate of tax applicable under section
    1(c)" for "31 percent" in introductory provisions. See Effective
    and Termination Dates of 2001 Amendment note below.
      1994 - Subsec. (p). Pub. L. 103-465, Sec. 702(a), reenacted
    heading without change and amended text of subsec. (p) generally.
    Prior to amendment, text read as follows: "The Secretary is
    authorized by regulations to provide for withholding - 
        "(1) from remuneration for services performed by an employee
      for his employer which (without regard to this subsection) does
      not constitute wages, and
        "(2) from any other type of payment with respect to which the
      Secretary finds that withholding would be appropriate under the
      provisions of this chapter,
    if the employer and the employee, or in the case of any other type
    of payment the person making and the person receiving the payment,
    agree to such withholding. Such agreement shall be made in such
    form and manner as the Secretary may by regulations provide. For
    purposes of this chapter (and so much of subtitle F as relates to
    this chapter) remuneration or other payments with respect to which
    such agreement is made shall be treated as if they were wages paid
    by an employer to an employee to the extent that such remuneration
    is paid or other payments are made during the period for which the
    agreement is in effect."
      Subsec. (r). Pub. L. 103-465, Sec. 701(a), added subsec. (r).
      1992 - Subsec. (o)(6). Pub. L. 102-318 substituted "3405(e)(1)"
    for "3405(d)(1)".
      Subsec. (q)(1). Pub. L. 102-486, Sec. 1934(a), substituted "28
    percent" for "20 percent".
      Subsec. (q)(3)(A), (C). Pub. L. 102-486, Sec. 1942(a),
    substituted "$5,000" for "$1,000".
      1990 - Subsec. (a)(3). Pub. L. 101-508 struck out par. (3) which
    read as follows: "Notwithstanding the provisions of this
    subsection, the Secretary shall modify the tables and procedures
    under paragraph (1) to reflect - 
        "(A) the amendments made by section 101(b) of the Economic
      Recovery Tax Act of 1981, and such modification shall take effect
      on October 1, 1981, as if such amendments made a 5-percent
      reduction effective on such date, and
        "(B) the amendments made by section 101(a) of such Act, and
      such modifications shall take effect - 
          "(i) on July 1, 1982, as if the reductions in the rate of tax
        under section 1 (as amended by such section) were attributable
        to a 10-percent reduction effective on such date, and
          "(ii) on July 1, 1983, as if such reductions were
        attributable to a 10-percent reduction effective on such date."
      1988 - Subsec. (m)(1). Pub. L. 100-647 substituted "section 62(a)
    (other than paragraph (10) thereof))" for "section 62) (other than
    paragraph (13) thereof)".
      1987 - Subsec. (f)(3)(B). Pub. L. 100-203 amended subpar. (B)
    generally. Prior to amendment, subpar. (B) read as follows: "A
    withholding exemption certificate furnished the employer in cases
    in which a previous such certificate is in effect shall take effect
    with respect to the first payment of wages made on or after the
    first status determination date which occurs at least 30 days from
    the date on which such certificate is so furnished, except that at
    the election of the employer such certificate may be made effective
    with respect to any payment of wages made on or after the date on
    which such certificate is so furnished; but a certificate furnished
    pursuant to paragraph (2)(C) shall not take effect, and may not be
    made effective, with respect to any payment of wages made in the
    calendar year in which the certificate is furnished. For purposes
    of this subparagraph the term 'status determination date' means
    January 1, May 1, July 1, and October 1 of each year."
      1986 - Subsec. (f)(1). Pub. L. 99-514, Sec. 104(b)(15)(F),
    substituted "standard deduction" for "zero bracket" and
    "subparagraph (E)" for "subparagraph (G)" in last sentence.
      Subsec. (f)(1)(A). Pub. L. 99-514, Sec. 104(b)(15)(B), inserted
    "unless he is an individual described in section 151(d)(2)" after
    "himself".
      Subsec. (f)(1)(B). Pub. L. 99-514, Sec. 104(b)(15)(A),
    redesignated subpar. (D) as (B) and struck out former subpar. (B)
    which read as follows: "one additional exemption for himself if, on
    the basis of facts existing at the beginning of such day, there may
    reasonably be expected to be allowable an exemption under section
    151(c)(1) (relating to old age) for the taxable year under subtitle
    A in respect of which amounts deducted and withheld under this
    chapter in the calendar year in which such day falls are allowed as
    a credit;".
      Pub. L. 99-514, Sec. 104(b)(15)(C), which directed that
    "subparagraph (A) or (D)" be substituted for "subparagraph (A),
    (B), (C), or (F)" was executed by making the substitution for
    "subparagraph (A), (B), or (C)", as the probable intent of
    Congress.
      Subsec. (f)(1)(C). Pub. L. 99-514, Sec. 104(b)(15)(A), (D),
    redesignated subpar. (E) as (C), substituted "section 151(c)" for
    "section 151(e)", and struck out former subpar. (C) which read as
    follows: "one additional exemption for himself if, on the basis of
    facts existing at the beginning of such day, there may reasonably
    be expected to be allowable an exemption under section 151(d)(1)
    (relating to the blind) for the taxable year under subtitle A in
    respect of which amounts deducted and withheld under this chapter
    in the calendar year in which such day falls are allowed as a
    credit;".
      Subsec. (f)(1)(D). Pub. L. 99-514, Sec. 104(b)(15)(A),
    redesignated subpar. (F) as (D). Former subpar. (D) redesignated
    (B).
      Subsec. (f)(1)(E). Pub. L. 99-514, Sec. 104(b)(15)(A), (E),
    redesignated subpar. (G) as (E) and substituted "standard
    deduction" for "zero bracket". Former subpar. (E) redesignated (C).
      Pub. L. 99-514, Sec. 1301(j)(8), substituted "section 7703" for
    "section 143".
      Subsec. (f)(1)(F), (G). Pub. L. 99-514, Sec. 104(b)(15)(A),
    redesignated subpars. (F) and (G) as (D) and (E), respectively.
      Subsec. (i)(1). Pub. L. 99-514, Sec. 1581(b), struck out "or
    decreases" after "increases".
      Subsec. (m)(3). Pub. L. 99-514, Sec. 104(b)(15)(G), inserted
    "(including the additional standard deduction under section
    63(c)(3) for the aged and blind)".
      Subsec. (r). Pub. L. 99-514, Sec. 1303(b)(4), struck out subsec.
    (r) which provided for extension of withholding to GSOC
    distributions.
      1985 - Subsec. (s). Pub. L. 99-44 added subsec. (s).
      1983 - Subsec. (s). Pub. L. 98-67 struck out subsec. (s) which
    related to extension of withholding to certain payments where
    identifying number was not furnished or was inaccurate. See section
    3406 of this title.
      1982 - Subsec. (o)(6). Pub. L. 97-248, Sec. 334(d), added par.
    (6).
      Subsec. (s). Pub. L. 97-248, Sec. 317(a), added subsec. (s).
      1981 - Subsec. (a). Pub. L. 97-34, Sec. 101(e)(1), revised
    subsec. (a) generally to provide for a 5-percent reduction in
    income tax withholding rates on Oct. 1, 1981, a further 10-percent
    reduction on July 1, 1982, and a final 10-percent reduction on July
    1, 1983.
      Subsec. (b)(1). Pub. L. 97-34, Sec. 101(e)(2)(A), redesignated
    par. (2) as (1). Former par. (1), which set out a table for
    determining amount of one withholding exemption for each of the
    various payroll periods, was struck out.
      Subsec. (b)(2). Pub. L. 97-34, Sec. 101(e)(2)(A), redesignated
    par. (3) as (2). Former par. (2) redesignated (1).
      Subsec. (b)(3). Pub. L. 97-34, Sec. 101(e)(2)(A), (B),
    redesignated par. (4) as (3) and substituted provisions relating to
    an employer's computation of the tax to be deducted and withheld as
    if the aggregate of the wages paid to the employee during the
    calendar week were paid for a weekly payroll period, for provisions
    relating to an employer's computation of the tax to be deducted and
    withheld using the excess of the aggregate of the wages paid to the
    employee during the calendar week over the withholding exemption
    allowed by this subsection for a weekly payroll period. Former par.
    (3) redesignated (2).
      Subsec. (b)(4), (5). Pub. L. 97-34, Sec. 101(e)(2)(A),
    redesignated par. (5) as (4). Former par. (4) redesignated (3).
      Subsec. (f)(1)(G). Pub. L. 97-34, Sec. 101(e)(3), inserted "(or
    more than one exemption if so prescribed by the Secretary)" after
    "an amount equal to one exemption".
      Subsec. (i). Pub. L. 97-34, Sec. 101(e)(4), substituted
    provisions authorizing the Secretary by regulations to provide for
    increases or decreases in the amount of withholding otherwise
    required under this section in cases where the employee requests
    the changes, for provisions under which the Secretary was
    authorized to provide withholding in addition to that otherwise
    required under this section in cases in which the employer and the
    employee agreed to such additional withholding.
      Subsec. (m). Pub. L. 97-34, Sec. 101(e)(5), revised provisions
    respecting additional withholding allowances for anticipated excess
    itemized deductions and tax credits claimed in accordance with
    Treasury regulations and Treasury statutory authority to provide
    additional withholding allowances for any additional items
    specified in Treasury regulations.
      1980 - Subsec. (o)(1)(C). Pub. L. 96-601, Sec. 4(a), added
    subpar. (C).
      Subsec. (o)(2)(B). Pub. L. 96-601, Sec. 4(d), struck out ", but
    only to the extent that the amount is includible in the gross
    income of such individual" after "pension or annuity".
      Subsec. (o)(2)(C). Pub. L. 96-601, Sec. 4(c), added subpar. (C).
      Subsec. (o)(3). Pub. L. 96-601, Sec. 4(b), substituted provision
    authorizing amount to be withheld from annuity payments or sick pay
    for provision relating to request for withholding. See subsec.
    (o)(4) of this section.
      Subsec. (o)(4), (5). Pub. L. 96-601, Sec. 4(b), added pars. (4)
    and (5).
      1978 - Subsec. (a). Pub. L. 95-600, Sec. 101(e)(1), substituted
    "With respect to wages paid after December 31, 1978, the tables so
    prescribed shall be the same as the tables prescribed under this
    subsection which were in effect on January 1, 1975, except that
    such tables shall be modified to the extent necessary to reflect
    the amendments made by sections 101 and 102 of the Tax Reduction
    and Simplification Act of 1977 and the amendments made by section
    101 of the Revenue Act of 1978." for "With respect to wages paid
    after May 31, 1977, and before January 1, 1979, the tables so
    prescribed shall be the same as the tables prescribed under this
    subsection which were in effect on January 1, 1976; except that
    such tables shall be modified to the extent necessary so that, had
    they been in effect for all of 1977, they would reflect the full
    year effect of the amendments made by sections 101 and 102 of the
    Tax Reduction and Simplification Act of 1977. With respect to wages
    paid after December 31, 1978, the tables so prescribed shall be the
    same as the tables prescribed under this subsection which were in
    effect on January 1, 1975, except that such tables shall be
    modified to the extent necessary to reflect the amendments made by
    sections 101 and 102 of the Tax Reduction and Simplification Act of
    1977.".
      Subsec. (b)(1). Pub. L. 95-600, Sec. 102(c)(1), increased the
    amounts set out in the table for one withholding exemption for each
    of the payroll period categories from $14.40, $28.80, $31.30,
    $62.50, $187.50, $375.00, $750.00 and $2.10 to $19.23, $38.46,
    $41.66, $83.33, $250.00, $500.00, $1,000.00 and $2.74,
    respectively.
      Subsec. (m)(1). Pub. L. 95-600, Secs. 101(e)(2), 102(c)(2),
    substituted "$1,000" for "$750", "$3,400" for "$3,200" and "$2,300"
    for "$2,200".
      Subsec. (r). Pub. L. 95-600, Sec. 601(b)(2), added subsec. (r).
      1977 - Subsec. (a). Pub. L. 95-30, Sec. 105(a), substituted "With
    respect to wages paid after May 31, 1977, and before January 1,
    1979, the tables so prescribed shall be the same as the tables
    prescribed under this subsection which were in effect on January 1,
    1976; except that such tables shall be modified to the extent
    necessary so that, had they been in effect for all of 1977, they
    would reflect the full year effect of the amendments made by
    sections 101 and 102 of the Tax Reduction and Simplification Act of
    1977. With respect to wages paid after December 31, 1978, the
    tables so prescribed shall be the same as the tables prescribed
    under this subsection which were in effect on January 1, 1975,
    except that such tables shall be modified to the extent necessary
    to reflect the amendments made by sections 101 and 102 of the Tax
    Reduction and Simplification Act of 1977" for "With respect to
    wages paid prior to January 1, 1978, the tables so prescribed shall
    be the same as the tables prescribed under this section which were
    in effect on January 1, 1976. With respect to wages paid after
    December 31, 1977, the Secretary shall prescribe new tables which
    shall be the same as the tables prescribed under this subsection
    which were in effect on January 1, 1975, except that such tables
    shall be modified to the extent necessary to reflect the amendments
    made to subsections (b) and (c) of section 141 by the Tax Reform
    Act of 1976".
      Subsec. (f)(1). Pub. L. 95-30, Sec. 105(b)(1), substituted "zero
    bracket" for "standard deduction" in subpar. (G) and in provisions
    following subpar. (G).
      Subsec. (m)(1)(B). Pub. L. 95-30, Sec. 105(b)(2), substituted "an
    amount equal to $3,200 ($2,200" for "an amount equal to the lesser
    of (i) 16 percent of his estimated wages, or (ii) $2,800 ($2,400".
      Subsec. (m)(2)(A). Pub. L. 95-30, Sec. 105(b)(3)(A), (B),
    substituted "section 151" for "sections 141 and 151" and "(or the
    zero bracket amount (within the meaning of section 63(d)))" for
    "(or the amount of the standard deduction)".
