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Internal Revenue Code · 26 U.S.C.

§ 3231. Definitions

In force Text current through Public Law 119-121 (October 9, 2026) release point 119-121

Official text, no changes From the Office of the Law Revision Counsel, release point 119-121 (current through Public Law 119-121 (October 9, 2026)). Compare it with the official text at uscode.house.gov (external site).

Cite as 26 U.S.C. § 3231

At a glance

Read from the text, the source credit and the official notes. Not part of the law.

Status
In force
Enacted
September 29, 1965 by Pub. L. 89–212
Last amended
December 19, 2014 by Pub. L. 113–295
Amendments
24 dated changes in the source credit
Length
9 subsections · 3,282 words · about 14 min to read
Defines
24 terms
Cross-references
cites 14; cited by 14 Code sections and 20 other regulations
Regulations
6 issued under this section
(a) Employer

For purposes of this chapter, the term “employer” means any carrier (as defined in subsection (g)), and any company which is directly or indirectly owned or controlled by one or more such carriers or under common control therewith, and which operates any equipment or facility or performs any service (except trucking service, casual service, and the casual operation of equipment or facilities) in connection with the transportation of passengers or property by railroad, or the receipt, delivery, elevation, transfer in transit, refrigeration or icing, storage, or handling of property transported by railroad, and any receiver, trustee, or other individual or body, judicial or otherwise, when in the possession of the property or operating all or any part of the business of any such employer; except that the term “employer” shall not include any street, interurban, or suburban electric railway, unless such railway is operating as a part of a general steam-railroad system of transportation, but shall not exclude any part of the general steam-railroad system of transportation now or hereafter operated by any other motive power. The Surface Transportation Board is hereby authorized and directed upon request of the Secretary, or upon complaint of any party interested, to determine after hearing whether any line operated by electric power falls within the terms of this exception. The term “employer” shall also include railroad associations, traffic associations, tariff bureaus, demurrage bureaus, weighing and inspection bureaus, collection agencies and other associations, bureaus, agencies, or organizations controlled and maintained wholly or principally by two or more employers as hereinbefore defined and engaged in the performance of services in connection with or incidental to railroad transportation; and railway labor organizations, national in scope, which have been or may be organized in accordance with the provisions of the Railway Labor Act, as amended (45 U.S.C., chapter 8), and their State and National legislative committees and their general committees and their insurance departments and their local lodges and divisions, established pursuant to the constitutions and bylaws of such organizations. The term “employer” shall not include any company by reason of its being engaged in the mining of coal, the supplying of coal to an employer where delivery is not beyond the mine tipple, and the operation of equipment or facilities therefor, or in any of such activities.

(b) Employee

For purposes of this chapter, the term “employee” means any individual in the service of one or more employers for compensation. The term “employee” includes an officer of an employer. The term “employee” shall not include any individual while such individual is engaged in the physical operations consisting of the mining of coal, the preparation of coal, the handling (other than movement by rail with standard railroad locomotives) of coal not beyond the mine tipple, or the loading of coal at the tipple.

(c) Employee representative

For purposes of this chapter, the term “employee representative” means any officer or official representative of a railway labor organization other than a labor organization included in the term “employer” as defined in subsection (a), who before or after June 29, 1937, was in the service of an employer as defined in subsection (a) and who is duly authorized and designated to represent employees in accordance with the Railway Labor Act (45 U.S.C., chapter 8), as amended, and any individual who is regularly assigned to or regularly employed by such officer or official representative in connection with the duties of his office.

