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practitioner, as the case may be; or (B) the due date of the return (including any extension thereof) for his second taxable year ending after 1959.11

(3) (A) EFFECTIVE DATE OF CERTIFICATE.-A certificate filed pursuant to this subsection shall be effective for the taxable year immediately preceding the earliest taxable year for which, at the time the certificate is filed, the period for filing a return (including any extension thereof) has not expired, and for all succeeding taxable years. An election made pursuant to this subsection shall be irrevocable.

(B) Notwithstanding the first sentence of subparagraph (A), if an individual filed a certificate on or before the date of enactment of this subparagraph which (but for this subparagraph) is effective only for the first taxable year ending after 1956 and all succeeding taxable years, such certificate shall be effective for his first taxable year ending after 1955 and all succeeding taxable years if

(i) such individual files a supplemental certificate after the date of enactment of this subparagraph and on or before April 15, 1962,

(ii) the tax under section 1401 in respect of all such individual's self-employment income (except for underpayments of tax attributable to errors made in good faith) for his first taxable year ending after 1955 is paid on or before April 15, 1962, and

(iii) in any case where refund has been made of any such tax which (but for this subparagraph) is an overpayment, the amount refunded (including any interest paid under section 6611) is repaid on or before April 15, 1962.

The provisions of section 6401 shall not apply to any payment or repayment described in this subparagraph.

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(4) TREATMENT OF CERTAIN REMUNERATION PAID IN 1955 AND

1956 AS WAGES.—If—

(A) in 1955 or 1956 an individual was paid remuneration for service described in section 3121 (b) (8) (A) which was erroneously treated by the organization employing him (under a certificate filed by such organization pursuant to section 3121 (k) or the corresponding section of prior law) as employment (within the meaning of chapter 21), and

(B) on or before the date of the enactment of this paragraph the taxes imposed by sections 3101 and 3111 were paid

11 P. L. 86-778, sec. 101 (a), substituted "1959" for "1956," applicable only with respect to certificates (and supplemental certificates) filed pursuant to section 1402 (e) of the Internal Revenue Code of 1954 after September 13, 1960; except that no monthly benefits under title II of the Social Security Act for September 1960 or any prior month shall be payable or increased by reason of this amendment and no lump-sum death payment under such title shall be payable or increased by reason of this amendment in the case of any individual who died prior to September 13, 1960.

See secs. 4 (b) and 4 (c) of P. L. 85-239 on p. 215 for recomputation provisions.

12 P. L. 86-778, sec. 101 (b) amended par. (3) in its entirety. This amendment is applicable (except as may otherwise be specifically indicated therein) only with respect to certificates (and supplemental certificates) filed pursuant to sec. 1402 (e) of the Internal Revenue Code of 1954 after September 13, 1960; except that no monthly benefits under title II of the Social Security Act for September 1960 or any prior month shall be payable or increased by reason of this amendment and no lump-sum death payment under such title shall be payable or increased by reason of this amendment in the case of any individual who died prior to September 13, 1960. For par. (3) as it read prior to this amendment see p. 000.

(in good faith and upon the assumption that the insurance system established by title II of the Social Security Act had been extended to such service) with respect to any part of the remuneration paid to such individual for such service, then the remuneration with respect to which such taxes were paid, and with respect to which no credit or refund of such taxes (other than a credit or refund which would be allowable if such service had constituted employment) has been obtained on or before the date of the enactment of this paragraph, shall be deemed (for purposes of this chapter and chapter 21) to constitute remuneration paid for employment and not net earnings from self-employment.18

(5) OPTIONAL PROVISION FOR CERTAIN CERTIFICATES FILED ON OR BEFORE APRIL 15, 1962.-In any case where an individual has derived earnings, in any taxable year ending after 1954 and before 1960, from the performance of service described in subsection (c) (4), or in subsection (c) (5) (as in effect prior to the enactment of this paragraph) insofar as it related to the performance of service by an individual in the exercise of his profession as a Christian Science practioner, and has reported such earnings as self-employment income on a return filed on or before the date of the enactment of this paragraph and on or before the due date prescribed for filing such return (including any extension thereof)—

(A) a certificate filed by such individual, or a fiduciary acting for such individual or his estate, or his survivor within the meaning of section 205 (c) (1) (C) of the Social Security Act) after the date of the enactment of this paragraph and on or before April 15, 1962, may be effective, at the election of the person filing such certificate, for the first taxable year ending after 1954 and before 1960 for which such a return was filed, and for all succeeding taxable years, rather than for the period prescribed in paragraph (3), and