      Subsec. (m)(2)(C). Pub. L. 95-30, Sec. 105(b)(3)(C), substituted
    "(or the zero bracket amount)" for "(or the standard deduction)".
      Subsec. (q)(3)(C). Pub. L. 95-30, Sec. 405(a), inserted reference
    to certain parimutuel pools and jai alai in heading and, in text,
    designated existing provisions as cl. (i) and added cl. (ii).
      1976 - Subsec. (a). Pub. L. 94-455, Secs. 401(d)(1), 1906
    (b)(13)(A), struck out "or his delegate" after "Secretary",
    inserted "With respect to wages paid prior to January 1, 1978"
    after "by the Secretary", as amended, and substituted "prescribed
    under this section which were" for "contained in this subsection
    as" after "same as the tables", "1976" for "1975" after "January
    1", and "With respect to wages paid after December 31, 1977, the
    Secretary shall prescribe new tables which shall be the same as the
    tables prescribed under this subsection which were in effect on
    January 1, 1975, except that such tables shall be modified to the
    extent necessary to reflect the amendments made to subsections (b)
    and (c) of section 141 by the Tax Reform Act of 1976" for "except
    that the amounts set forth as amounts of income tax to be withheld
    with respect to wages paid after April 30, 1975, and before January
    1, 1976, shall reflect the full calendar year effect for 1975 of
    the amendments made by sections 201, 202, 203, and 204 of the Tax
    Reduction Act of 1975" after "effect on January 1, 1976", as
    amended.
      Pub. L. 94-414 substituted "October 1, 1976" for "September 15,
    1976".
      Pub. L. 94-396 substituted "September 15, 1976" for "September 1,
    1976".
      Pub. L. 94-331 substituted "September 1, 1976" for "July 1,
    1976".
      Subsec. (c)(4). Pub. L. 94-455, Sec. 1906(b)(13)(A), struck out
    "or his delegate" after "Secretary".
      Subsec. (c)(6). Pub. L. 94-455, Secs. 401(d)(2), 1906(b)(13)(A),
    substituted "the table for an annual payroll period prescribed
    pursuant to subsection (a)" for "table 7 contained in subsection
    (a)" after "basis of the", as subsec. (c)(6) was in effect on the
    day before the date of enactment of the Tax Reduction Act of 1975,
    Pub. L. 94-12, which was approved on Mar. 29, 1975, and struck out
    "or his delegate" after "Secretary".
      Subsecs. (f), (h), (i), (j). Pub. L. 94-455, Sec. 1906(b)(13)(A),
    struck out "or his delegate" after "Secretary".
      Subsec. (l). Pub. L. 94-455, Sec. 1903(a)(17), substituted
    "section 2(a)" for "section 2(b)" after "as defined in".
      Subsec. (m)(1)(B). Pub. L. 94-455, Sec. 401(d)(3), reenacted
    subpar. (B) without change.
      Subsec. (m)(2)(A). Pub. L. 94-455, Sec. 502(b), inserted "(other
    than paragraph (13) thereof)" after "under section 62".
      Subsec. (m)(2)(D), (3)(B). Pub. L. 94-455, Sec. 1906(b)(13)(A),
    struck out "or his delegate" after "Secretary".
      Subsec. (m)(4). Pub. L. 94-455, Sec. 504(c)(3), added subpar.
    (C). Sec. 1906(b)(13)(A) struck out "or his delegate" after
    "Secretary".
      Subsecs. (n), (p). Pub. L. 94-455, Sec. 1906(b)(13)(A), struck
    out "or his delegate" after "Secretary" wherever appearing.
      Subsec. (q). Pub. L. 94-455, Sec. 1207(d), added subsec. (q).
      1975 - Subsec. (a). Pub. L. 94-164, Sec. 5(a)(1), inserted
    provision that the tables prescribed with respect to wages paid
    after Dec. 31, 1975, and before July 1, 1976, shall be the same as
    the tables prescribed under this subsection which were in effect on
    Dec. 10, 1975.
      Pub. L. 94-12, Sec. 205(a), substituted provisions directing the
    Secretary to prescribe new withholding tables setting changed
    withholding rates for wages paid during the period May 1, 1975, to
    Dec. 31, 1975, so as to reflect the full calendar year effect for
    1975 of the amendments to the minimum standard deduction, the
    percentage standard deduction, the earned income credit, and the
    additional tax credit by sections 201, 202, 203, and 204 of the Tax
    Reduction Act of 1975, Pub. L. 94-12, for provisions setting out 8
    tables to be followed by employers in withholding taxes on wages
    paid.
      Subsec. (c)(6). Pub. L. 94-12, Sec. 205(b), substituted "the
    table for an annual payroll period prescribed pursuant to
    subsection (a)" for "table 7 contained in subsection (a)". See 1976
    Amendment note set out above.
      Subsec. (m)(1)(B). Pub. L. 94-164, Sec. 2(b)(2), substituted
    "$2,800" and "$2,400" for "$2,600" and "$2,300" respectively in cl.
    (ii).
      Pub. L. 94-12, Sec. 202(b), substituted "the lesser of (i) 16
    percent of his estimated wages, or (ii) $2,600 ($2,300 in the case
    of an individual who is not married (within the meaning of section
    143) and who is not a surviving spouse (as defined in section
    2(a)))" for "the lesser of (i) $2,000 or (ii) 15 percent of his
    estimated wages".
      1971 - Subsec. (a). Pub. L. 92-178, Sec. 208(a), substituted new
    sets of tables 1 to 8 applicable (under Sec. 208(i)(1)) with
    respect to wages paid after Jan. 15, 1972, for the tables
    applicable in the case of wages paid as provided in former: par.
    (1) after Dec. 31, 1969, and before July 1, 1970; par. (2) after
    June 30, 1970, and before Jan. 1, 1971; par. (3) after Dec. 31,
    1970, and before Jan. 1, 1972; par. (4) after Dec. 31, 1971, and
    before Jan. 1, 1973; and par. (5) after Dec. 31, 1972. Pub. L. 92-
    178, Sec. 208(h)(1), made provisions of par. (3) applicable (under
    section 208(i)(2)) with respect to wages paid after Dec. 31, 1971,
    and before Jan. 16, 1972.
      Subsec. (b)(1). Pub. L. 92-178, Sec. 208(b)(1), revised
    withholding rates upwards, substituting 14.40; 28.80; 31.30; 62.50;
    187.50; 375.00; 750.00; and 2.10 for 12.50; 25.00 27.10; 54.20;
    162.50; 325.00; 650.00; and 1.80, respectively, to be effective
    with respect to wages paid after Jan. 15, 1972. Pub. L. 92-178,
    Sec. 208(h)(2), in amending Pub. L. 91-172, Sec. 805(b)(1),
    extended application of such former withholding rates to wages paid
    after June 30, 1970, and before Jan. 16, 1972, previously
    applicable to wages paid before Jan. 1, 1972.
      Subsec. (c)(6). Pub. L. 92-178, Sec. 208(g), substituted "table 7
    contained in subsection (a)" for "table 7 contained in paragraph
    (1), (2), (3), (4), or (5) (whichever is applicable) of subsection
    (a)".
      Subsec. (f)(1)(G). Pub. L. 92-178, Sec. 208(c), added subpar.
    (G).
      Subsec. (f)(7). Pub. L. 92-178, Sec. 208(d), added par. (7).
      Subsec. (m)(1)(B). Pub. L. 92-178, Sec. 208(e), substituted "an
    amount equal to the lesser of (i) $2,000 or (ii) 15 percent of his
    estimated wages" for "an amount equal to 15 percent of his
    estimated wages".
      Subsec. (m)(2)(A). Pub. L. 92-178, Sec. 208(f)(1), inserted "or
    (if such a return has not been filed for such preceding taxable
    year at the time the withholding exemption certificate is furnished
    the employer) the second taxable year preceding the estimation
    year" after "for the taxable year preceding the estimation year".
      Subsec. (m)(2)(D). Pub. L. 92-178, Sec. 208(f)(2), substituted as
    definition of "estimation year" the calendar year in which the
    wages are paid for prior provision defining term as meaning "(i)
    with respect to payments of wages after April 30 and on or before
    December 31 of any calendar year, such calendar year, and (ii) with
    respect to payments of wages on or after January 1 and before May 1
    of any calendar year, the preceding calendar year (except that with
    respect to an exemption certificate furnished by an employee after
    he has filed his return for the preceding calendar year, such term
    means the current calendar year)."
      Subsec. (m)(3)(B) to (E). Pub. L. 92-178, Sec. 208(f)(3), struck
    out subpars. (B) and (C) providing that only one certificate be in
    effect and for termination of effectiveness of certificate and
    redesignated subpars. (D) and (E) as (B) and (C), respectively.
      1969 - Subsec. (a)(1). Pub. L. 91-172, Sec. 805(a), (b)(2),
    substituted new sets of tables 1 to 8 for application to wages paid
    after Dec. 31, 1969, and before July 1, 1970, and after June 30,
    1970, and before January 1, 1972, for the tables applicable to
    wages paid before July 13, 1968, and after Dec. 31, 1969.
      Pub. L. 91-53, Sec. 6(a)(1), substituted "December 31, 1969" for
    "July 31, 1969".
      Pub. L. 91-36, Sec. 2(a)(1), substituted "July 31, 1969" for
    "June 30, 1969".
      Subsec. (a)(2). Pub. L. 91-172, Sec. 805(a), substituted a set of
    tables 1 to 8 for application to wages paid after June 30, 1970,
    and before Jan. 1, 1971, for the tables applicable to wages paid
    after June 30, 1970, and before Jan. 1, 1970.
      Pub. L. 91-53, Sec. 6(a)(2), substituted "January 1, 1970" for
    "August 1, 1969".
      Pub. L. 91-36, Sec. 2(a)(2), substituted "August 1, 1969" for
    "July 1, 1969".
      Subsec. (a)(3) to (5). Pub. L. 91-172, Sec. 805(a), added sets of
    tables applicable, respectively, to wages paid after Dec. 31, 1970,
    and before Jan. 1, 1972, after Dec. 31, 1971, and before Jan. 1,
    1973, and after Dec. 31, 1972.
      Subsec. (b)(1). Pub. L. 91-172, Sec. 805(b)(1)-(4), revised
    withholding rates effective with respect to wages paid after Dec.
    31, 1969, and before July 1, 1970, for the period after June 30,
    1970, and before Jan. 1, 1972, during 1972, and after 1972.
      Subsec. (c)(1). Pub. L. 91-172, Sec. 805(c)(1), substituted
    provisions authorizing employer to deduct and withhold tax
    determinable according to tables prescribed by the Secretary or his
    delegate for provisions under which the employer was authorized to
    deduct and withhold tax only according to tables set out.
      Subsec. (c)(6). Pub. L. 91-172, Sec. 805(c)(2), substituted
    provisions for determination of amount deductible according to
    tables prescribed by the Secretary or his delegate and for
    computation of wages and amounts of income tax after Dec. 31, 1969,
    for provisions for determination of such wages and amounts of
    income tax after July 13, 1968, and before Jan. 1, 1970.
      Pub. L. 91-53, Sec. 6(a)(3), substituted "January 1, 1970" for
    "August 1, 1969".
      Pub. L. 91-36, Sec. 2(a)(3), substituted "August 1, 1969" for
    "July 1, 1969".
      Subsec. (h). Pub. L. 91-172, Sec. 805(d), redesignated existing
    pars. (1) to (3) as subpars. (A) to (C) of par. (1), and added
    pars. (2) to (4).
      Subsec. (m)(1). Pub. L. 91-172, Sec. 805(e)(2), substituted $750
    for $700 in the material preceding subpar. (A) and in subpar. (B)
    substituted 15 per cent for 10 per cent of the first $7,500 and 17
    per cent of remainder of the estimated wages.
      Subsec. (m)(2)(A). Pub. L. 91-172, Sec. 805(e)(2), inserted
    amount of standard deduction as an alternative limit in cl. (i),
    and substituted the determinable additional deductions for
    provisions referring to an employee who did not show such
    deductions on his return.
      Subsec. (m)(2)(B). Pub. L. 91-172, Sec. 805(e)(2), struck out
    limit on aggregate amount.
      Subsec. (m)(2)(C), (D). Pub. L. 91-172, Sec. 805(e)(1), (2),
    added subpar. (C). Former subpar. (C) redesignated (D)
      Subsec. (n). Pub. L. 91-172, Sec. 805(f)(1), added subsec. (n).
      Subsecs. (o), (p). Pub. L. 91-172, Sec. 805(g), added subsecs.
    (o) and (p).
      1968 - Subsec. (a). Pub. L. 90-364, Sec. 102(c)(1), designated
    existing Tables 1 to 8 as constituting par. (1), inserted
    provisions preceding existing Table 1-8 so as to limit their
    application to the case of wages paid on or before the 15th day
    after the date of the enactment of the Revenue and Expenditure
    Control Act of 1968 or after June 30, 1969, and added par. (2).
      Subsec. (c)(6). Pub. L. 90-364, Sec. 102(c)(2), added par. (6).
      1966 - Subsec. (a). Pub. L. 89-368, Sec. 101(a), struck out
    reference to subsections (j) and (k) and substituted provisions
    establishing separate tables for single persons and for married
    persons in each of eight payroll period categories each containing
    six graduated withholding rates ranging from 14 to 30 percent for
    provisions placing the rate at a fixed 14 percent.
      Subsec. (b)(1). Pub. L. 89-368, Sec. 101(b), increased amounts
    set out for one withholding exemption for each of the payroll
    period categories from "$13.00", "$26.00", "$28.00", "$56.00",
    "$167.00", "$333.00", "$667.00", and "$1.80" to "$13.50", "$26.90",
    "$29.20", "$58.30", "$175.00", "$350.00", "$700.00", and "$1.90"
    respectively.
      Subsec. (c)(1). Pub. L. 89-368, Sec. 101(c), replaced existing
    tables with separate tables for employees who are married and for
    employees who are not married covering weekly, biweekly,
    semimonthly, monthly, and daily or miscellaneous pay periods and
    reflecting increased and graduated withholding rates.
      Subsec. (f)(1)(F), (3)(B). Pub. L. 89-368, Sec. 101(e)(1), (3),
    added par. (1)(F) and, in par. (3)(B), changed definition of
    "status determination date" from January 1 and July 1 of each year
    to January 1, May 1, July 1, and October 1 of each year.
      Subsec. (l). Pub. L. 89-368, Sec. 101(d), added subsec. (l).
      Subsec. (m). Pub. L. 89-368, Sec. 101(e)(2), added subsec. (m).
      1965 - Subsec. (a). Pub. L. 89-97, Sec. 313(d)(3), substituted
    "subsections (j) and (k)" for "subsection (j)".
      Subsec. (h)(3). Pub. L. 89-97, Sec. 313(d)(4), inserted "(and, in
    the case of tips referred to in subsection (k), within 30 days
    thereafter)" after "quarter" first place it appears.
      Subsec. (k). Pub. L. 89-212 inserted "or section 3202 (c)(2)" and
    "or section 3202(a)".
      Pub. L. 89-97, Sec. 313(d)(5), added subsec. (k).
      1964 - Subsec. (a). Pub. L. 88-272, Sec. 302(a), reduced tax from
    18% to 14%.
      Subsec. (c)(1). Pub. L. 88-272, Sec. 302(b), substituted new
    tables reflecting lowered withholding rates.
      1961 - Subsec. (f)(6). Pub. L. 87-256 added par. (6).
      1955 - Subsec. (a). Act Aug. 9, 1955, Sec. 2(a), inserted
    "(except as provided in subsection (j))" after "upon such wages".
      Subsec. (j). Act Aug. 9, 1955, Sec. 2(b), added subsec. (j).