(d) Service For purposes of this chapter, an individual is in the service of an employer whether his service is rendered within or without the United States, if—
(1) he is subject to the continuing authority of the employer to supervise and direct the manner of rendition of his service, or he is rendering professional or technical services and is integrated into the staff of the employer, or he is rendering, on the property used in the employer’s operations, other personal services the rendition of which is integrated into the employer’s operations, and
(2) he renders such service for compensation;
except that an individual shall be deemed to be in the service of an employer, other than a local lodge or division or a general committee of a railway-labor-organization employer, not conducting the principal part of its business in the United States, only when he is rendering service to it in the United States; and an individual shall be deemed to be in the service of such a local lodge or division only if—
(3) all, or substantially all, the individuals constituting its membership are employees of an employer conducting the principal part of its business in the United States; or
(4) the headquarters of such local lodge or division is located in the United States;
and an individual shall be deemed to be in the service of such a general committee only if—
(5) he is representing a local lodge or division described in paragraph (3) or (4) immediately above; or
(6) all, or substantially all, the individuals represented by it are employees of an employer conducting the principal part of its business in the United States; or
(7) he acts in the capacity of a general chairman or an assistant general chairman of a general committee which represents individuals rendering service in the United States to an employer, but in such case if his office or headquarters is not located in the United States and the individuals represented by such general committee are employees of an employer not conducting the principal part of its business in the United States, only such proportion of the remuneration for such service shall be regarded as compensation as the proportion which the mileage in the United States under the jurisdiction of such general committee bears to the total mileage under its jurisdiction, unless such mileage formula is inapplicable, in which case such other formula as the Railroad Retirement Board may have prescribed pursuant to section 1(c) of the Railroad Retirement Act of 1937 (45 U.S.C. 228a) shall be applicable, and if the application of such mileage formula, or such other formula as the Board may prescribe, would result in the compensation of the individual being less than 10 percent of his remuneration for such service, no part of such remuneration shall be regarded as compensation;
Provided however, That an individual not a citizen or resident of the United States shall not be deemed to be in the service of an employer when rendering service outside the United States to an employer who is required under the laws applicable in the place where the service is rendered to employ therein, in whole or in part, citizens or residents thereof; and the laws applicable on August 29, 1935, in the place where the service is rendered shall be deemed to have been applicable there at all times prior to that date.
(e) Compensation For purposes of this chapter—
(1) The term “compensation” means any form of money remuneration paid to an individual for services rendered as an employee to one or more employers. Such term does not include (i) the amount of any payment (including any amount paid by an employer for insurance or annuities, or into a fund, to provide for any such payment) made to, or on behalf of, an employee or any of his dependents under a plan or system established by an employer which makes provision for his employees generally (or for his employees generally and their dependents) or for a class or classes of his employees (or for a class or classes of his employees and their dependents), on account of sickness or accident disability or medical or hospitalization expenses in connection with sickness or accident disability or death, except that this clause does not apply to a payment for group-term life insurance to the extent that such payment is includible in the gross income of the employee, (ii) tips (except as is provided under paragraph (3)), (iii) an amount paid specifically—either as an advance, as reimbursement or allowance—for traveling or other bona fide and necessary expenses incurred or reasonably expected to be incurred in the business of the employer provided any such payment is identified by the employer either by a separate payment or by specifically indicating the separate amounts where both wages and expense reimbursement or allowance are combined in a single payment, or (iv) any remuneration which would not (if chapter 21 applied to such remuneration) be treated as wages (as defined in section 3121(a)) by reason of section 3121(a)(5). Such term does not include remuneration for service which is performed by a nonresident alien individual for the period he is temporarily present in the United States as a nonimmigrant under subparagraph (F), (J), (M), or (Q) of section 101(a)(15) of the Immigration and Nationality Act, as amended, and which is performed to carry out the purpose specified in subparagraph (F), (J), (M), or (Q), as the case may be. For the purpose of determining the amount of taxes under sections 3201 and 3221, compensation earned in the service of a local lodge or division of a railway-labor-organization employer shall be disregarded with respect to any calendar month if the amount thereof is less than $25. Compensation for service as a delegate to a national or international convention of a railway labor organization defined as an “employer” in subsection (a) of this section shall be disregarded for purposes of determining the amount of taxes due pursuant to this chapter if the individual rendering such service has not previously rendered service, other than as such a delegate, which may be included in his “years of service” for purposes of the Railroad Retirement Act. Nothing in the regulations prescribed for purposes of chapter 24 (relating to wage withholding) which provides an exclusion from “wages” as used in such chapter shall be construed to require a similar exclusion from “compensation” in regulations prescribed for purposes of this chapter.
(2) Application of contribution bases
(A) Compensation in excess of applicable base excluded
(i) In general

The term “compensation” does not include that part of remuneration paid during any calendar year to an individual by an employer after remuneration equal to the applicable base has been paid during such calendar year to such individual by such employer for services rendered as an employee to such employer.

