Page images
PDF
EPUB

Public Law 89-212
89th Congress, H. R. 10874
September 29, 1965

An Act

79 STAT. 858

To amend the Railroad Retirement Act of 1937 and the Railroad Retirement

Tax Act to eliminate certain provisions which reduce spouses' annuities, to provide coverage for tips, to increase the base on which railroad retirement benefits and taxes are computed, and to change the railroad retirement tax rates,

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

Railroad Retire

ment Act of 1937 SPOUSES’ ANNUITIES

and Railroad Re

tirement Tax Act, SECTION 1. Subsection (e) of section 2 of the Railroad Retirement amendments. Act of 1937 (45 U.S.C. 228b(e)) is amended by changing the colon 65 Stat. 683. before the last proviso to a period and by striking out all that follows down through the period at the end of such subsection.

COVERAGE OF TIPS

Sec. 2. (a)(1) Subsection (a) of section 3202 of the Internal Revenue Code of 1954 (relating to deduction of tax from compensation) 68A Stat. 431. is amended by adding at the end thereof the following new sentence: 26 USC 3202. “An employer who is furnished by an employee a written statement of tips (received in a calendar month) pursuant to section 6053(a) Ante, p. 384. to which paragraph (3) of section 3231(e) is applicable may deduct Post, po 859. an amount equivalent to such tax with respect to such tips from any compensation of the employee (exclusive of 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."

(2) Such section 3202 is amended by adding at the end thereof the following new subsection: "(c) SPECIAL RULE FOR TIP..

"(1) In the case of tips which constitute compensation, subsection (a) shall be applicable only to such tips as are included in a written statement furnished to the employer pursuant to section 6053(a), and only to the extent that collection can be made by the employer, at or after the time such statement is so furnished and before the close of the 10th day following the calendar month (or, if paragraph (3) applies, the 30th day following the quarter) in which the tips were deemed paid, by deducting the amount of the tax from such compensation of the employee (excluding tips, but including funds turned over by the employee to the employer pursuant to paragraph (2)) as are under control of the employer.

"(2) If the tax imposed by section 3201, with respect to tips Post, p. 861. which are included in written statements furnished in any month to the employer pursuant to section 6053 (a), exceeds the compensation of the employee (excluding tips) from which the employer is required to collect the tax under paragraph (1), the employee may furnish to the employer on or before the 10th day of the following month (or, if paragraph (3) applies, on or before the 30th day of the following quarter) an amount of money equa) to the amount of the excess.

*(3) The Secretary or his delegate may, under regulations pre- Quarterly scribed by him, authorize employers

estimates;

deductions,

79 STAT. 860 (f) (1) Subsection (b) of section 1 of the Railroad Retirement Act of 1937 is amended (A) by inserting “(1)” after“(h)”, (B) by insert- 50 Stat. 309, ing in the second sentence thereof "(except as is provided under para- 45 USC 2282. graph (2))” after "tips", and (C) by adding at the end thereof the

following new paragraphs: . “(2) Solely for purposes of determining amounts to be included in the compensation of an individual who is an employee (as defined in subsection (b)) the term 'compensation' shall (subject to section 3 (c)) also include cash tips received by an employee in any calendar month in the course of his employment by an employer unless the amount of such cash tips is less than $20.

“(3) Tips included as compensation by reason of the provisions of paragraph (2) 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) of the Internal Revenue Code of 1954 or (if no state- Ante, p. 384. ment including such tips is so furnished) at the time received ; and tips so deemed to be paid in any month shall be deemed paid for services rendered in such month.”

INCREASE IN BASE FOR BENEFIT COMPUTATION PURPOSES SEC. 3. (a) Subsection (a) of section 3 of the Railroad Retirement Act of 1937 is amended by striking out "the next $300” and inserting 77 Stat. 219. in lieu thereof the following: "the remainder up to a total of (i) 45 USC 228c.

$450, or (ii) an amount equal to one-twelfth of the current maximum · annual taxable 'wages' as defined in section 3121 of the Internal Revenue Code of 1954, whichever is greater".

68A Stat. 417. (b) The second sentence of subsection (c) of such section 3 is 26 USC 3121. : amended by inserting before ", shall be recognized” the following: 60 Stato 728. - "and before the calendar month next following the calendar month

in which this Act was amended in 1965, or in excess of (i) $450, or (ii) an amount equal to one-twelfth of the current maximum annual taxable 'wages' as defined in section 3121 of the Internal Revenue Code of 1954, whichever is greater, for any calendar month after the month in which this Act was so amended”.