                     EFFECTIVE DATE OF 2006 AMENDMENT                 
      Pub. L. 109-222, title V, Sec. 511(b), May 17, 2006, 120 Stat.
    365, provided that: "The amendment made by this section [amending
    this section] shall apply to payments made after December 31,
    2010."

             EFFECTIVE AND TERMINATION DATES OF 2001 AMENDMENT         
      Amendment by Pub. L. 107-16 applicable to amounts paid after the
    60th day after June 7, 2001, and references to income brackets and
    rates of tax in such amendment to be applied without regard to
    section 1(i)(1)(D) of this title, see section 101(d)(2) of Pub. L.
    107-16, set out as a note under section 1 of this title.
      Amendment by Pub. L. 107-16 inapplicable to taxable, plan, or
    limitation years beginning after Dec. 31, 2010, and the Internal
    Revenue Code of 1986 to be applied and administered to such years
    as if such amendment had never been enacted, see section 901 of
    Pub. L. 107-16, set out as a note under section 1 of this title.

                     EFFECTIVE DATE OF 1994 AMENDMENT                 
      Section 701(b) of Pub. L. 103-465 provided that: "The amendment
    made by this section [amending this section] shall apply to
    payments made after December 31, 1994."
      Amendment by section 702(a) of Pub. L. 103-465 applicable to
    payments made after Dec. 31, 1996, see section 702(d) of Pub. L.
    103-465, set out as a note under section 3304 of this title.

                     EFFECTIVE DATE OF 1992 AMENDMENTS                 
      Section 1934(b) of Pub. L. 102-486 provided that: "The amendment
    made by this section [amending this section] applies to payments
    received after December 31, 1992."
      Section 1942(b) of Pub. L. 102-486 provided that: "The amendments
    made by subsection (a) [amending this section] shall apply to
    payments of winnings after December 31, 1992."
      Amendment by Pub. L. 102-318 applicable, except as otherwise
    provided, to distributions after Dec. 31, 1992, see section 522(d)
    of Pub. L. 102-318, set out as a note under section 401 of this
    title.

                     EFFECTIVE DATE OF 1988 AMENDMENT                 
      Amendment by 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.

                     EFFECTIVE DATE OF 1987 AMENDMENT                 
      Section 10302(b) of Pub. L. 100-203 provided that: "The amendment
    made by subsection (a) [amending this section] shall apply to
    certificates furnished after the day 30 days after the date of the
    enactment of this Act [Dec. 22, 1987]."

                     EFFECTIVE DATE OF 1986 AMENDMENT                 
      Amendment by section 104(b)(15) of Pub. L. 99-514 applicable to
    taxable years beginning after Dec. 31, 1986, see section 151(a) of
    Pub. L. 99-514, set out as a note under section 1 of this title.
      Amendment by section 1301(j)(8) of Pub. L. 99-514 applicable to
    bonds issued after Aug. 15, 1986, except as otherwise provided, see
    sections 1311 to 1318 of Pub. L. 99-514, set out as an Effective
    Date; Transitional Rules note under section 141 of this title.
      Amendment by section 1303(b)(4) of Pub. L. 99-514 effective Oct.
    22, 1986, see section 1311(f) of Pub. L. 99-514, as amended, set
    out as an Effective Date; Transitional Rules note under section 141
    of this title.

                     EFFECTIVE DATE OF 1985 AMENDMENT                 
      Section 6(d) of Pub. L. 99-44 provided that: "The amendment made
    by section 3 [amending this section] shall take effect on January
    1, 1985."

                     EFFECTIVE DATE OF 1983 AMENDMENT                 
      Amendment by Pub. L. 98-67 applicable with respect to payments
    made after Dec. 31, 1983, see section 110(a) of Pub. L. 98-67, set
    out as a note under section 31 of this title.

                     EFFECTIVE DATE OF 1982 AMENDMENT                 
      Section 317(b) of Pub. L. 97-248 provided: "The amendments made
    by subsection (a) [amending this section] shall apply to payments
    made after December 31, 1983."
      Amendment by section 334(d) of Pub. L. 97-248 applicable to
    payments or other distributions made after Dec. 31, 1982, see
    section 334(e) of Pub. L. 97-248, set out as an Effective Date note
    under section 3405 of this title.

                     EFFECTIVE DATE OF 1981 AMENDMENT                 
      Section 101(f)(2) of Pub. L. 97-34 provided that: "The amendments
    made by subsection (e) [amending this section] shall apply to
    remuneration paid after September 30, 1981; except that the
    amendment made by subsection (e)(5) [amending this section] shall
    apply to remuneration paid after December 31, 1981."

                     EFFECTIVE DATE OF 1980 AMENDMENT                 
      Section 4(f) of Pub. L. 96-601 provided that: "The amendments
    made by this section [amending this section and section 6051 of
    this title] shall apply to payments made on or after the first day
    of the first calendar month beginning more than 120 days after the
    date of the enactment of this Act [Dec. 24, 1980]."

                     EFFECTIVE DATE OF 1978 AMENDMENT                 
      Section 101(f)(2) of Pub. L. 95-600 provided that: "The
    amendments made by subsection (e) [amending this section] shall
    apply to remuneration paid after December 31, 1978."
      Section 102(d)(2) of Pub. L. 95-600 provided that: "The
    amendments made by subsection (c) [amending this section] shall
    apply with respect to remuneration paid after December 31, 1978."
      Amendment by section 601(b)(2) of Pub. L. 95-600 applicable with
    respect to corporations chartered after Dec. 31, 1978, and before
    Jan. 1, 1984, see section 601(d) of Pub. L. 95-600, set out as a
    note under section 172 of this title.

                     EFFECTIVE DATE OF 1977 AMENDMENT                 
      Section 106(b) of Pub. L. 95-30 provided that: "The amendments
    made by section 105 [amending this section] shall apply to wages
    paid after April 30, 1977."
      Section 405(b) of Pub. L. 95-30 provided that: "The amendments
    made by this section [amending this section] apply to payments made
    after April 30, 1977."

                     EFFECTIVE DATE OF 1976 AMENDMENT                 
      Amendment by section 401(d) of Pub. L. 94-455 applicable to wages
    paid after Sept. 14, 1976, see section 401(e) of Pub. L. 94-455,
    set out as a note under section 32 of this title.
      Section 1207(f)(3) of Pub. L. 94-455 provided that: "The
    amendments made by subsection (d) [amending this section] shall
    apply to payments of winnings made after the 90th day after the
    date of the enactment of this Act [Oct. 4, 1976]."

            EFFECTIVE AND TERMINATION DATES OF 1975 AMENDMENTS        
      Amendment by section 2(b)(2) of Pub. L. 94-164 applicable to
    taxable years ending after Dec. 31, 1975 and before Jan. 1, 1977,
    see section 2(g) of Pub. L. 94-164, set out as an Effective Date of
    1975 Amendment note under section 32 of this title.
      Section 209(c) of Pub. L. 94-12, as amended by Pub. L. 94-164,
    Sec. 5(a)(2); Pub. L. 94-331, Sec. 3(a)(2); Pub. L. 94-396, Sec.
    2(b); Pub. L. 94-414, Sec. 3(a)(2), provided that: "The amendments
    made by sections 202(b) and 205 [amending this section] shall apply
    to wages paid after April 30, 1975, and before October 1, 1976."

                     EFFECTIVE DATE OF 1971 AMENDMENT                 
      Section 208(i) of Pub. L. 92-178 provided that:
        "(1) The amendments made by this section [amending this
      section] (other than subsection (h)) shall apply with respect to
      wages paid after January 15, 1972.
        "(2) The amendments made by subsection (h) [amending this
      section] shall apply with respect to wages paid after December
      31, 1971, and before January 16, 1972."