(ii) Remuneration not treated as compensation excluded

There shall not be taken into account under clause (i) remuneration which (without regard to clause (i)) is not treated as compensation under this subsection.

(iii) Hospital insurance taxes Clause (i) shall not apply to—
(I) so much of the rate applicable under section 3201(a) or 3221(a) as does not exceed the rate of tax in effect under section 3101(b), and
(II) so much of the rate applicable under section 3211(a) as does not exceed the rate of tax in effect under section 1401(b).
(B) Applicable base
(i) Tier 1 taxes

Except as provided in clause (ii), the term “applicable base” means for any calendar year the contribution and benefit base determined under section 230 of the Social Security Act for such calendar year.

(ii) Tier 2 taxes, etc. For purposes of—
(I) the taxes imposed by sections 3201(b), 3211(b), and 3221(b), and
(II) computing average monthly compensation under section 3(j) of the Railroad Retirement Act of 1974 (except with respect to annuity amounts determined under subsection (a) or (f)(3) of section 3 of such Act),
clause (2) of the first sentence, and the second sentence, of subsection (c) of section 230 of the Social Security Act shall be disregarded.
(C) Successor employers For purposes of this paragraph, the second sentence of section 3121(a)(1) (relating to successor employers) shall apply, except that—
(i) the term “services” shall be substituted for “employment” each place it appears,
(ii) the term “compensation” shall be substituted for “remuneration (other than remuneration referred to in the succeeding paragraphs of this subsection)” each place it appears, and
(iii) the terms “employer”, “services”, and “compensation” shall have the meanings given such terms by this section.
(3) Solely for purposes of the taxes imposed by section 3201 and other provisions of this chapter insofar as they relate to such taxes, 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.
(4)
(A) For purposes of applying sections 3201(a), 3211(a), and 3221(a), in the case of payments made to an employee or any of his dependents on account of sickness or accident disability, clause (i) of the second sentence of paragraph (1) shall exclude from the term “compensation” only—
(i) payments which are received under a workmen’s compensation law, and
(ii) benefits received under the Railroad Retirement Act of 1974.
(B) Notwithstanding any other provision of law, for purposes of the sections specified in subparagraph (A), the term “compensation” shall include benefits paid under section 2(a) of the Railroad Unemployment Insurance Act for days of sickness, except to the extent that such sickness (as determined in accordance with standards prescribed by the Railroad Retirement Board) is the result of on-the-job injury.
(C) Under regulations prescribed by the Secretary, subparagraphs (A) and (B) shall not apply to payments made after the expiration of a 6-month period comparable to the 6-month period described in section 3121(a)(4).
(D) Except as otherwise provided in regulations prescribed by the Secretary, any third party which makes a payment included in compensation solely by reason of subparagraph (A) or (B) shall be treated for purposes of this chapter as the employer with respect to such compensation.
(5) The term “compensation” shall not include 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.
(6) The term “compensation” shall not include 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.
[(7) Repealed. Pub. L. 113–295, div. A, title II, § 221(a)(19)(B)(v), Dec. 19, 2014, 128 Stat. 4040.]
(8) Treatment of certain deferred compensation and salary reduction arrangements
(A) Certain employer contributions treated as compensation

Nothing in any paragraph of this subsection (other than paragraph (2)) shall exclude from the term “compensation” any amount described in subparagraph (A) or (B) of section 3121(v)(1).

(B) Treatment of certain nonqualified deferred compensation

The rules of section 3121(v)(2) which apply for purposes of chapter 21 shall also apply for purposes of this chapter.

