[Code of Federal Regulations]
[Title 26, Volume 15]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR31.3211-2]

[Page 139-140]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 31_EMPLOYMENT TAXES AND COLLECTION OF INCOME TAX AT SOURCE--Table of Contents
 
Subpart C_Railroad Retirement Tax Act (Chapter 22, Internal Revenue Code 
                                of 1954)
 
Sec. 31.3211-2  Rates and computation of employee representative tax.

    (a) Rates--(1)(i) Tier 1 tax. The Tier 1 employee representative tax 
rate equals the sum of the tax rates in effect under sections 3101(a) 
and 3111(a), relating to the employee and the employer tax for old-age, 
survivors, and disability insurance, and sections 3101(b) and 3111(b), 
relating to the employee and the employer tax for hospital insurance. 
The Tier 1 employee representative tax rate is applied to compensation 
up to the contribution base described in section 3231(e)(2)(B)(i). The 
contribution base is determined under section 230 of the Social Security 
Act, and is identical to the old-age, survivors, and disability 
insurance wage base and the hospital insurance wage base, respectively, 
under the Federal Insurance Contributions Act.
    (ii) Example. The rule in paragraph (a)(1)(i) of this section is 
illustrated by the following example.

    Example. B, an employee representative, received compensation of 
$60,000 in 1992. The sections 3101(a) and 3111(a) rates of 12.4 percent 
(6.2 percent plus 6.2 percent) would be applied to B's compensation up 
to $55,500, the applicable contribution base for 1992. The sections 
3101(b) and 3111(b) rates of 2.9 percent (1.45 percent plus 1.45 
percent) would be applied to the entire $60,000 of B's compensation 
because the applicable contribution base for 1992 is $130,200.


[[Page 140]]


    (2) (i) Tier 2 tax. The Tier 2 employee representative tax rate 
equals the percentage set forth in section 3211(a)(2) of the Code. This 
rate is applied up to the contribution base described in section 
3231(e)(2)(B)(ii).
    (ii) Example. The rule in paragraph (a)(2)(i) of this section is 
illustrated by the following example.

    Example. B received compensation of $60,000 in 1992. The section 
3211(a)(2) rate of 14.75 percent would be applied to B's compensation up 
to $41,400, the applicable contribution base for 1992.

    (3) Supplemental Annuity Tax. The supplemental annuity tax for each 
work-hour for which compensation is paid to an employee representative 
for services rendered as an employee representative is imposed at the 
same rate as the excise tax imposed on every employer under section 
3221(c). See also Sec. 31.3211-3.
    (b) (1) Computation. The employee representative tax is computed by 
multiplying the amount of the employee representative's compensation 
with respect to which the employee representative tax is imposed by the 
rate applicable to such compensation, as determined under paragraph (a) 
of this section. The applicable rate is the rate in effect when the 
compensation is received by the employee representative. For rules 
relating to the time of receipt, see Sec. 31.3121(a)-2 (a) and (b).
    (2) Example. The rule in paragraph (b)(1) of this section is 
illustrated by the following example.

    Example. In 1990, employee representative B received $1,000 as 
remuneration for services performed for employer R in 1989. The employee 
representative tax is payable at the rate of 30.05 percent (15.30 
percent plus 14.75 percent) in effect for 1990 (the year the 
compensation was received), and not the 29.77 percent rate (15.02 
percent plus 14.75 percent) in effect for 1989 (the year the services 
were performed).

    (c) (1) Rule where compensation is received both as an employee 
representative and employee. The following rule applies to an individual 
who renders service both as an employee representative and as an 
employee. The employee representative tax is imposed on compensation 
received as an employee representative under the rules described in 
Sec. 31.3211-2. The employee tax is imposed on compensation received as 
an employee under the rules described in Sec. 31.3201-2. However, if 
the total compensation received is greater than the applicable 
contribution base, the employee representative tax is imposed on the 
amount equal to the contribution base less the amount received for 
services rendered as an employee.
    (2) Example. The rule in paragraph (c)(1) of this section is 
illustrated by the following example.

    Example. C performed services both as an employee and an employee 
representative in 1992. C received compensation of $40,000 as an 
employee and $20,000 as an employee representative. C's entire 
compensation of $40,000 is subject to tax under the rules described in 
Sec. 31.3201-2. The amount of employee representative compensation 
subject to the section 3101(a) and the section 3111(a) rate is $15,500 
($55,500-$40,000). The entire $20,000 is subject to the sections 3101(b) 
and 3111(b) rates since the combined compensation is less than $130,200, 
the applicable contribution base for 1992. The amount of the employee 
representative compensation subject to the section 3211(a)(2) rate is 
$1,400 ($41,400-$40,000).

[T.D. 8582, 59 FR 66190, Dec. 23, 1994]