                     EFFECTIVE DATE OF 1969 AMENDMENTS                 
      Section 805(h) of Pub. L. 91-172, as amended by Pub. L. 99-514,
    Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
      "(1) The amendments made by subsections (a), (b), (c), (d), and
    (e) [amending this section] shall apply with respect to
    remuneration paid after December 31, 1969.
      "(2) The amendment made by subsection (f) [amending this section
    and section 6051 of this title] applies to wages paid after April
    30, 1970.
      "(3) Subsection (o) of section 3402 of the Internal Revenue Code
    of 1986 [formerly I.R.C. 1954], added by subsection (g) of this
    subsection, shall apply to payments made after December 31, 1970.
    Subsection (p) of such section 3402, added by subsection (g) of
    this section, shall apply to payments made after June 30, 1970."
      Section 6(b) of Pub. L. 91-53 provided that: "The amendments made
    by this section [amending this section] shall apply with respect to
    wages paid after July 31, 1969, and before January 1, 1970."
      Section 2(b) of Pub. L. 91-36 provided that: "The amendments made
    by subsection (a) [amending this section] shall apply with respect
    to wages paid after June 30, 1969."

                     EFFECTIVE DATE OF 1966 AMENDMENT                 
      Section 101(e)(6) of Pub. L. 89-368 provided that: "The
    amendments made by paragraphs (1) and (2) of this subsection
    [amending this section] shall apply only with respect to
    remuneration paid after December 31, 1966, but only with respect to
    withholding exemptions based on estimation years beginning after
    such date."
      Section 101(g) of Pub. L. 89-368 provided that: "The amendments
    made by this section (other than subsection (e) [amending this
    section]) shall apply only with respect to remuneration paid after
    April 30, 1966."

                     EFFECTIVE DATE OF 1965 AMENDMENTS                 
      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.
      Amendment by Pub. L. 89-97 applicable only with respect to tips
    received by employees after 1965, see section 313(f) of Pub. L. 89-
    97, set out as an Effective Date note under section 6053 of this
    title.

                     EFFECTIVE DATE OF 1964 AMENDMENT                 
      Section 302(d) of Pub. L. 88-272 provided that: "The amendments
    made by subsections (a) and (b) of this section [amending this
    section] shall apply with respect to remuneration paid after the
    seventh day following the date of the enactment of this Act [Feb.
    26, 1964]. The amendment made by subsection (c) of this section
    [amending section 1441 of this title] shall apply with respect to
    payments made after the seventh day following the date of the
    enactment of this Act."

                     EFFECTIVE DATE OF 1961 AMENDMENT                 
      Amendment by Pub. L. 87-256 applicable with respect to wages paid
    after Dec. 31, 1961, see section 110(h)(4) of Pub. L. 87-256, set
    out as a note under section 3401 of this title.

                     EFFECTIVE DATE OF 1955 AMENDMENT                 
      Section 3 of act Aug. 9, 1955, provided that: "The amendment made
    by section 2 [amending this section] shall be applicable only with
    respect to remuneration paid after the date of enactment of this
    Act [Aug. 9, 1955]."

                             SAVINGS PROVISION                         
      For provisions that nothing in amendment by Pub. L. 101-508 be
    construed to affect treatment of certain transactions occurring,
    property acquired, or items of income, loss, deduction, or credit
    taken into account prior to Nov. 5, 1990, for purposes of
    determining liability for tax for periods ending after Nov. 5,
    1990, see section 11821(b) of Pub. L. 101-508, set out as a note
    under section 45K of this title.

            PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1994        
      For provisions directing that if any amendments made by subtitle
    B [Secs. 521-523] of title V of Pub. L. 102-318 require an
    amendment to any plan, such plan amendment shall not be required to
    be made before the first plan year beginning on or after Jan. 1,
    1994, see section 523 of Pub. L. 102-318, set out as a note under
    section 401 of this title.

           WITHHOLDING ALLOWANCES TO REFLECT NEW RATE SCHEDULES       
      Section 1581(a) of Pub. L. 99-514 provided that: "The Secretary
    of the Treasury or his delegate shall modify the withholding
    schedules and withholding exemption certificates under section 3402
    of the Internal Revenue Code of 1954 [now 1986] to better
    approximate actual tax liability under the amendments made by this
    Act [see Tables for classification]."

    EMPLOYER'S RESPONSIBILITY UPON FAILURE OF EMPLOYEE TO FILE REVISED
           WITHHOLDING ALLOWANCE CERTIFICATE BEFORE OCT. 1, 1987
      Section 1581(c) of Pub. L. 99-514, as amended by Pub. L. 100-647,
    title I, Sec. 1015(p), Nov. 10, 1988, 102 Stat. 3572, provided
    that: "If an employee has not filed a revised withholding allowance
    certificate before October 1, 1987, the employer shall withhold
    income taxes from the employee's wages - 
        "(1) as if the employee claimed 1 withholding allowance, if the
      employee checked the 'single' box on the employee's previous
      withholding allowance certificate, or
        "(2) as if the employee claimed 2 withholding allowances, if
      the employee checked the 'married' box on the employee's previous
      withholding allowance certificate.
    The preceding sentence shall not apply if its application would
    result in an increase in the number of withholding allowances for
    the employee."

    FAILURE TO DEDUCT AND WITHHOLD UNDER A DUTY CREATED OR INCREASED BY
                          TAX REFORM ACT OF 1976
      Section 304 of Pub. L. 95-30, as amended by Pub. L. 99-514, Sec.
    2, Oct. 22, 1986, 100 Stat. 2095, provided that: "No person shall
    be liable in respect of any failure to deduct and withhold under
    section 3402 of the Internal Revenue Code of 1986 [formerly I.R.C.
    1954] (relating to income tax collected at source) on remuneration
    paid before January 1, 1977, to the extent that the duty to deduct
    and withhold was created or increased by any provision of the Tax
    Reform Act of 1976 [Pub. L. 94-455]."

                   WAGES PAID DURING 1972 AND AFTER 1972               
      Section 805(b)(3), (4) of Pub. L. 91-172, title VIII, Dec. 30,
    1969, 83 Stat. 704, which provided for section 3402(b)(1)
    withholding rates of 13.50; 26.90; 29.20; 58.30; 175.00; 350.00;
    700.00; and 1.90, effective with respect to wages during 1972, and
    withholding rates of 14.40; 28.80; 31.30; 62.50; 187.50; 375.00;
    750.00; and 2.10, effective with respect to wages paid after 1972,
    was repealed by section 208(b)(2) of Pub. L. 92-178.

                  TRANSITIONAL DETERMINATION STATUS DATE              
      Section 101(f) of Pub. L. 89-368, as amended by Pub. L. 99-514,
    Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
    "Notwithstanding section 3402(f)(3)(B) of the Internal Revenue Code
    of 1986 [formerly I.R.C. 1954], a withholding exemption certificate
    furnished the employer after the date of the enactment of this Act
    [Mar. 15, 1966] and before May 1, 1966, shall take effect with
    respect to the first payment of wages made on or after May 1, 1966,
    or the 10th day after the date on which such certificate is
    furnished to the employer, whichever is later, and at the election
    of the employer such certificate may be made effective with respect
    to any payment of wages made on or after the date on which such
    certificate is furnished."

                             MEANING OF TERMS                         
      Section 1 of act Aug. 9, 1955, provided that: "The terms used in
    this Act [amending subsecs. (a) and (j) of this section] shall have
    the same meaning as when used in the Internal Revenue Code."

-FOOTNOTE-
    (!1) See References in Text note below.

-End-

-CITE-
    26 USC Sec. 3403                                            01/03/2007

-EXPCITE-
    TITLE 26 - INTERNAL REVENUE CODE
    Subtitle C - Employment Taxes
    CHAPTER 24 - COLLECTION OF INCOME TAX AT SOURCE ON WAGES

-HEAD-
    Sec. 3403. Liability for tax

-STATUTE-
      The employer shall be liable for the payment of the tax required
    to be deducted and withheld under this chapter, and shall not be
    liable to any person for the amount of any such payment.

-SOURCE-
    (Aug. 16, 1954, ch. 736, 68A Stat. 469; Pub. L. 97-248, title III,
    Secs. 307(a)(2), 308(a), Sept. 3, 1982, 96 Stat. 589, 591; Pub. L.
    98-67, title I, Sec. 102(a), Aug. 5, 1983, 97 Stat. 369.)

-MISC1-
                                AMENDMENTS                            
      1983 - Pub. L. 98-67 repealed amendments made by Pub. L. 97-248.
    See 1982 Amendment note below.
      1982 - Pub. L. 97-248 provided that, applicable to payments of
    interest, dividends, and patronage dividends paid or credited after
    June 30, 1983, this section is amended by striking out "this
    chapter" and inserting in lieu thereof "this subchapter". Section
    102(a), (b) of Pub. L. 98-67, title I, Aug. 5, 1983, 97 Stat. 369,
    repealed subtitle A (Secs. 301-308) of title III of Pub. L. 97-248
    as of the close of June 30, 1983, and provided that the Internal
    Revenue Code of 1954 [now 1986] [this title] shall be applied and
    administered (subject to certain exceptions) as if such subtitle A
    (and the amendments made by such subtitle A) had not been enacted.

-End-

-CITE-
    26 USC Sec. 3404                                            01/03/2007

-EXPCITE-
    TITLE 26 - INTERNAL REVENUE CODE
    Subtitle C - Employment Taxes
    CHAPTER 24 - COLLECTION OF INCOME TAX AT SOURCE ON WAGES

-HEAD-
    Sec. 3404. Return and payment by governmental employer

-STATUTE-
      If the employer is the United States, or a State, or political
    subdivision thereof, or the District of Columbia, or any agency or
    instrumentality of any one or more of the foregoing, the return of
    the amount deducted and withheld upon any wages may be made by any
    officer or employee of the United States, or of such State, or
    political subdivision, or of the District of Columbia, or of such
    agency or instrumentality, as the case may be, having control of
    the payment of such wages, or appropriately designated for that
    purpose.

-SOURCE-
    (Aug. 16, 1954, ch. 736, 68A Stat. 469; Pub. L. 94-455, title XIX,
    Sec. 1903(c), Oct. 4, 1976, 90 Stat. 1810.)

-MISC1-
                                AMENDMENTS                            
      1976 - Pub. L. 94-455 struck out "Territory" after "or a State"
    and "of such State".

-End-

-CITE-
    26 USC Sec. 3405                                            01/03/2007

-EXPCITE-
    TITLE 26 - INTERNAL REVENUE CODE
    Subtitle C - Employment Taxes
    CHAPTER 24 - COLLECTION OF INCOME TAX AT SOURCE ON WAGES

-HEAD-
    Sec. 3405. Special rules for pensions, annuities, and certain other
      deferred income

-STATUTE-
    (a) Periodic payments
      (1) Withholding as if payment were wages
        The payor of any periodic payment (as defined in subsection
      (e)(2)) shall withhold from such payment the amount which would
      be required to be withheld from such payment if such payment were
      a payment of wages by an employer to an employee for the
      appropriate payroll period.
      (2) Election of no withholding
        An individual may elect to have paragraph (1) not apply with
      respect to periodic payments made to such individual. Such an
      election shall remain in effect until revoked by such individual.
      (3) When election takes effect
        Any election under this subsection (and any revocation of such
      an election) shall take effect as provided by subsection (f)(3)
      of section 3402 for withholding exemption certificates.
      (4) Amount withheld where no withholding exemption certificate in
        effect
        In the case of any payment with respect to which a withholding
      exemption certificate is not in effect, the amount withheld under
      paragraph (1) shall be determined by treating the payee as a
      married individual claiming 3 withholding exemptions.
    (b) Nonperiodic distribution
      (1) Withholding
        The payor of any nonperiodic distribution (as defined in
      subsection (e)(3)) shall withhold from such distribution an
      amount equal to 10 percent of such distribution.
      (2) Election of no withholding
        (A) In general
          An individual may elect not to have paragraph (1) apply with
        respect to any nonperiodic distribution.
        (B) Scope of election
          An election under subparagraph (A) - 
            (i) except as provided in clause (ii), shall be on a
          distribution-by-distribution basis, or
            (ii) to the extent provided in regulations, may apply to
          subsequent nonperiodic distributions made by the payor to the
          payee under the same arrangement.
    (c) Eligible rollover distributions
      (1) In general
        In the case of any designated distribution which is an eligible
      rollover distribution - 
          (A) subsections (a) and (b) shall not apply, and
          (B) the payor of such distribution shall withhold from such
        distribution an amount equal to 20 percent of such
        distribution.
      (2) Exception
        Paragraph (1)(B) shall not apply to any distribution if the
      distributee elects under section 401(a)(31)(A) to have such
      distribution paid directly to an eligible retirement plan.
      (3) Eligible rollover distribution
        For purposes of this subsection, the term "eligible rollover
      distribution" has the meaning given such term by section
      402(f)(2)(A).
    (d) Liability for withholding
      (1) In general
        Except as provided in paragraph (2), the payor of a designated
      distribution (as defined in subsection (e)(1)) shall withhold,
      and be liable for, payment of the tax required to be withheld
      under this section.
      (2) Plan administrator liable in certain cases
        (A) In general
          In the case of any plan to which this paragraph applies,
        paragraph (1) shall not apply and the plan administrator shall
        withhold, and be liable for, payment of the tax unless the plan
        administrator - 
            (i) directs the payor to withhold such tax, and
            (ii) provides the payor with such information as the
          Secretary may require by regulations.
        (B) Plans to which paragraph applies
          This paragraph applies to any plan described in, or which at
        any time has been determined to be described in - 
            (i) section 401(a),
            (ii) section 403(a),
            (iii) section 301(d) of the Tax Reduction Act of 1975, or
            (iv) section 457(b) and which is maintained by an eligible
          employer described in section 457(e)(1)(A).
    (e) Definitions and special rules
      For purposes of this section - 
      (1) Designated distribution
        (A) In general
          Except as provided in subparagraph (B), the term "designated
        distribution" means any distribution or payment from or under -
        
            (i) an employer deferred compensation plan,
            (ii) an individual retirement plan (as defined in section
          7701(a)(37)), or
            (iii) a commercial annuity.
        (B) Exceptions
          The term "designated distribution" shall not include - 
            (i) any amount which is wages without regard to this
          section,
            (ii) the portion of a distribution or payment which it is
          reasonable to believe is not includible in gross income, and
            (iii) any amount which is subject to withholding under
          subchapter A of chapter 3 (relating to withholding of tax on
          nonresident aliens and foreign corporations) by the person
          paying such amount or which would be so subject but for a tax
          treaty, or
            (iv) any distribution described in section 404(k)(2).