(9) Meals and lodging

The term “compensation” shall not include the value of meals or lodging furnished by or on behalf of the employer if at the time of such furnishing it is reasonable to believe that the employee will be able to exclude such items from income under section 119.

(10) Archer MSA contributions

The term “compensation” shall not include 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).

(11) Health savings account contributions

The term “compensation” shall not include 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).

(12) Qualified stock options The term “compensation” shall not include any remuneration on account of—
(A) a transfer of a share of stock to any individual pursuant to an exercise of an incentive stock option (as defined in section 422(b)) or under an employee stock purchase plan (as defined in section 423(b)), or
(B) any disposition by the individual of such stock.
(f) Company

For purposes of this chapter, the term “company” includes corporations, associations, and joint-stock companies.

(g) Carrier

For purposes of this chapter, the term “carrier” means a rail carrier subject to part A of subtitle IV of title 49.

(h) Tips constituting compensation, time deemed paid

For purposes of this chapter, tips which constitute compensation for purposes of the taxes imposed by 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.

(i) Concurrent employment by 2 or more employers

For purposes of this chapter, if 2 or more related corporations which are employers concurrently employ the same individual and compensate such individual through a common paymaster which is 1 of such corporations, each such corporation shall be considered to have paid as remuneration to such individual only the amounts actually disbursed by it to such individual and shall not be considered to have paid as remuneration to such individual amounts actually disbursed to such individual by another of such corporations.

(Aug. 16, 1954, ch. 736, 68A Stat. 434; Aug. 31, 1954, ch. 1164, pt. II, § 206(b), 68 Stat. 1040; Pub. L. 89–212, § 2(b), Sept. 29, 1965, 79 Stat. 859; Pub. L. 90–624, § 1, Oct. 22, 1968, 82 Stat. 1316; Pub. L. 94–92, title II, § 203(b), Aug. 9, 1975, 89 Stat. 465; Pub. L. 94–93, title II, §§ 204–206, Aug. 9, 1975, 89 Stat. 466; Pub. L. 94–455, title XIX, §§ 1903(a)(10), 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1808, 1834; Pub. L. 94–547, § 4(b), Oct. 18, 1976, 90 Stat. 2526; Pub. L. 95–473, § 2(a)(2)(G), Oct. 17, 1978, 92 Stat. 1465; Pub. L. 97–34, title VII, §§ 741(d)(2), 743(a)–(c), Aug. 13, 1981, 95 Stat. 347, 348; Pub. L. 97–123, § 3(c), Dec. 29, 1981, 95 Stat. 1662; Pub. L. 98–76, title II, § 225(a)(1), (3), (b), (c)(1)(C), (6)–(8), Aug. 12, 1983, 97 Stat. 424, 425; Pub. L. 98–369, div. A, title V, § 531(d)(2), July 18, 1984, 98 Stat. 884; Pub. L. 98–611, § 1(f), Oct. 31, 1984, 98 Stat. 3178; Pub. L. 98–612, § 1(c), Oct. 31, 1984, 98 Stat. 3181; Pub. L. 99–514, title I, § 122(e)(2), title XVIII, § 1899A(41), Oct. 22, 1986, 100 Stat. 2112, 2960; Pub. L. 100–647, title I, §§ 1001(d)(2)(C)(ii), 1011B(a)(22)(B), Nov. 10, 1988, 102 Stat. 3351, 3486; Pub. L. 101–140, title II, § 203(a)(2), Nov. 8, 1989, 103 Stat. 830; Pub. L. 101–239, title X, §§ 10205(a), 10206(a), (b), 10207(a), (b), Dec. 19, 1989, 103 Stat. 2474–2476; Pub. L. 101–508, title XI, §§ 11331(c), 11704(a)(19), Nov. 5, 1990, 104 Stat. 1388–468, 1388–519; Pub. L. 103–66, title XIII, § 13207(c), Aug. 10, 1993, 107 Stat. 468; Pub. L. 103–296, title III, § 320(a)(1)(D), Aug. 15, 1994, 108 Stat. 1535; Pub. L. 104–88, title III, § 304(d), Dec. 29, 1995, 109 Stat. 944; Pub. L. 104–191, title III, § 301(c)(2)(A), Aug. 21, 1996, 110 Stat. 2049; Pub. L. 106–554, § 1(a)(7) [title II, § 202(b)(5)], Dec. 21, 2000, 114 Stat. 2763, 2763A–629; Pub. L. 107–90, title II, § 204(e)(3), (4), Dec. 21, 2001, 115 Stat. 893; Pub. L. 108–173, title XII, § 1201(d)(2)(A), Dec. 8, 2003, 117 Stat. 2477; Pub. L. 108–357, title II, § 251(a)(2), title III, § 320(b)(2), Oct. 22, 2004, 118 Stat. 1458, 1473; Pub. L. 113–295, div. A, title II, § 221(a)(19)(B)(v), (100)(D), Dec. 19, 2014, 128 Stat. 4040, 4052.)

