Title 26 — Internal Revenue CodeRelease 119-73
§3321 Imposition of tax
Title 26 › Subtitle Subtitle C— - Employment Taxes › Chapter CHAPTER 23A— - RAILROAD UNEMPLOYMENT REPAYMENT TAX › § 3321
Summary
Rail employers must pay a monthly excise tax equal to 4% of the total rail wages they pay in that month. Employee representatives (for example, union reps) must pay a 4% tax on the rail wages paid to them each month. For those reps, wages are figured the same way as if their employee organization were a rail employer. No tax applies to rail wages paid on or after the first day of a month if, on that first day, there is no remaining balance of transfers made before October 1, 1985, to the Railroad Unemployment Insurance account under section 10(d) and no unpaid interest on those transfers.
Full Legal Text
Title 26, §3321
Internal Revenue Code — Source: USLM XML via OLRC
(a)There is hereby imposed on every rail employer for each calendar month an excise tax, with respect to having individuals in his employ, equal to 4 percent of the total rail wages paid by him during such month.
(b)(1)There is hereby imposed on the income of each employee representative a tax equal to 4 percent of the rail wages paid to him during the calendar month.
(2)The rail wages of an employee representative for purposes of paragraph (1) shall be determined in the same manner and with the same effect as if the employee organization by which such employee representative is employed were a rail employer.
(c)The tax imposed by this section shall not apply to rail wages paid on or after the 1st day of any calendar month if, as of such 1st day, there is—
(1)no balance of transfers made before October 1, 1985, to the railroad unemployment insurance account under section 10(d) of the Railroad Unemployment Insurance Act, and
(2)no unpaid interest on such transfers.
Legislative History
Notes & Related Subsidiaries
Editorial Notes
References in Text
section 10(d) of the Railroad Unemployment Insurance Act, referred to in subsec. (c)(1), is classified to section 360(d) of Title 45, Railroads.
Amendments
1988—Pub. L. 100–647, § 7106(a), amended section generally, revising and restating provisions of subsecs. (a) and (b) and specifying imposition of 4 percent tax on rail wages rather than a tax based on the “applicable percentage” of rail wages, and in subsec. (c) substituting provisions relating to termination if loans to railroad unemployment fund repaid for provisions relating to rates of tax. Pub. L. 100–647, § 1018(u)(17), added a period at end of par. (4). 1986—Subsec. (c). Pub. L. 99–272 amended subsec. (c) generally. Prior to amendment subsec. (c) read as follows: “(c) Rate of Tax.—For purposes of this section— “(1) For taxable period july 1 through december 31, 1986.—The applicable percentage for the taxable period beginning on
July 1, 1986, and ending on
December 31, 1986, shall be 2 percent. “(2) Subsequent taxable periods.—The applicable percentage for any taxable period beginning after 1986 shall be the sum of— “(A) 2 percent, plus “(B) 0.3 percent for each preceding taxable period. In no event shall the applicable percentage exceed 5 percent.”
Statutory Notes and Related Subsidiaries
Effective Date
of 1988 AmendmentAmendment by section 1018(u)(17) of Pub. L. 100–647 effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, Pub. L. 99–514, to which such amendment relates, see section 1019(a) of Pub. L. 100–647, set out as a note under section 1 of this title. Pub. L. 100–647, title VII, § 7106(d), Nov. 10, 1988, 102 Stat. 3774, provided that: “The
Amendments
made by this section [amending this section and section 3322, 6157, 6201, 6317, 6513, and 6601 of this title, omitting section 3323 of this title, and amending provisions set out as a note under section 231n of Title 45, Railroads], and the provisions of subsection (b) [set out below], shall apply to remuneration paid after December 31, 1988.”
Effective Date
Pub. L. 98–76, title II, § 231(d), Aug. 12, 1983, 97 Stat. 429, provided that: “The
Amendments
made by this section [enacting this chapter and amending section 6157, 6201, 6317, 6513, and 6601 of this title] shall apply to remuneration paid after
June 30, 1986.” Continuation of Surtax Rate Through 1990 Pub. L. 100–647, title VII, § 7106(b), Nov. 10, 1988, 102 Stat. 3773, provided that: “(1) In general.—In the case of any calendar month beginning before
January 1, 1991—“(A) there shall be substituted for ‘4 percent’ in subsections (a) and (b) of section 3321 of the 1986 Code the percentage equal to the sum of—“(i) 4 percent, plus “(ii) the surtax rate (if any) for such calendar month, and “(B) subsection (c) of such section shall not apply to so much of the tax imposed by such section as is attributable to the surtax rate. “(2) Surtax rate.—For purposes of paragraph (1), the surtax rate shall be—“(A) 3.5 percent for each month during a calendar year if, as of September 30, of the preceding calendar year, there was a balance of transfers (or unpaid interest thereon) made after
September 30, 1985, to the railroad unemployment insurance account under section 10(d) of the Railroad Unemployment Insurance Act [45 U.S.C. 360(d)], and “(B) zero for any other calendar month.”
Reference
Citations & Metadata
Citation
26 U.S.C. § 3321
Title 26 — Internal Revenue Code
Last Updated
Apr 6, 2026
Release point: 119-73