        For purposes of clause (ii), any distribution or payment from
        or under an individual retirement plan (other than a Roth IRA)
        shall be treated as includible in gross income.
      (2) Periodic payment
        The term "periodic payment" means a designated distribution
      which is an annuity or similar periodic payment.
      (3) Nonperiodic distribution
        The term "nonperiodic distribution" means any designated
      distribution which is not a periodic payment.
      [(4) Repealed. Pub. L. 102-318, title V, Sec. 521(b)(38), July 3,
        1992, 106 Stat. 312]
      (5) Employer deferred compensation plan
        The term "employer deferred compensation plan" means any
      pension, annuity, profit-sharing, or stock bonus plan or other
      plan deferring the receipt of compensation.
      (6) Commercial annuity
        The term "commercial annuity" means an annuity, endowment, or
      life insurance contract issued by an insurance company licensed
      to do business under the laws of any State.
      (7) Plan administrator
        The term "plan administrator" has the meaning given such term
      by section 414(g).
      (8) Maximum amount withheld
        The maximum amount to be withheld under this section on any
      designated distribution shall not exceed the sum of the amount of
      money and the fair market value of other property (other than
      securities of the employer corporation) received in the
      distribution. No amount shall be required to be withheld under
      this section in the case of any designated distribution which
      consists only of securities of the employer corporation and cash
      (not in excess of $200) in lieu of financial shares. For purposes
      of this paragraph, the term "securities of the employer
      corporation" has the meaning given such term by section
      402(e)(4)(E).
      (9) Separate arrangements to be treated separately
        If the payor has more than 1 arrangement under which designated
      distributions may be made to any individual, each such
      arrangement shall be treated separately.
      (10) Time and manner of election
        (A) In general
          Any election and any revocation under this section shall be
        made at such time and in such manner as the Secretary shall
        prescribe.
        (B) Payor required to notify payee of rights to elect
          (i) Periodic payments
            The payor of any periodic payment - 
              (I) shall transmit to the payee notice of the right to
            make an election under subsection (a) not earlier than 6
            months before the first of such payments and not later than
            when making the first of such payments,
              (II) if such a notice is not transmitted under subclause
            (I) when making such first payment, shall transmit such a
            notice when making such first payment, and
              (III) shall transmit to payees, not less frequently than
            once each calendar year, notice of their rights to make
            elections under subsection (a) and to revoke such
            elections.
          (ii) Nonperiodic distributions
            The payor of any nonperiodic distribution shall transmit to
          the payee notice of the right to make any election provided
          in subsection (b) at the time of the distribution (or at such
          earlier time as may be provided in regulations).
          (iii) Notice
            Any notice transmitted pursuant to this subparagraph shall
          be in such form and contain such information as the Secretary
          shall prescribe.
      (11) Withholding includes deduction
        The terms "withholding", "withhold", and "withheld" include
      "deducting", "deduct", and "deducted".
      (12) Failure to provide correct TIN
        If - 
          (A) a payee fails to furnish his TIN to the payor in the
        manner required by the Secretary, or
          (B) the Secretary notifies the payor before any payment or
        distribution that the TIN furnished by the payee is incorrect,

      no election under subsection (a)(2) or (b)(2) shall be treated as
      in effect and subsection (a)(4) shall not apply to such payee.
      (13) Election may not be made with respect to certain payments
        outside the United States or its possessions
        (A) In general
          Except as provided in subparagraph (B), in the case of any
        periodic payment or nonperiodic distribution which is to be
        delivered outside of the United States and any possession of
        the United States, no election may be made under subsection
        (a)(2) or (b)(2) with respect to such payment.
        (B) Exception
          Subparagraph (A) shall not apply if the recipient certifies
        to the payor, in such manner as the Secretary may prescribe,
        that such person is not - 
            (i) a United States citizen or a resident alien of the
          United States, or
            (ii) an individual to whom section 877 applies.
    (f) Withholding to be treated as wage withholding under section
      3402 for other purposes
      For purposes of this chapter (and so much of subtitle F as
    relates to this chapter) - 
        (1) any designated distribution (whether or not an election
      under this section applies to such distribution) shall be treated
      as if it were wages paid by an employer to an employee with
      respect to which there has been withholding under section 3402,
      and
        (2) in the case of any designated distribution not subject to
      withholding under this section by reason of an election under
      this section, the amount withheld shall be treated as zero.

-SOURCE-
    (Added Pub. L. 97-248, title III, Sec. 334(a), Sept. 3, 1982, 96
    Stat. 623; amended Pub. L. 98-369, div. A, title V, Sec. 542(c),
    title VII, Secs. 714(j)(1), (4), (5), 722(h)(4)(A), July 18, 1984,
    98 Stat. 891, 962, 963, 976; Pub. L. 99-514, title XI, Sec.
    1102(e)(1), title XII, Sec. 1234(b)(1), title XVIII, Sec.
    1875(c)(10), Oct. 22, 1986, 100 Stat. 2416, 2566, 2895; Pub. L. 100-
    647, title I, Sec. 1012(bb)(2)(A)-(C), Nov. 10, 1988, 102 Stat.
    3534; Pub. L. 102-318, title V, Secs. 521(b)(36)-(40), 522(b)(1)-
    (2)(C), July 3, 1992, 106 Stat. 312-314; Pub. L. 104-188, title I,
    Sec. 1704(t)(71), Aug. 20, 1996, 110 Stat. 1891; Pub. L. 106-554,
    Sec. 1(a)(7) [title III, Sec. 314(b)], Dec. 21, 2000, 114 Stat.
    2763, 2763A-643; Pub. L. 107-16, title VI, Sec. 641(a)(1)(D)(ii),
    (iii), June 7, 2001, 115 Stat. 119.)

-REFTEXT-
                            REFERENCES IN TEXT                        
      Section 301(d) of the Tax Reduction Act of 1975, referred to in
    subsec. (d)(2)(B)(iii), is section 301(d) of Pub. L. 94-12, Mar.
    29, 1975, 89 Stat. 26, relating to plan requirements for taxpayers
    electing additional credits, which was set out as a note under
    section 46 of this title and was repealed by Pub. L. 95-600, title
    I, Sec. 141(f)(1), Nov. 6, 1978, 92 Stat. 2795.

-MISC1-
                                AMENDMENTS                            
      2001 - Subsec. (c)(3). Pub. L. 107-16, Sec. 641(a)(1)(D)(ii),
    reenacted heading without change and amended text of par. (3)
    generally. Prior to amendment, text read as follows: "For purposes
    of this subsection, the term 'eligible rollover distribution' has
    the meaning given such term by section 402(f)(2)(A) (or in the case
    of an annuity contract under section 403(b), a distribution from
    such contract described in section 402(f)(2)(A))."
      Subsec. (d)(2)(B)(iv). Pub. L. 107-16, Sec. 641(a)(1)(D)(iii),
    added cl. (iv).
      2000 - Subsec. (e)(1)(B). Pub. L. 106-554 inserted "(other than a
    Roth IRA)" after "individual retirement plan" in concluding
    provisions.
      1996 - Subsec. (e)(12). Pub. L. 104-188 substituted "(b)(2)" for
    "(b)(3)" in closing provisions.
      1992 - Subsec. (a). Pub. L. 102-318, Sec. 521(b)(36), substituted
    "Periodic payments" for "Pensions, annuities, etc." in heading.
      Subsec. (a)(1). Pub. L. 102-318, Sec. 522(b)(2)(A), substituted
    "subsection (e)(2)" for "subsection (d)(2)".
      Subsec. (b)(1). Pub. L. 102-318, Secs. 521(b)(37)(A),
    522(b)(2)(B), substituted "subsection (e)(3)" for "subsection
    (d)(3)" and "an amount equal to 10 percent of such distribution"
    for "the amount determined under paragraph (2)".
      Subsec. (b)(2), (3). Pub. L. 102-318, Sec. 521(b)(37)(B),
    redesignated par. (3) as (2) and struck out former par. (2) which
    related to amount of withholding.
      Subsec. (c). Pub. L. 102-318, Sec. 522(b)(1), added subsec. (c).
    Former subsec. (c) redesignated (d).
      Subsec. (d). Pub. L. 102-318, Sec. 522(b)(1), (2)(C),
    redesignated subsec. (c) as (d) and substituted "subsection (e)(1)"
    for "subsection (d)(1)" in par. (1). Former subsec. (d)
    redesignated (e).
      Pub. L. 102-318, Sec. 521(b)(40), substituted "(b)(2)" for
    "(b)(3)" in par. (13)(A).
      Pub. L. 102-318, Sec. 521(b)(39), amended par. (8) generally.
    Prior to amendment, par. (8) read as follows: "The maximum amount
    to be withheld under this section on any designated distribution
    shall not exceed the sum of the amount of money and the fair market
    value of other property (other than employer securities of the
    employer corporation (within the meaning of section 402(a)(3)))
    received in the distribution. No amount shall be required to be
    withheld under this section in the case of any designated
    distribution which consists only of employer securities of the
    employer corporation (within the meaning of section 402(a)(3)) and
    cash (not in excess of $200) in lieu of fractional shares."
      Pub. L. 102-318, Sec. 521(b)(38), struck out par. (4) which
    defined "qualified total distribution" and provided special rule
    for accumulated deductible employee contributions in determining
    qualified total distribution.
      Subsecs. (e), (f). Pub. L. 102-318, Sec. 522(b)(1), redesignated
    subsecs. (d) and (e) as (e) and (f), respectively.
      1988 - Subsec. (d)(13). Pub. L. 100-647, Sec. 1012(bb)(2)(C),
    substituted "United States or its possessions" for "United States"
    in heading.
      Subsec. (d)(13)(A). Pub. L. 100-647, Sec. 1012(bb)(2)(A),
    substituted "the United States and any possession of the United
    States" for "the United States".
      Subsec. (d)(13)(B)(i). Pub. L. 100-647, Sec. 1012(bb)(2)(B),
    amended cl. (i) generally, substituting "or a resident alien of the
    United States" for "who is a bona fide resident of a foreign
    country".
      1986 - Subsec. (d)(1)(B). Pub. L. 99-514, Sec. 1102(e)(1),
    inserted last sentence for "For purposes of clause (ii), any
    distribution or payment from or under an individual retirement plan
    shall be treated as includible in gross income."
      Subsec. (d)(1)(B)(iii), (iv). Pub. L. 99-514, Sec. 1875(c)(10),
    reenacted cl. (iii) relating to amounts subject to withholding
    under subchapter A of chapter 3 as cl. (iii) and reenacted cl.
    (iii) relating to distribution described in section 404(k)(2) as
    cl. (iv).
      Subsec. (d)(13). Pub. L. 99-514, Sec. 1234(b)(1), added par.
    (13).
      1984 - Subsec. (b)(2)(C). Pub. L. 98-369, Sec. 714(j)(1),
    substituted "nonperiodic distribution" for "distribution described
    in subparagraph (B)" and "subparagraph (A) or (B) (as the case may
    be) shall be applied by taking into account" for "the Secretary, in
    prescribing tables or procedures under paragraph (1), shall take
    into account", designated phrase "which is made by reason of a
    participant's death" as cl. (i) and added cl. (ii).
      Subsec. (d)(1)(B)(iii). Pub. L. 98-369, Sec. 714(j)(4), added cl.
    (iii) relating to amounts subject to withholding under subchapter A
    of chapter 3.
      Pub. L. 98-369, Sec. 542(c), added cl. (iii) relating to
    distributions described in section 404(k)(2). Directory language
    that section (d)(1)(B) be amended by striking out "and" at end of
    cl. (i) and substituting ", or" for the period at end of cl. (ii)
    could not be executed in view of prior amendment by section
    714(j)(4) of Pub. L. 98-369, which struck out "and" at end of cl.
    (i) and substituted ", and" for the period at end of cl. (ii).
      Subsec. (d)(8). Pub. L. 98-369, Sec. 714(j)(5), freed from
    withholding requirement any designated distribution which consists
    only of employer securities of the employer corporation (within the
    meaning of section 402(a)(3)) and cash (not in excess of $200) in
    lieu of fractional shares.
      Subsec. (d)(12). Pub. L. 98-369, Sec. 722(h)(4), added par. (12).