(B) a certificate filed by such individual on or before the date of the enactment of this paragraph which (but for this subparagraph) is ineffective for the first taxable year ending after 1954 and before 1959 for which such a return was filed shall be effective for such first taxable year, and for all succeeding taxable years, provided a supplemental certificate is filed by such individual (or a fiduciary acting for such individual or his estate, or his survivor within the meaning of section 205 (c) (1) (C) of the Social Security Act) after the date of the enactment of this paragraph and on or before April 15, 1962,

but only if

(i) the tax under section 1401 in respect of all such individual's self-employment income (except for underpayments of tax attributable to errors made in good faith), for each such year ending before 1960 in the case of a certificate described in subparagraph (A) or for each such year ending

13 For treatment under title II of remuneration referred to in paragraph (4) see sec. 3 of P. L. 85-239 on p. 215.

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before 1959 in the case of a certificate described in subparagraph (B), is paid on or before April 15, 1962, and

(ii) in any case where refund has been made of any such tax which (but for this paragraph) is an overpayment, the amount refunded (including any interest paid under section 6611) is repaid on or before April 15, 1962.

The provisions of section 6401 shall not apply to any payment or repayment described in this paragraph.14

(f) PARTNER'S TAXABLE YEAR ENDING AS THE RESULT OF DEATH.In computing a partner's net earnings from self-employment for his taxable year which ends as a result of his death (but only if such taxable year ends within, and not with, the taxable year of the partnership), there shall be included so much of the deceased partner's distributive share of the partnership's ordinary income or loss for the partnership taxable year as is not attributable to an interest in the partnership during any period beginning on or after the first day of the first calendar month following the month in which such partner died. For purposes of this subsection

(1) in determining the portion of the distributive share which is attributable to any period specified in the preceding sentence, the ordinary income or loss of the partnership shall be treated as having been realized or sustained ratably over the partnership taxable year; and

(2) the term 'deceased partner's distributive share' includes the share of his estate or of any other person succeeding, by reason of his death, to rights with respect to his partnership interest.15

(g) TREATMENT OF CERTAIN REMUNERATION ERRONEOUSLY REPORTED AS NET EARNINGS FROM SELF-EMPLOYMENT.-If—

(1) an amount is erroneously paid as tax under section 1401, for any taxable year ending after 1954 and before 1962, with respect to remuneration for service described in section 3121 (b) (8) (other than service described in section 3121 (b) (8) (A)), and such remuneration is reported as self-employment income on a return filed on or before the due date prescribed for filing such return (including any extension thereof),

(2) the individual who paid such amount (or a fiduciary acting for such individual or his estate, or his survivor (within the meaning of section 205 (c) (1) (C) of the Social Security Act)) requests that such remuneration be deemed to constitute net earnings from self-employment,

(3) such request is filed after the date of the enactment of this paragraph and on or before April 15, 1962,

14 P. L. 86-778, sec. 101 (c) added paragraph (5). For effective date see footnote 12. 15 P. L. 85-840, sec. 403 (a) added subsec. (f). (1) Except as provided in par. (2), this amendment applies only with respect to individuals who die after August 28, 1958. (2) In the case of an individual who died after 1955 and on or before August 28, 1958, this amendment applies only if—

(A) before January 1, 1960, there is filed a return (or amended return) of the tax imposed by chapter 2 of the Internal Revenue Code of 1954 for the taxable year ending as a result of his death, and

(B) in any case where the return is filed solely for the purpose of reporting net earnings from self-employment resulting from this amendment, the return is accompanied by the amount of tax attributable to such net earnings. In any case described in the preceding sentence, no interest or penalty shall be assessed or collected on the amount of any tax due under chapter 2 of such Code solely by reason of the operation of sec. 1402 (f) of such Code.

