U.S. Code > Title 26 Internal Revenue Code > Subtitle C—Employment Taxes (§§ 3101—3510) > CHAPTER 22—RAILROAD RETIREMENT TAX ACT (§§ 3201—3241) > Subchapter C—Tax on Employers (§ 3221) > § 3221. Rate of tax

§ 3221. Rate of tax

(a) Tier 1 tax
In addition to other taxes, there is hereby imposed on every employer an excise tax, with respect to having individuals in his employ, equal to the applicable percentage of compensation paid during any calendar year by such employer for services rendered to such employer. For purposes of the preceding sentence, the term “applicable percentage” means the percentage equal to the sum of the rates of tax in effect under subsections (a) and (b) of section 3111 for the calendar year.
(b) Tier 2 tax
(1) In general
In addition to other taxes, there is hereby imposed on every employer an excise tax, with respect to having individuals in his employ, equal to the applicable percentage of the compensation paid during any calendar year by such employer for services rendered to such employer.
(2) Applicable percentage
For purposes of paragraph (1), the term “applicable percentage” means—
(A) 15.6 percent in the case of compensation paid during 2002,
(B) 14.2 percent in the case of compensation paid during 2003, and
(C) in the case of compensation paid during any calendar year after 2003, the percentage determined under section 3241 for such calendar year.
(c) Special rate for certain individuals hired in 2010
(1) In general
In the case of compensation paid by a qualified employer during the period beginning on the day after the date of the enactment of this subsection and ending on December 31, 2010, with respect to having a qualified individual in the employer’s employ for services rendered to such qualified employer, the applicable percentage under subsection (a) shall be equal to the rate of tax in effect under section 3111 (b) for the calendar year.
(2) Qualified employer
The term “qualified employer” means any employer other than the United States, any State, or any political subdivision thereof, or any instrumentality of the foregoing.
(3) Qualified individual
For purposes of this subsection, the term “qualified individual” means any individual who—
(A) begins employment with a qualified employer after February 3, 2010, and before January 1, 2011,
(B) certifies by signed affidavit, under penalties of perjury, that such individual has not been employed for more than 40 hours during the 60-day period ending on the date such individual begins such employment,
(C) is not employed by the qualified employer to replace another employee of such employer unless such other employee separated from employment voluntarily or for cause, and
(D) is not an individual described in section 51 (i)(1) (applied by substituting “qualified employer” for “taxpayer” each place it appears).
(4) Election
A qualified employer may elect to have this subsection not apply. Such election shall be made in such manner as the Secretary may require.
(5) Special rule for first calendar quarter of 2010
(A) Nonapplication of exemption during first quarter
Paragraph (1) shall not apply with respect to compensation paid during the first calendar quarter of 2010.
(B) Crediting of first quarter exemption during second quarter
The amount by which the tax imposed under subsection (a) would (but for subparagraph (A)) have been reduced with respect to compensation paid by a qualified employer during the first calendar quarter of 2010 shall be treated as a payment against the tax imposed under subsection (a) with respect to the qualified employer for the second calendar quarter of 2010 which is made on the date that such tax is due.
(d) Cross reference
For application of different contribution bases with respect to the taxes imposed by subsections (a) and (b), see section 3231 (e)(2).