Terms defined here

Where the text says “the term … means”. Select a term to jump to its definition.

Regulations under this section

Treasury regulations (26 CFR) issued under § 3231

Cross-references

Computed from the citations in the text of Title 26 and 26 CFR.

This section cites 14 other sections

Cited by 14 Code sections

Cited in 20 regulations not issued under it

Amendment history

From the source credit and the official notes, newest first.

  1. Amended by Pub. L. 113–295Parts changed in 2014: (b) (e)(7)
  2. Amended by Pub. L. 108–357Parts changed in 2004: (e)(5) (e)(12)
  3. Amended by Pub. L. 108–173Parts changed in 2003: (e)(11)
  4. Amended by Pub. L. 107–90Parts changed in 2001: (e)(2)(A)(iii)(II) (e)(2)(B)(ii)(I) (e)(4)(A)
  5. Amended by Pub. L. 106–554Parts changed in 2000: (e)(10)
  6. Amended by Pub. L. 104–191Parts changed in 1996: (e)(10)
  7. Amended by Pub. L. 104–88Parts changed in 1995: (a) (g)
  8. Amended by Pub. L. 103–296Parts changed in 1994: (e)(1)
  9. Amended by Pub. L. 103–66Parts changed in 1993: (e)(2)(A)(iii) (e)(2)(B)(i)
  10. Amended by Pub. L. 101–508Parts changed in 1990: (e)(2)(B)(i) (e)(8)
  11. Amended by Pub. L. 101–239Parts changed in 1989: (e)(1) (e)(8) (e)(9) (e)(10)
  12. Amended by Pub. L. 101–140
  13. Amended by Pub. L. 100–647Parts changed in 1988: (e)(1) (e)(8)
  14. Amended by Pub. L. 99–514Parts changed in 1986: (e)(5) (e)(6)
  15. Amended by Pub. L. 98–611, Pub. L. 98–612Parts changed in 1984: (e)(5) (e)(6)
  16. Amended by Pub. L. 98–369
  17. Amended by Pub. L. 98–76Parts changed in 1983: (e)(1) (e)(2) (e)(3) (e)(4)(A) (h) (i)
  18. Amended by Pub. L. 97–123Parts changed in 1981: (e)(1) (e)(2) (e)(4)
  19. Amended by Pub. L. 97–34
  20. Amended by Pub. L. 95–473Parts changed in 1978: (g)
  21. Amended by Pub. L. 94–547Parts changed in 1976: (a) (b) (c) (d)(7) (e)(1)
  22. Amended by Pub. L. 94–455
  23. Amended by Pub. L. 94–92, Pub. L. 94–93Parts changed in 1975: (e)(1) (e)(2)
  24. Amended by Pub. L. 90–624Parts changed in 1968: (e)(1)
  25. Enacted by Pub. L. 89–212Parts changed in 1965: (e)(1) (e)(3) (h)

Where it sits in the Code

  1. Subtitle C Employment Taxes
  2. Chapter 22 RAILROAD RETIREMENT TAX ACT
  3. Subchapter D General Provisions

Nearby sections

Official notes

The Law Revision Counsel's notes for this section (amendments, effective dates and related laws) are long, so they have their own page.