(4) such remuneration was paid to such individual for services performed in the employ of an organization which, on or before the date on which such request is filed, has filed a certificate pursuant to section 3121 (k), and

(5) no credit or refund of any portion of the amount erroneously paid for such taxable year as tax under section 1401 (other than a credit or refund which would be allowable if such tax were applicable with respect to such remuneration) has been obtained before the date on which such request is filed or, if obtained, the amount credited or refunded (including any interest under section 6611) is repaid on or before such date,

then, for purposes of this chapter and chapter 21, any amount of such remuneration which is paid to such individual before the calendar quarter in which such request is filed (or before the succeeding quarter if such certificate first becomes effective with respect to services performed by such individual in such succeeding quarter), and with respect to which no tax (other than an amount erroneously paid as tax) has been paid under chapter 21, shall be deemed to constitute net earnings from self-employment and not remuneration for employment. For purposes of section 3121 (b) (8) (B) (ii) and (iii), if the certificate filed by such organization pursuant to section 3121 (k) is not effective with respect to services performed by such individual on or before the first day of the calendar quarter in which the request is filed, such individual shall be deemed to have become an employee of such organization (or to have become a member of a group described in section 3121 (k) (1) (E)) on the first day of the succeeding quarter.16

SEC. 1403. MISCELLANEOUS PROVISIONS.

(a) TITLE OF CHAPTER.-This chapter may be cited as the "SelfEmployment Contributions Act of 1954".

(b) CROSS REFERENCES.

(1) For provisions relating to returns, see section 6017.

(2) For provisions relating to collection of taxes in Virgin Islands, Guam, American Samoa," and Puerto Rico, see section 7651.

Subtitle C-Employment Taxes

CHAPTER 21-FEDERAL INSURANCE CONTRIBUTIONS

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In addition to other taxes, there is hereby imposed on the income of every individual a tax equal to the following percentages of the wages (as defined in section 3121 (a)) received by him with respect to employment (as defined in section 3121 (b))—

16 P. L. 86-778, sec. 105 (c) (1) added subsec. (g). For effect of this subsection for purposes of title II of the Social Security Act see P. L. 86-778, sec. 105 (c) (2), p. 226. For limitations on applicability see P. L. 86-778, sec. 105 (d) (2), p. 226.

17 P. L. 86-778, sec. 103 (m) inserted ", Guam, American Samoa," after "Virgin Islands" effective September 13, 1960.

(1) with respect to wages received during the calendar year 1959, the rate shall be 212 percent;

(2) with respect to wages received during the calendar years 1960 to 1962, both inclusive, the rate shall be 3 percent;

(3) with respect to wages received during the calendar years 1963 to 1965, both inclusive, the rate shall be 312 percent;

(4) with respect to wages received during the calendar years 1966 to 1968, both inclusive, the rate shall be 4 percent; and

(5) with respect to wages received after December 31, 1968, the rate shall be 42 percent.

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SEC. 3102. DEDUCTION OF TAX FROM WAGES.

(a) REQUIREMENT.-The tax imposed by section 3101 shall be collected by the employer of the taxpayer, by deducting the amount of the tax from the wages as and when paid. An employer who in any calendar quarter pays to an employee cash remuneration to which paragraph (7) (B) or (C) or (10) of section 3121 (a) is applicable may deduct an amount equivalent to such tax from any such payment of remuneration, even though at the time of payment the total amount of such remuneration paid to the employee by the employer in the calendar quarter is less than $50; and an employer who in any calendar year pays to an employee cash remuneration to which paragraph (8) (B) of section 3121 (a) is applicable may deduct an amount equivalent to such tax from any such payment of remuneration, even though at the time of payment the total amount of such remuneration paid to the employee by the employer in the calendar year is less than $150 and the employee has not performed agricultural labor for the employer on 20 days or more in the calendar year for cash remuneration computed on a time basis.

(6) INDEMNIFICATION OF EMPLOYER.-Every employer required so to deduct the tax shall be liable for the payment of such tax, and shall be indemnified against the claims and demands of any person for the amount of any such payment made by such employer.

SUBCHAPTER B-TAX ON EMPLOYERS

Sec. 3111. Rate of Tax---

Sec. 3112. Instrumentalities of the United States..
Sec. 3113. District of Columbia credit unions__.

SEC. 3111. RATE OF TAX.

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In addition to other taxes, there is hereby imposed on every employer an excise tax, with respect to having individuals in his employ, equal to the following percentages of the wages (as defined in section 3121 (a)) paid by him with respect to employment (as defined in section 3121 (b))—

(1) with respect to wages paid during the calendar year 1959, the rate shall be 212 percent;

(2) with respect to wages paid during the calendar years 1960 to 1962, both inclusive, the rate shall be 3 percent;

(3) with respect to wages paid during the calendar years 1963 to 1965, both inclusive, the rate shall be 32 percent;

(4) with respect to wages paid during the calendar years

18 Sec. 401 (b) of P. L. 85-840 amended sec. 3101 in its entirety effective with respect to remuneration paid after December 31, 1958. For sec. 3101 as it read prior to this amendment, see p. 404.

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