SEC. 3401. DEFINITIONS (68A Stat. 455-457): (a). Aug. 9, 1955, H.R. 4394, P.L. 84-321, § [1], 69 Stat. 616–618: Amended Sec. 3401(a) (relating to definition of "wages" for purposes of collection of income tax at source) to read as follows: 434 "(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 paid in any medium other than cash; except that such term shall not include remuneration paid "(1) for active service as a member of the Armed Forces of the United States performed in a month for which such member is entitled to the benefits of section 112; or "(2) for agricultural labor (as defined in section 3121(g)); 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 434 The amendatory statute erroneously referred to subsection (a) as "subdivision (a)". Subsection (a) of section 3401 originally read as follows (68A Stat. 455-456): "(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 paid in any medium other than cash; except that such term shall not include remuneration paid "(1) for active service as a member of the Armed Forces of the United States performed in a month for which such member is entitled to the benefits of section 112, or "(2) for agricultural labor (as defined in section 3121(g)), 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 services performed by a nonresident alien individual, other than "(A) a resident of a contiguous country who enters and leaves the United States at frequent intervals, or "(B) a resident of Puerto Rico if such services are performed as an employee of the United States or any agency thereof, or "(7) for such services, performed by a nonresident alien individual who is a resident of a contiguous country and who enters and leaves the United States at frequent intervals, as may be designated by regulations prescribed by the Secretary or his delegate, or [Footnote 434 continued on following page] SEC. 3401-Continued (a) (revised 1955)-Continued 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 services performed by a nonresident alien individual, other than "(A) a resident of a contiguous country who enters and leaves the United States at frequent intervals; or "(B) a resident of Puerto Rico if such services are performed as an employee of the United States or any agency thereof; or "(7) for such services, performed by a nonresident alien individual who is a resident of a contiguous country and who enters and leaves the United States at frequent intervals, as may be designated by regulations prescribed by the Secretary or his delegate; or "(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 Footnote 434-—Continued. "(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 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 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 Puero 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 "(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 service, 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, meets the requirements of section 401(a) (3), (4), (5), and (6).” It will be noted that the only substantive change made by the amendment was the insertion in paragraph (8)(A)(ii) of the words "or in a possession of the United States" and "or possession of the United States". Otherwise the amendment merely substituted semicolons for commas at the end of paragraphs, subparagraphs, and clauses, and added an "s" to the word "service" in the next to the last line of paragraph (10)(B). SEC. 3401-Continued (a) (revised 1955)-Continued (a) (6) (C). (added) 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 "(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 requierd 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, meets the requirements of section 401 (a) (3), (4), (5), and (6).” Effective Date: August 9, 1955, the date of enactment. Sept. 21, 1961, H.R. 8666, P.L. 87-256, § 110(g) (1), 75 Stat. 537: Amended Sec. 3401 (a) (6) (as revised by P.L. 84-321, § 1) by adding at the end thereof the following new subparagraph (C): "(C) an individual who is temporarily present in the United States as a nonimmigrant under subparagraph (F) or (J) of section 101(a)(15) of the Immigration and Nationality Act, as amended, if such remuneration is exempt, under section 1441(c)(4)(B), from SEC. 3401-Continued (a) (6) (C) (added 1961)-Continued Do.... (a) (12) (B) (C) (added) (a) (13). (added) deduction and withholding under section 1441(a), and is not exempt from taxation under section 872 (b)(3), or". Applicability: Wages paid after December 31, 1961. (Id., § 110(h) (4), 75 Stat. 538.) July 30, 1965, H.R. 6675, P.L. 89-97, § 313(d) (2), 79 Stat. 384: Amended Sec. 3401(a) by striking out at the end of paragraph (6) (the end of subparagraph (C) as added by P.L. 87–256, § 110 (g)(1))— ", or" and inserting in lieu thereof "; or" 435 Applicability: Same as for the above amendment adding subparagraph (C) to section 3401(a)(6). Oct. 10, 1962, H.R. 10, P.L. 87–792, § 7(1), 76 Stat. 830: Amended Sec. 3401 (a) (12) (as revised by P.L. 84-321, § 1, p. 658 above) by striking out subparagraph (B) and inserting in lieu thereof the following new subparagraphs (B) and (C): "(B) under or to an annuity plan which, at the time of such payment, is a plan described in section 403(a); or "(C) 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)." Applicability: Taxable years beginning after December 31, 1962. (Id., § 8, 76 Stat. 831). Sept. 22, 1961, H.R. 7500, P.L. 87-293, § 201(c), 75 Stat. 625: Amended Sec. 3401(a) (relating to definition of "wages" for purposes of collection of income tax at source and to the items excluded from such definition) (1) by striking out the period at the end of paragraph (12) and inserting in lieu thereof "; or", and (2) by adding at the end thereof the following new paragraph (13): "(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." Effective date: September 22, 1961-the date of enactment. (Id., § 27, 75 Stat. 625.) Applicability: Remuneration paid after September 22, 1961-the date of enact ment. (Id., § 201(d), 75 Stat. 625.) This correction was included in the enacting clause of the amendment providing for the addition of a new paragraph (16) to section 3401(a). See p. 660 below. SEC. 3401-Continued (a) (14).... Feb. 26, 1964, H.R. 8363, P.L. 88-272, § 204 (b), 78 Stat. 36: (added) (a) (15)_ (added) (a) (16). (added) (f).. Amended Sec. 3401(a) by striking out the period at the end of paragraph (13) (as added by P.L. 87-293, § 201(c)) and inserting in lieu thereof "; or", and by adding at the end thereof the following new paragraph (14): "(14) in the form of group-term life insurance on the life of an employee; or". Applicability: Remuneration paid after December 31, 1963, in the form of groupterm life insurance provided after such date. (Id., § 204(d), 78 Stat. 37.) Feb. 26, 1964, H.R. 8363, P.L. 88-272, § 213 (c), 78 Stat. 52: Amended Sec. 3401(a) (relating to definition of "wages") by adding after paragraph (14) (as added by P.L. 88-272, § 204 (b)) the following new paragraph (15): "(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." Applicability: Remuneration paid after the seventh day following the date of enactment (February 26, 1964). (Id., § 213(d), 78 Stat. 52.) July 30, 1965, H.R. 6675, P.L. 89–97, § 313(d) (2),436 79 Stat. 384: Amended Sec. 3401(a) by striking out the period at the end of paragraph (15) (as added by P.L. 88-272, § 213(c)) and inserting in lieu thereof "; or", and by adding after paragraph (15) the following new paragraph (16): "(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." Applicability: Only with respect to tips received by employees after 1965. July 30, 1965, H.R. 6675, P.L. 89–97, § 313(d) (1), 79 Stat. 383: "(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 436 The full text of the enacting clause of P.L. 89–97, § 313(d) (2) is as follows: "(2) Section 3401(a) of such Code (relating to definition of wages for purposes of collecting income tax at source) is amended by striking out,, or' at the end of paragraph (6) and inserting in lieu thereof '; or', by striking out the period at the end of paragraph (12) and inserting in lieu thereof '; or', by striking out the period at the end of paragraph (15) and inserting in lieu thereof '; or', and by adding after paragraph (15) the following new paragraph:". The correction with respect to paragraph (6) is set forth at page 659 above. The correction with respect to paragraph (12) was unnecessary since the suggested change had already been made in connection with the addition of the new paragraph (13) by P.L. 87-293, § 201(c). See p. 659 above. |