                     EFFECTIVE DATE OF 2001 AMENDMENT                 
      Amendment by Pub. L. 107-16 applicable to distributions after
    Dec. 31, 2001, see section 641(f)(1) of Pub. L. 107-16, set out as
    a note under section 402 of this title.

                     EFFECTIVE DATE OF 2000 AMENDMENT                 
      Amendment by Pub. L. 106-554 effective as if included in the
    provisions of the Taxpayer Relief Act of 1997, Pub. L. 105-34, to
    which such amendment relates, see section 1(a)(7) [title III, Sec.
    314(g)] of Pub. L. 106-554, set out as a note under section 56 of
    this title.

                     EFFECTIVE DATE OF 1992 AMENDMENT                 
      Amendment by section 521(b)(36)-(40) of Pub. L. 102-318
    applicable to distributions after Dec. 31, 1992, see section 521(e)
    of Pub. L. 102-318, set out as a note under section 402 of this
    title.
      Amendment by section 522(b)(1)-(2)(C) of Pub. L. 102-318
    applicable, except as otherwise provided, to distributions after
    Dec. 31, 1992, see section 522(d) of Pub. L. 102-318, set out as a
    note under section 401 of this title.

                     EFFECTIVE DATE OF 1988 AMENDMENT                 
      Section 1012(bb)(2)(D) of Pub. L. 100-647 provided that: "The
    amendments made by this paragraph [amending this section] shall
    apply to distributions made after the date of the enactment of this
    Act [Nov. 10, 1988]."

                     EFFECTIVE DATE OF 1986 AMENDMENT                 
      Amendment by section 1102(e)(1) of Pub. L. 99-514 applicable to
    contributions and distributions for taxable years beginning after
    Dec. 31, 1986, see section 1102(g) of Pub. L. 99-514, set out as a
    note under section 219 of this title.
      Section 1234(b)(2) of Pub. L. 99-514 provided that: "The
    amendment made by this subsection [amending this section] shall
    apply to payments after December 31, 1986."
      Amendment by section 1875(c)(10) of Pub. L. 99-514 effective,
    except as otherwise provided, as if included in the provisions of
    the Tax Reform Act of 1984, Pub. L. 98-369, div. A, to which such
    amendment relates, see section 1881 of Pub. L. 99-514, set out as a
    note under section 48 of this title.

                     EFFECTIVE DATE OF 1984 AMENDMENT                 
      Amendment by section 542(c) of Pub. L. 98-369 applicable to
    taxable years beginning after July 18, 1984, see section 542(d) of
    Pub. L. 98-369, set out as a note under section 404 of this title.
      Amendment by section 714(j)(1), (4), (5) of Pub. L. 98-369
    effective as if included in the provision of the Tax Equity and
    Fiscal Responsibility Act of 1982, Pub. L. 97-248, to which such
    amendment relates, see section 715 of Pub. L. 98-369, set out as a
    note under section 31 of this title.
      Amendment by section 722(h)(4)(A) of Pub. L. 98-369 applicable to
    payments or distributions after Dec. 31, 1984, unless the payor
    elects to have such amendment apply to payments or distributions
    before Jan. 1, 1985, see section 722(h)(5)(B) of Pub. L. 98-369,
    set out as a note under section 643 of this title.

                              EFFECTIVE DATE                          
      Section 334(e) of Pub. L. 97-248, as amended by Pub. L. 99-514,
    Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
      "(1) Amendment made by subsections (a) and (d). - Except as
    provided in paragraph (4), the amendment made by subsections (a)
    [enacting this section] and (d) [amending section 3402 of this
    title] shall apply to payments or other distributions made after
    December 31, 1982.
      "(2) Amendments made by subsection (b). - Except as provided in
    paragraph (4), the amendments made by subsection (b) [amending
    section 6047 of this title] shall take effect on January 1, 1983.
      "(3) Amendments made by subsection (c). - The amendments made by
    subsection (c) [enacting section 6704 of this title] shall take
    effect on January 1, 1985.
      "(4) Periodic payments beginning before january 1, 1983. - For
    purposes of section 3405(a) of the Internal Revenue Code of 1986
    [formerly I.R.C. 1954], in the case of periodic payments beginning
    before January 1, 1983, the first periodic payment after December
    31, 1982, shall be treated as the first such periodic payment.
      "(5) Delay in application. - The Secretary of the Treasury shall
    prescribe such regulations which delay (but not beyond June 30,
    1983) the application of some or all of the amendments made by this
    section with respect to any payor until such time as such payor is
    able to comply without undue hardship with the requirements of such
    provisions.
      "(6) Waiver of penalty. - No penalty shall be assessed under
    section 6672 with respect to any failure to withhold as required by
    the amendments made by this section if such failure was before July
    1, 1983, and if the person made a good faith effort to comply with
    such withholding requirements."

            PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1994        
      For provisions directing that if any amendments made by subtitle
    B [Secs. 521-523] of title V of Pub. L. 102-318 require an
    amendment to any plan, such plan amendment shall not be required to
    be made before the first plan year beginning on or after Jan. 1,
    1994, see section 523 of Pub. L. 102-318, set out as a note under
    section 401 of this title.

            PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1989        
      For provisions directing that if any amendments made by subtitle
    A or subtitle C of title XI [Secs. 1101-1147 and 1171-1177] or
    title XVIII [Secs. 1800-1899A] of Pub. L. 99-514 require an
    amendment to any plan, such plan amendment shall not be required to
    be made before the first plan year beginning on or after Jan. 1,
    1989, see section 1140 of Pub. L. 99-514, as amended, set out as a
    note under section 401 of this title.

-End-

-CITE-
    26 USC Sec. 3406                                            01/03/2007

-EXPCITE-
    TITLE 26 - INTERNAL REVENUE CODE
    Subtitle C - Employment Taxes
    CHAPTER 24 - COLLECTION OF INCOME TAX AT SOURCE ON WAGES

-HEAD-
    Sec. 3406. Backup withholding

-STATUTE-
    (a) Requirement to deduct and withhold
      (1) In general
        In the case of any reportable payment, if - 
          (A) the payee fails to furnish his TIN to the payor in the
        manner required,
          (B) the Secretary notifies the payor that the TIN furnished
        by the payee is incorrect,
          (C) there has been a notified payee underreporting described
        in subsection (c), or
          (D) there has been a payee certification failure described in
        subsection (d),

      then the payor shall deduct and withhold from such payment a tax
      equal to the product of the fourth lowest rate of tax applicable
      under section 1(c) and such payment.
      (2) Subparagraphs (C) and (D) of paragraph (1) apply only to
        interest and dividend payments
        Subparagraphs (C) and (D) of paragraph (1) shall apply only to
      reportable interest or dividend payments.
    (b) Reportable payment, etc.
      For purposes of this section - 
      (1) Reportable payment
        The term "reportable payment" means - 
          (A) any reportable interest or dividend payment, and
          (B) any other reportable payment.
      (2) Reportable interest or dividend payment
        (A) In general
          The term "reportable interest or dividend payment" means any
        payment of a kind, and to a payee, required to be shown on a
        return required under - 
            (i) section 6049(a) (relating to payments of interest),
            (ii) section 6042(a) (relating to payments of dividends),
          or
            (iii) section 6044 (relating to payments of patronage
          dividends) but only to the extent such payment is in money.
        (B) Special rule for patronage dividends
          For purposes of subparagraphs (C) and (D) of subsection
        (a)(1), the term "reportable interest or dividend payment"
        shall not include any payment to which section 6044 (relating
        to patronage dividends) applies unless 50 percent or more of
        such payment is in money.
      (3) Other reportable payment
        The term "other reportable payment" means any payment of a
      kind, and to a payee, required to be shown on a return required
      under - 
          (A) section 6041 (relating to certain information at source),
          (B) section 6041A(a) (relating to payments of remuneration
        for services),
          (C) section 6045 (relating to returns of brokers),
          (D) section 6050A (relating to reporting requirements of
        certain fishing boat operators), but only to the extent such
        payment is in money and represents a share of the proceeds of
        the catch, or
          (E) section 6050N (relating to payments of royalties).
      (4) Whether payment is of reportable kind determined without
        regard to minimum amount
        The determination of whether any payment is of a kind required
      to be shown on a return described in paragraph (2) or (3) shall
      be made without regard to any minimum amount which must be paid
      before a return is required.
      (5) Exception for certain small payments
        To the extent provided in regulations, the term "reportable
      payment" shall not include any payment which - 
          (A) does not exceed $10, and
          (B) if determined for a 1-year period, would not exceed $10.
      (6) Other reportable payments include payments described in
        section 6041(a) or 6041A(a) only where aggregate for calendar
        year is $600 or more
        Any payment of a kind required to be shown on a return required
      under section 6041(a) or 6041A(a) which is made during any
      calendar year shall be treated as a reportable payment only if - 
          (A) the aggregate amount of such payment and all previous
        payments described in such sections by the payor to the payee
        during such calendar year equals or exceeds $600,
          (B) the payor was required under section 6041(a) or 6041A(a)
        to file a return for the preceding calendar year with respect
        to payments to the payee, or
          (C) during the preceding calendar year, the payor made
        reportable payments to the payee with respect to which amounts
        were required to be deducted and withheld under subsection (a).
      (7) Exception for certain window payments of interest, etc.
        For purposes of subparagraphs (C) and (D) of subsection (a)(1),
      the term "reportable interest or dividend payment" shall not
      include any payment - 
          (A) in redemption of a coupon on a bearer instrument or in
        redemption of a United States savings bond, or
          (B) to the extent provided in regulations, of interest on
        instruments similar to those described in subparagraph (A).