(c) Subsection (f) (2) of section 5 of such Act is amended by 73 Stat. 27; inserting after “so amended” where it appears the second time in the 77 Stat. 220. first parenthetical phrase after clause (vi) the following: "and before 45 USC 228e. the calendar month next following the month in which this Act was i amended in 1965, and in excess of (i) $450, or (ii) an amount equal to one-twelfth of the current maximum annual taxable 'wages' as defined in section 3121 of the Internal Revenue Code of 1954, whichever is greater, for any month after the month in which this Act was So amended”. (d) Subsection (1) (9) of section 5 of such Act is amended - 65 Stat. 689.

(1) by striking out "and" where it appears the fourth time and inserting in lieu thereof a comma;

(2) by inserting after “so amended” where it appears the second time the following: "and before the calendar month next following the calendar month in which this Act was amended in 1965, and any excess over (i) $450, or (ii) an amount equal to one-twelth of the current maximum annual taxable 'wages' as defined in section 3121 of the Internal Revenue Code of 1954, whichever is greater, for any calendar month after the month in which this Act was so amended”;

(3) by striking out "$6,600" both times it appears in such sub- Ante, p. 400. section and inserting in lieu thereof “an amount equal to the current maximum annual taxable 'wages' as defined in section 3121 of the Internal Revenue Code of 1954'; and

79 STAT. 859

Ante, p. 384.

Post, p. 861.

68A Stat. 437. 26 USC 3231.

“(A) to estimate the amount of tips that will be reported by the employee pursuant to section 6053(a) in any, quarter of the calendar year,

“(B) to determine the amount to be deducted upon each payment of compensation (exclusive of tips) during such : quarter as if the tips so estimated constituted actual tips so (3 reported, and

“(C) to deduct upon any payment of compensation (other than tips, but including funds turned over by the employee to the employer pursuant to paragraph (2)) to such employee during such quarter (and within 30 days thereafter) such amount as may be necessary to adjust the amount actually deducted upon such compensation of the employee during the quarter to the amount required to be deducted in respect of tips included in written statements furnished to the

employer during the quarter. “(4) If the tax imposed by section 3201 with respect to tips which constituto compensation exceeds the portion of such tax which can be collected by the employer from the compensation of the employee pursuant to paragraph (1) or paragraph (3), such excess shall be paid by the employee." (b) (1) The second sentence of subsection (e) (1) of section 3231 of such Code (relating to definition of compensation for purposes of the Railroad Retirement Tax Act) is amended by inserting“ (except as is provided under paragraph (3))” after "tips".

(2) Subsection (e) of such section 3231 is further amended by adding at the end thereof the following new paragraph:

" (3) Solely for purposes of the tax imposed by section 3201 and other provisions of this chapter insofar as they relate to such tax, the term compensation also includes cash tips received by an employee in any calendar month in the course of his employment by an employer unless the amount of such cash tips is less than

$20.” (3) Such section 3231 is further amended by adding at the end thereof the following new subsection:

“(h) Tips CONSTITUTING COMPENSATION, TIME DEEMED PAID.—For purposes of this chapter, tips which constitute compensation for purposes of the tax imposed under section 3201 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; and tips so deemed to be paid in any month shall be deemed paid for services rendered in such month."

(c) Section 3402(k) of such Code (relating to income tax collected at source on tips) is amended (1) by inserting “or section 3202(c) (2) ” after "section 3102(c)(2)” and (2) by inserting “or section 3202 (a)" after “section 3102 (a)”.

(d)(1) Section 6053(a) of such Code (relating to reports of tips by employees) is amended by inserting "or which are compensation (as defined in section 3231(e))” after "or section 3401(a))".

(2) Section 6053(b) of such Code (relating to statements furnished by employers) is amended (A) by inserting "or section 3201 (as the case may be)” after "section 3101", and (B) by inserting “or section 3202 (as the case may be)” after "section 3102".

(e) Section 6652(c) of such Code (relating to failure to report tips) is amended (1) by inserting “or which are compensation (as defined in section 3231 (e))” after “which are wages (as defined in section 3121(a))", and (2) by inserting "or section 3201 (as the case may be)” after “section 3101".

Ante, p. 384.

Ante, p. 385.

79 STAT. 861

68A Stat. 417.
26 USC 3121.
60 Stat. 734;
77 Stat. 220.
45 USC 228e.