      The preceding sentence shall not apply for purposes of
      determining whether there is payee underreporting described in
      subsection (c).
    (c) Notified payee underreporting with respect to interest and
      dividends
      (1) Notified payee underreporting
        If - 
          (A) the Secretary determines with respect to any payee that
        there has been payee underreporting,
          (B) at least 4 notices have been mailed by the Secretary to
        the payee (over a period of at least 120 days) with respect to
        the underreporting, and
          (C) in the case of any payee who has filed a return for the
        taxable year, any deficiency of tax attributable to such
        failure has been assessed,

      the Secretary may notify payors of reportable interest or
      dividend payments with respect to such payee of the requirement
      to deduct and withhold under subsection (a)(1)(C) (but not the
      reasons for the withholding under subsection (a)(1)(C)).
      (2) Payee underreporting defined
        For purposes of this section, there has been payee
      underreporting if for any taxable year the Secretary determines
      that - 
          (A) the payee failed to include in his return of tax under
        chapter 1 for such year any portion of a reportable interest or
        dividend payment required to be shown on such return, or
          (B) the payee may be required to file a return for such year
        and to include a reportable interest or dividend payment in
        such return, but failed to file such return.
      (3) Determination by secretary to stop (or not to start)
        withholding
        (A) In general
          If the Secretary determines that - 
            (i) there was no payee underreporting,
            (ii) any payee underreporting has been corrected (and any
          tax, penalty, or interest with respect to the payee
          underreporting has been paid),
            (iii) withholding under subsection (a)(1)(C) has caused (or
          would cause) undue hardship to the payee and it is unlikely
          that any payee underreporting by such payee will occur again,
          or
            (iv) there is a bona fide dispute as to whether there has
          been any payee underreporting,

        then the Secretary shall take the action described in
        subparagraph (B).
        (B) Secretary to take action to stop (or not to start)
          withholding
          For purposes of subparagraph (A), if at the time of the
        Secretary's determination under subparagraph (A) - 
            (i) no notice has been given under paragraph (1) to any
          payor with respect to the underreporting, the Secretary shall
          not give any such notice, or
            (ii) if such notice has been given, the Secretary shall - 
              (I) provide the payee with a written certification that
            withholding under subsection (a)(1)(C) is to stop, and
              (II) notify the applicable payors (and brokers) that such
            withholding is to stop.
        (C) Time for taking action where notice to payor has been given
          In any case where notice has been given under paragraph (1)
        to any payor with respect to any underreporting, if the
        Secretary makes a determination under subparagraph (A) during
        the 12-month period ending on October 15 of any calendar year -
        
            (i) except as provided in clause (ii), the Secretary shall
          take the action described in subparagraph (B)(ii) to bring
          about the stopping of withholding no later than December 1 of
          such calendar year, or
            (ii) in the case of - 
              (I) a no payee underreporting determination under clause
            (i) of subparagraph (A), or
              (II) a hardship determination under clause (iii) of
            subparagraph (A),

          such action shall be taken no later than the 45th day after
          the day on which the Secretary made the determination.
        (D) Opportunity to request determination
          The Secretary shall prescribe procedures under which - 
            (i) a payee may request a determination under subparagraph
          (A), and
            (ii) the payee may provide information with respect to such
          request.
      (4) Payor notifies payee of withholding because of payee
        underreporting
        Any payor required to withhold any tax under subsection
      (a)(1)(C) shall, at the time such withholding begins, notify the
      payee of such withholding.
      (5) Payee may be required to notify Secretary who his payors and
        brokers are
        For purposes of this section, the Secretary may require any
      payee of reportable interest or dividend payments who is subject
      to withholding under subsection (a)(1)(C) to notify the Secretary
      of - 
          (A) all payors from whom the payee receives reportable
        interest or dividend payments, and
          (B) all brokers with whom the payee has accounts which may
        involve reportable interest or dividend payments.

      The Secretary may notify any such broker that such payee is
      subject to withholding under subsection (a)(1)(C).
    (d) Interest and dividend backup withholding applies to new
      accounts and instruments unless payee certifies that he is not
      subject to such withholding
      (1) In general
        There is a payee certification failure unless the payee has
      certified to the payor, under penalty of perjury, that such payee
      is not subject to withholding under subsection (a)(1)(C).
      (2) Special rules for readily tradable instruments
        (A) In general
          Subsection (a)(1)(D) shall apply to any reportable interest
        or dividend payment to any payee on any readily tradable
        instrument if (and only if) the payor was notified by a broker
        under subparagraph (B) or no certification was provided to the
        payor by the payee under paragraph (1) and - 
            (i) such instrument was acquired directly by the payee from
          the payor, or
            (ii) such instrument is held by the payor as nominee for
          the payee.
        (B) Broker notifies payor
          If - 
            (i) a payee acquires any readily tradable instrument
          through a broker, and
            (ii) with respect to such acquisition - 
              (I) the payee fails to furnish his TIN to the broker in
            the manner required under subsection (a)(1)(A),
              (II) the Secretary notifies such broker before such
            acquisition that the TIN furnished by the payee is
            incorrect,
              (III) the Secretary notifies such broker before such
            acquisition that such payee is subject to withholding under
            subsection (a)(1)(C), or
              (IV) the payee does not provide a certification to such
            broker under subparagraph (C),

          such broker shall, within such period as the Secretary may
          prescribe by regulations (but not later than 15 days after
          such acquisition), notify the payor that such payee is
          subject to withholding under subparagraph (A), (B), (C), or
          (D) of subsection (a)(1), respectively.
        (C) Time for payee to provide certification to broker
          In the case of any readily tradable instrument acquired by a
        payee through a broker, the certification described in
        paragraph (1) may be provided by the payee to such broker - 
            (i) at any time after the payee's account with the broker
          was established and before the acquisition of such
          instrument, or
            (ii) in connection with the acquisition of such instrument.
      (3) Exception for existing accounts, etc.
        This subsection and subsection (a)(1)(D) shall not apply to any
      reportable interest or dividend payment which is paid or credited
      - 
          (A) in the case of interest or any other amount of a kind
        reportable under section 6049, with respect to any account
        (whatever called) established before January 1, 1984, or with
        respect to any instrument acquired before January 1, 1984,
          (B) in the case of dividends or any other amount reportable
        under section 6042, on any stock or other instrument acquired
        before January 1, 1984, or
          (C) in the case of patronage dividends or other amounts of a
        kind reportable under section 6044, with respect to any
        membership acquired, or contract entered into, before January
        1, 1984.
      (4) Exception for readily tradable instruments acquired through
        existing brokerage accounts
        Subparagraph (B) of paragraph (2) shall not apply with respect
      to a readily tradable instrument which was acquired through an
      account with a broker if - 
          (A) such account was established before January 1, 1984, and
          (B) during 1983, such broker bought or sold instruments for
        the payee (or acted as a nominee for the payee) through such
        account.

      The preceding sentence shall not apply with respect to any
      readily tradable instrument acquired through such account after
      the broker was notified by the Secretary that the payee is
      subject to withholding under subsection (a)(1)(C).
    (e) Period for which withholding is in effect
      (1) Failure to furnish TIN
        In the case of any failure by a payee to furnish his TIN to a
      payor in the manner required, subsection (a) shall apply to any
      reportable payment made by such payor during the period during
      which the TIN has not been furnished in the manner required. The
      Secretary may require that a TIN required to be furnished under
      subsection (a)(1)(A) be provided under penalties of perjury only
      with respect to interest, dividends, patronage dividends, and
      amounts subject to broker reporting.
      (2) Notification of incorrect number
        In any case in which the Secretary notifies the payor that the
      TIN furnished by the payee is incorrect, subsection (a) shall
      apply to any reportable payment made by such payor - 
          (A) after the close of the 30th day after the day on which
        the payor received such notification, and
          (B) before the payee furnishes another TIN in the manner
        required.
      (3) Notified payee underreporting described in subsection (c)
        (A) In general
          In the case of any notified payee underreporting described in
        subsection (c), subsection (a) shall apply to any reportable
        interest or dividend payment made - 
            (i) after the close of the 30th day after the day on which
          the payor received notification from the Secretary of such
          underreporting, and
            (ii) before the stop date.
        (B) Stop date
          For purposes of this subsection, the term "stop date" means
        the determination effective date or, if later, the earlier of -
        
            (i) the day on which the payor received notification from
          the Secretary under subsection (c)(3)(B) to stop withholding,
          or
            (ii) the day on which the payor receives from the payee a
          certification provided by the Secretary under subsection
          (c)(3)(B).
        (C) Determination effective date
          For purposes of this subsection - 
          (i) In general
            Except as provided in clause (ii), the determination
          effective date of any determination under subsection
          (c)(3)(A) which is made during the 12-month period ending on
          October 15 of any calendar year shall be the first January 1
          following such October 15.
          (ii) Determination that there was no underreporting; hardship
            In the case of any determination under clause (i) or (iii)
          of subsection (c)(3)(A), the determination effective date
          shall be the date on which the Secretary's determination is
          made.
      (4) Failure to provide certification that payee is not subject to
        withholding
        (A) In general
          In the case of any payee certification failure described in
        subsection (d)(1), subsection (a) shall apply to any reportable
        interest or dividend payment made during the period during
        which the certification described in subsection (d)(1) has not
        been furnished to the payor.
        (B) Special rule for readily tradable instruments acquired
          through broker where notification
          In the case of any readily tradable instrument acquired by
        the payee through a broker, the period described in
        subparagraph (A) shall start with payments to the payee made
        after the close of the 30th day after the payor receives
        notification from a broker under subsection (d)(2)(B).
      (5) 30-day grace periods
        (A) Start-up
          If the payor elects the application of this subparagraph with
        respect to the payee, subsection (a) shall also apply to any
        reportable payment made during the 30-day period described in
        paragraph (2)(A), (3)(A), or (4)(B).
        (B) Stopping
          Unless the payor elects not to have this subparagraph apply
        with respect to the payee, subsection (a) shall also apply to
        any reportable payment made after the close of the period
        described in paragraph (1), (2), or (4) (as the case may be)
        and before the 30th day after the close of such period. A
        similar rule shall also apply with respect to the period
        described in paragraph (3)(A) where the stop date is determined
        under clause (i) or (ii) of paragraph (3)(B).
        (C) Election of shorter grace period
          The payor may elect a period shorter than the grace period
        set forth in subparagraph (A) or (B), as the case may be.
    (f) Confidentiality of information
      (1) In general
        No person may use any information obtained under this section
      (including any failure to certify under subsection (d)) except
      for purposes of meeting any requirement under this section or
      (subject to the safeguards set forth in section 6103) for
      purposes permitted under section 6103.
      (2) Cross reference
          For provision providing for civil damages for violation of
        paragraph (1), see section 7431.
    (g) Exceptions
      (1) Payments to certain payees
        Subsection (a) shall not apply to any payment made to - 
          (A) any organization or governmental unit described in
        subparagraph (B), (C), (D), (E), or (F) of section 6049(b)(4),
        or
          (B) any other person specified in regulations.
      (2) Amounts for which withholding otherwise required
        Subsection (a) shall not apply to any amount for which
      withholding is otherwise required by this title.
      (3) Exemption while waiting for TIN
        The Secretary shall prescribe regulations for exemptions from
      the tax imposed by subsection (a) during the period during which
      a person is waiting for receipt of a TIN.
    (h) Other definitions and special rules
      For purposes of this section - 
      (1) Obviously incorrect number
        A person shall be treated as failing to furnish his TIN if the
      TIN furnished does not contain the proper number of digits.
      (2) Payee furnishes 2 incorrect TINs
        If the payee furnishes the payor 2 incorrect TINs in any 3-year
      period, the payor shall, after receiving notice of the second
      incorrect TIN, treat the payee as not having furnished another
      TIN under subsection (e)(2)(B) until the day on which the payor
      receives notification from the Secretary that a correct TIN has
      been furnished.
      (3) Joint payees
        Except to the extent otherwise provided in regulations, any
      payment to joint payees shall be treated as if all the payment
      were made to the first person listed in the payment.
      (4) Payor defined
        The term "payor" means, with respect to any reportable payment,
      a person required to file a return described in paragraph (2) or
      (3) of subsection (b) with respect to such payment.
      (5) Broker
        (A) In general
          The term "broker" has the meaning given to such term by
        section 6045(c)(1).
        (B) Only 1 broker per acquisition
          If, but for this subparagraph, there would be more than 1
        broker with respect to any acquisition, only the broker having
        the closest contact with the payee shall be treated as the
        broker.
        (C) Payor not treated as broker
          In the case of any instrument, such term shall not include
        any person who is the payor with respect to such instrument.
        (D) Real estate broker not treated as a broker
          Except as provided by regulations, such term shall not
        include any real estate broker (as defined in section
        6045(e)(2)).
      (6) Readily tradable instrument
        The term "readily tradable instrument" means - 
          (A) any instrument which is part of an issue any portion of
        which is traded on an established securities market (within the
        meaning of section 453(f)(5)), and
          (B) except as otherwise provided in regulations prescribed by
        the Secretary, any instrument which is regularly quoted by
        brokers or dealers making a market.
      (7) Original issue discount
        To the extent provided in regulations, rules similar to the
      rules of paragraph (6) of section 6049(d) shall apply.
      (8) Requirement of notice to payee
        Whenever the Secretary notifies a payor under paragraph (1)(B)
      of subsection (a) that the TIN furnished by any payee is
      incorrect, the Secretary shall at the same time furnish a copy of
      such notice to the payor, and the payor shall promptly furnish
      such copy to the payee.
      (9) Requirement of notice to Secretary
        If the Secretary notifies a payor under paragraph (1)(B) of
      subsection (a) that the TIN furnished by any payee is incorrect
      and such payee subsequently furnishes another TIN to the payor,
      the payor shall promptly notify the Secretary of the other TIN so
      furnished.
      (10) Coordination with other sections
        For purposes of section 31, this chapter (other than section
      3402(n)), and so much of subtitle F (other than section 7205) as
      relates to this chapter, payments which are subject to
      withholding under this section shall be treated as if they were
      wages paid by an employer to an employee (and amounts deducted
      and withheld under this section shall be treated as if deducted
      and withheld under section 3402).
    (i) Regulations
      The Secretary shall prescribe such regulations as may be
    necessary or appropriate to carry out the purposes of this section.