(4) by striking out “$450" where it appears the second time and inserting in lieu thereof “(i) $450, or (i) an amount equal to one-twelfth of the current maximum annual taxable ‘wages' as defined in section 3121 of the Internal Revenue Code of 1954,

whichever is greater,”. (0) Subsection (1) (10) of section 5 of such Act is amended by striking out "$450” and inserting in lieu thereof “(i) $450, or (ii) an amount equal to one-twelfth of the current maximum annual taxable 'wages' as defined in section 3121 of the Internal Revenue Code of 1957, whichever is greater".

INCREASE IN BASE FOR TAX PURPOSES

77 Stat. 221. 26 USC 3201, 3202, 3211, 3221.

Sec. 4. Sections 3201, 3202, 3211, and 3221 of the Internal Revenue Code of 1954 (relating to taxes under the Railroad Retirement Tax Act) are each amended by inserting after the phrase "or $450 for any calendar month after the month in which this provision was so amended”, wherever such phrase appears in such sections, the following: "and before the calendar month next following the calendar month in which this provision was amended in 1965, or (i) $450, or (ii) an amount equal to one-twelfth of the current maximum annual taxable 'wages' as defined in section 3121 of the Internal Revenue Code of 1954, whichever is greater, for any month after the month in which this provision was so amended”.

73 Stat. 28.

CHANGES IN TAX RATES SEC. 5. (a) Section 3201 of the Internal Revenue Code of 1954 (relating to rate of tax on employees under the Railroad Retirement Tax Act) is amended by striking out paragraphs (1) and (2) and inserting in lieu thereof the following:

"71) 674 percent of so much of the compensation paid to such employee for services rendered by him after September 30, 1965,

(2) 612 percent of so much of the compensation paid to such employee for services rendered by him after December 31, 1965,

“(3) 634 percent of so much of the compensation paid to such employee for services rendered by him after December 31, 1966,

“(4) 7 percent of so much of the compensation paid to such employee for services rendered by him after December 31, 1967, and

“(5) 744 percent of so much of the compensation paid to such emplovee for services rendered by him after December 31, 1968,". (b) Section 3211 of such Code (relating to rate of tax on employee representatives under the Railroad Retirement Tax Act) is amended by striking out paragraphs (1) and (2) and inserting in lieu thereof the following:

“(1) 1212 percent of so much of the compensation paid to such employee representative for services rendered by him after September 30, 1965,

“(2) 13 percent of so much of the compensation paid to such employee representative for services rendered by him after December 31, 1965,

“(3) 1342 percent of so much of the compensation paid to such employee representative for services rendered by him after December 31, 1966,

“(4) 14 percent of so much of the compensation paid to such employee representative for services rendered by him after December 31, 1967, and

79 STAT. 862 “(5) 1412 percent of so much of the compensation paid to such employee representative for services rendered by him after December 31, 1968,". (c) Section 3221(a) of such Code (relating to rate of tax on 73 Stat. 29. employers under the Railroad Retirement Tax Act) is amended by 26 USC 3221. striking out paragraphs (1) and (2) and inserting in lieu thereof the following:

"71) 674 percent of so much of the compensation paid by such employer for services rendered to him after September 30, 1965,

(2) 612 percent of so much of the compensation paid by such employer for services rendered to him after December 31, 1965,

“(3) 634 percent of so much of the compensation paid by such employer for services rendered to him after December 31, 1966,

"(4) 7 percent of so much of the compensation paid by such employer for services rendered to him after December 31, 1967,

and

(5) 714 percent of so much of the compensation paid by such employer for services rendered to him after December 31, 1968,”.

EFFECTIVE DATES

Sec. 6. The amendments made by sections 1 and 3 of this Act shall take effect with respect to annuities accruing and deaths occurring in months after the month in which this Act is enacted, and shall apply also to annuities paid in lump sums equal to their commuted value because of a reduction in such annuities under section 2(e) of the Railroad Retirement Act of 1937, as in effect before the amendments 65 Stat. 683. made by this Act, as if such annuities had not been paid in such lump 45 USC 228b. sums: Provided, however, That the amounts of such annuities which were paid in lump sums equal to their commuted value shall not be included in the amount of annuities which become payable by reason of section 1 of this Act. The amendments made by section 2 of this Act shall apply only with respect to tips received after 1965. The amendments made by section 4 of this Act shall apply only with respect to calendar months after the month in which this Act is enacted. The amendments made by section 5 of this Act shall apply only with respect to compensation paid for services rendered after September 30, 1965.

Approved September 29, 1965.

LEGISLATIVE HISTORY:

HOUSE REPORT No. 976 (Comm. on Interstate & Foreign Commerce).
CONGRESSIONAL RECORD, Vol. 111 (1965):

Sept. 14: Considered and passed House.
Sept. 15: Considered and passed Senate.

« PreviousContinue »