-SOURCE-
    (Added Pub. L. 98-67, title I, Sec. 104(a), Aug. 5, 1983, 97 Stat.
    371; amended Pub. L. 98-369, div. A, title I, Sec. 152(a), title
    VII, Sec. 722(h)(1), (2), July 18, 1984, 98 Stat. 691, 975; Pub. L.
    99-514, title XV, Secs. 1521(b), 1523(b)(1), title XVIII, Sec.
    1899A(46), Oct. 22, 1986, 100 Stat. 2746, 2748, 2961; Pub. L. 100-
    647, title I, Sec. 1018(u)(44), Nov. 10, 1988, 102 Stat. 3592;
    Pub. L. 102-486, title XIX, Sec. 1935(a), Oct. 24, 1992, 106 Stat.
    3032; Pub. L. 107-16, title I, Sec. 101(c)(10), June 7, 2001, 115
    Stat. 44.)

-STATAMEND-
                           AMENDMENT OF SECTION                       
      For termination of amendment by section 901 of Pub. L. 107-16,
    see Effective and Termination Dates of 2001 Amendment note below.

-MISC1-
                                AMENDMENTS                            
      2001 - Subsec. (a)(1). Pub. L. 107-16, Secs. 101(c)(10), 901,
    temporarily substituted "equal to the product of the fourth lowest
    rate of tax applicable under section 1(c) and such payment" for
    "equal to 31 percent of such payment" in concluding provisions. See
    Effective and Termination Dates of 2001 Amendment note below.
      1992 - Subsec. (a)(1). Pub. L. 102-486, in closing provisions,
    substituted "31 percent" for "20 percent".
      1988 - Subsec. (h)(5)(D). Pub. L. 100-647 inserted period at end
    of subpar. (D).
      1986 - Subsec. (b)(3)(E). Pub. L. 99-514, Sec. 1523(b)(1), added
    subpar. (E).
      Subsec. (b)(6). Pub. L. 99-514, Sec. 1899A(46), substituted
    "6041A(a)" for "6041(A)(a)" in heading.
      Subsec. (h)(5)(D). Pub. L. 99-514, Sec. 1521(b), added subpar.
    (D).
      1984 - Subsec. (c)(1). Pub. L. 98-369, Sec. 722(h)(2),
    substituted "(but not the reasons for the withholding under
    subsection (a)(1)(C))" for "(but not the reasons therefor)".
      Subsec. (d)(2)(A). Pub. L. 98-369, Sec. 722(h)(1)(A), inserted
    "the payor was notified by a broker under subparagraph (B) or"
    after "if (and only if)" in provisions preceding cl. (i), struck
    out cl. (i) which read as follows: "the payor was notified by a
    broker under subparagraph (B)," and redesignated cls. (ii) and
    (iii) as (i) and (ii), respectively.
      Subsec. (d)(2)(B). Pub. L. 98-369, Sec. 722(h)(1)(B), in amending
    subpar. (B) generally, reenacted cl. (i), in cl. (ii) inserted
    "with respect to such acquisition - ", added subcls. (I) and (II),
    redesignated former subcls. (I) and (II) as (III) and (IV),
    respectively, and in subcl. (III) substituted "the Secretary
    notifies such broker" for "such broker is notified by the
    Secretary", and in provisions following cl. (ii) substituted "shall
    within such period as the Secretary may prescribe by regulations
    (but not later than 15 days after such acquisition), notify the
    payor that such payee is subject to withholding under subparagraph
    (A), (B), (C) or (D) of subsection (a)(1)," for "within 15 days
    after the date of the acquisition notify the payor that such payee
    is subject to withholding under subsection (a)(1)(D) (or subsection
    (a)(1)(C) in the case of a notification described in clause
    (ii)(II)."
      Subsec. (e)(1). Pub. L. 98-369, Sec. 152(a), inserted provision
    that the Secretary may require that a TIN required to be furnished
    under subsection (a)(1)(A) be provided under penalties of perjury
    only with respect to interest, dividends, patronage dividends, and
    amounts subject to broker reporting.

             EFFECTIVE AND TERMINATION DATES OF 2001 AMENDMENT         
      Amendment by Pub. L. 107-16 applicable to amounts paid after the
    60th day after June 7, 2001, and references to income brackets and
    rates of tax in such amendment to be applied without regard to
    section 1(i)(1)(D) of this title, see section 101(d)(2) of Pub. L.
    107-16, set out as a note under section 1 of this title.
      Amendment by Pub. L. 107-16 inapplicable to taxable, plan, or
    limitation years beginning after Dec. 31, 2010, and the Internal
    Revenue Code of 1986 to be applied and administered to such years
    as if such amendment had never been enacted, see section 901 of
    Pub. L. 107-16, set out as a note under section 1 of this title.

                     EFFECTIVE DATE OF 1992 AMENDMENT                 
      Section 1935(b) of Pub. L. 102-486 provided that: "The amendment
    made by subsection (a) [amending this section] shall apply to
    amounts paid after December 31, 1992."

                     EFFECTIVE DATE OF 1988 AMENDMENT                 
      Amendment by 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.

                     EFFECTIVE DATE OF 1986 AMENDMENT                 
      Amendment by section 1521(b) of Pub. L. 99-514 applicable to real
    estate transactions closing after Dec. 31, 1986, see section
    1521(c) of Pub. L. 99-514, set out as a note under section 6045 of
    this title.
      Amendment by section 1523(b)(1) of Pub. L. 99-514 applicable to
    payments made after Dec. 31, 1986, see section 1523(d) of Pub. L.
    99-514, set out as an Effective Date note under section 6050N of
    this title.

                     EFFECTIVE DATE OF 1984 AMENDMENT                 
      Section 152(b) of Pub. L. 98-369 provided that: "The amendment
    made by this section [amending this section] shall take effect on
    the date of the enactment of this Act [July 18, 1984]."
      Amendment by section 722(h)(1), (2) of Pub. L. 98-369 applicable
    as if included in amendments made by Interest and Dividend Tax
    Compliance Act of 1983, Pub. L. 98-67, see section 722(h)(5)(A) of
    Pub. L. 98-369, set out as a note under section 643 of this title.

                              EFFECTIVE DATE                          
      Section applicable with respect to payments made after Dec. 31,
    1983, see section 110(a) of Pub. L. 98-67, set out as an Effective
    Date of 1983 Amendment note under section 31 of this title.

            PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1989        
      For provisions directing that if any amendments made by subtitle
    A or subtitle C of title XI [Secs. 1101-1147 and 1171-1177] or
    title XVIII [Secs. 1800-1899A] of Pub. L. 99-514 require an
    amendment to any plan, such plan amendment shall not be required to
    be made before the first plan year beginning on or after Jan. 1,
    1989, see section 1140 of Pub. L. 99-514, as amended, set out as a
    note under section 401 of this title.

-End-

-CITE-
    26 USC Secs. 3451 to 3456                                   01/03/2007

-EXPCITE-
    TITLE 26 - INTERNAL REVENUE CODE
    Subtitle C - Employment Taxes
    CHAPTER 24 - COLLECTION OF INCOME TAX AT SOURCE ON WAGES

-HEAD-
    Secs. 3451 to 3456. Repealed.

-MISC1-
    [Secs. 3451 to 3456. Repealed. Pub. L. 98-67, title I, Sec. 102(a),
      Aug. 5, 1983, 97 Stat. 369].
      Section 3451, Pub. L. 97-248, title III, Sec. 301, Sept. 3, 1982,
    96 Stat. 576, set forth withholding requirements respecting income
    tax collected at source on interest, dividends, and patronage
    dividends.
      Section 3452, Pub. L. 97-248, title III, Sec. 301, Sept. 3, 1982,
    96 Stat. 577, related to exemptions from withholding requirements.
      Section 3453, Pub. L. 97-248, title III, Sec. 301, Sept. 3, 1982,
    96 Stat. 579; Pub. L. 97-354, Sec. 3(i)(1), Oct. 19, 1982, 96 Stat.
    1690, defined "payor".
      Section 3454, Pub. L. 97-248, title III, Sec. 301, Sept. 3, 1982,
    96 Stat. 580; Pub. L. 97-354, Sec. 3(i)(2), (3), Oct. 19, 1982, 96
    Stat. 1690; Pub. L. 97-424, title V, Sec. 547(b)(3), Jan. 6, 1983,
    96 Stat. 2200, defined the terms "interest", "dividend", and
    "patronage dividend".
      Section 3455, Pub. L. 97-248, title III, Sec. 301, Sept. 3, 1982,
    96 Stat. 583, set forth definitions and other special rules.
      Section 3456, Pub. L. 97-248, title III, Sec. 301, Sept. 3, 1982,
    96 Stat. 585, set forth administrative provisions.

                      EFFECTIVE DATES; SPECIAL RULES                  
      Pub. L. 97-248, title III, Sec. 308, Sept. 3, 1982, 96 Stat. 591,
    which provided that the amendments made by sections 301 to 308
    [enacting subchapter B (Secs. 3451-3456) of chapter 24 of this
    title and amending sections 31, 274, 275, 643, 661, 3403, 3502,
    3507, 6013, 6015, 6042, 6044, 6049, 6051, 6365, 6401, 6413, 6654,
    6682, 7205, 7215, 7654, and 7701 of this title] would apply to
    payments of interest, dividends, and patronage dividends paid or
    credited after June 30, 1983, provided for the delay in
    applications for payors unable to comply with the requirements of
    such provisions without undue hardship, provided a temporary rule
    for certain withholding exemptions, and provided for delays in
    making deposits, was repealed by Pub. L. 98-67, title I, Sec.
    102(a), Aug. 5, 1983, 97 Stat. 369.

              REPEAL OF WITHHOLDING ON INTEREST AND DIVIDENDS          
      Pub. L. 98-67, title I, Sec. 102(a)-(d), Aug. 5, 1983, 97 Stat.
    369, as amended by Pub. L. 99-514, Sec. 2, Oct. 22, 1986, 100 Stat.
    2095, provided that:
      "(a) In General. - Subtitle A of title III of the Tax Equity and
    Fiscal Responsibility Act of 1982 (relating to withholding of tax
    from interest and dividends) [subtitle A (Secs. 301-308) of title
    III of Pub. L. 97-248, which enacted this section and sections 3452
    to 3456 of this title, amended sections 31, 274, 275, 643, 661,
    3403, 3502, 3507, 6013, 6015, 6042, 6044, 6051, 6365, 6401, 6413,
    6654, 6682, 7205, 7215, 7654, and 7701 of this title and enacted
    provisions set out as a note above] is hereby repealed as of the
    close of June 30, 1983.
      "(b) Conforming Amendment. - Except as provided in this section,
    the Internal Revenue Code of 1986 [formerly I.R.C. 1954] shall be
    applied and administered as if such subtitle A (and the amendments
    made by such subtitle A) had not been enacted.
      "(c) Repeal Not To Apply to Amounts Deducted and Withheld Before
    September 2, 1983. - 
        "(1) In general. - If, notwithstanding the repeal made by
      subsection (a) (and the provisions of subsection (b)), an amount
      is deducted and withheld before September 2, 1983, under
      subchapter B of chapter 24 of the Internal Revenue Code of 1986
      (as in effect before its repeal by subsection (a)), the repeal
      made by subsection (a) (and the provisions of subsection (b))
      shall not apply to the amount so deducted and withheld.
        "(2) Election to have paragraph (1) not apply. - Paragraph (1)
      shall not apply with respect to any payor who elects (at the time
      and in the manner prescribed by the Secretary of the Treasury or
      his delegate) to have paragraph (1) not apply.
      "(d) Estimated Tax Payments. - For purposes of determining the
    amount of any addition to tax under section 6654 of the Internal
    Revenue Code of 1986 with respect to any installment required to be
    paid before July 1, 1983, the amount of the credit allowed by
    section 31 of such Code for any taxable year which includes any
    portion of the period beginning July 1, 1983, and ending December
    31, 1983, shall be increased by an amount equal to 10 percent of
    the aggregate amount of payments - 
        "(1) which are received during the portion of such taxable year
      after June 30, 1983, and before January 1, 1984, and
        "(2) which (but for the repeal made by subsection (a)) would
      have been subject to withholding under subchapter B of chapter 24
      of such Code (determined without regard to any exemption
      described in section 3452 of such subchapter B)."

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