ice performed in the United States by a citizen of the United States in the employ of an international organization, which service is excepted from employment under the provisions of paragraph (a) of this section, is treated as engagement in a trade or business under the provisions of section 211 of the Act (see § 404.1070 (d) (4)).

[32 F.R. 7768, May 27, 1967]

§ 404.1025a Communist organizations.

Service in the employ of any organization which is registered, or which is required to register under the Internal Security Act of 1950 as amended by a final order of the Subversive Activities Control Board, as a communist-action, communist-front, or communist-infiltrated organization, is excepted from employment if performed after June 30, 1956, and in a calendar quarter during any part of which the organization is so registered or the final order is in effect. [32 F.R. 7768, May 27, 1967] § 404.1025b

Nonresident aliens.

(a) In general. Service performed after December 31, 1961, by a nonresident alien, while he is temporarily in the United States as a nonimmigrant under subparagraph (F) (dealing with certain types of alien students, and their alien spouses and minor children) or (J) (dealing with certain types of participants in programs designated by the Secretary of State and their alien spouses and minor children) of section 101(a) (15) of the Immigration and Nationality Act as amended, is excepted from employment if it is performed to carry out a purpose for which the alien was admitted. For the purposes of this section, any alien temporarily in the United States as a nonimmigrant under either of such subparagraphs is deemed to be a nonresident alien; and any alien admitted to the United States as an exchange visitor under section 201 of the U.S. Information and Educational Exchange Act of 1948 is deemed to be a nonresident alien temporarily in the United States as a nonimmigrant under such subparagraph (J).

(b) Spouses and children. Service performed by a nonresident alien's alien spouse or minor child, who is also temporarily present in the United States as a nonimmigrant under subparagraph (F) or (J) of section 101 (a) (15) of the Immigration and Nationality Act as amended, is not excepted from employment by this

(a) General. (1) Whether remuneration paid after 1950 for employment performed after 1936 constitutes wages is determined under section 209 of the Act. This section and § 404.1027 (relating to the statutory exclusions from wages) apply with respect only to remuneration paid after 1950 for employment performed after 1936. Whether remuneration paid after 1936 and prior to 1940 for employment performed after 1936 constitutes wages shall be determined in accordance with the applicable provisions of law and Regulations No. 2 (20 CFR, 1938 ed., Part 402). Whether remuneration paid after 1939 and prior to 1951 for employment performed after 1936 constitutes wages shall be determined in accordance with the applicable provisions of law and Part 403 of this chapter (Regulations No. 3).

(2) The term "wages" means all remuneration for employment unless specifically excepted under section 209 of the Act (see § 404.1027).

(3) The name by which the remuneration for employment is designated is immaterial. Thus, salaries, fees, bonuses, and commissions on sales or on insurance premiums are wages within the meaning of the Act if paid as compensation for employment.

(4) Generally, the basis upon which the remuneration is paid is immaterial in determining whether the remuneration constitutes wages. Thus, it may be paid on the basis of piecework or a percentage of profits; and it may be paid hourly, daily, weekly, monthly, or annually. See, however, § 404.1027 (m) (3) relating to the treatment of cash remuneration computed on a time basis for agricultural labor.

(5) Generally, the medium in which the remuneration is paid is also immaterial. It may be paid in cash or in something other than cash, as for example, goods, lodging, food, or clothing. Remuneration paid in items other than cash is computed on the basis of the fair value of such items at the time of payment. See, however, § 404.1027 (i) relating to the treatment of remuneration paid in any medium other than cash for services

not in the course of the employer's trade or business, for domestic service in a private home of the employer, or for agricultural labor, § 404.1027 (o) for services described in section 209(j) of the Act (relating to home workers), and § 404.1027 (p) relating to tips paid in a medium other than cash.

(6) Ordinarily, facilities or privileges (such as entertainment, medical services, or so-called "courtesy" discounts on purchases), furnished or offered by an employer to his employees generally are not considered as remuneration for employment if such facilities or privileges are of relatively small value and are offered or furnished by the employer merely as a means of promoting the health, good will, contentment, or efficiency of his employees. The term "facilities or privileges," however, does not ordinarily include the value of meals or lodging furnished to employees. The value of these items is wages where:

(i) It is agreed as part of the contract of employment that the employer is to furnish to the employee daily meals or regular lodging or both; or

(ii) The value of such items forms an appreciable part of the total remuneration. For example, the value of meals or lodging furnished to hospital, restaurant, or hotel employees or to seamen or other employees aboard vessels, would generally be wages because either one or both of these conditions are met.

(7) Amounts of so-called "vacation allowances" paid to an employee constitute wages. Thus, the salary of an employee on vacation, paid notwithstanding his absence from work, constitutes wages.

(8) Amounts paid specifically-either as advances or reimbursements-for traveling or other bona fide ordinary and necessary expenses incurred or reasonably expected to be incurred in the business of the employer are not wages. Traveling and other reimbursed expenses must be identified either by making a separate payment or by specifically indicating the separate amounts where both wages and expense allowances are combined in a single payment.

(9) Remuneration for employment, unless such remuneration is specifically excepted under section 209 of the Act, constitutes wages even though at the time paid the relationship of employer and employee no longer exists between the person in whose employ the services

were performed and the individual who performed them.

Example: A is employed by B during January 1966, in employment and is entitled to receive remuneration of $100 for the services performed for B during the month. A leaves the employ of B on January 31, 1966. On February 15, 1966 (when A is no longer an employee of B), B pays A the remuneration of $100 which was earned for the services performed in January. The $100 is wages within the meaning of the Act.

(b) When paid and received. (1) In general, wages are received by an employee at the time they are paid by the employer to the employee. Wages are paid by an employer at the time that they are actually or constructively paid unless under subparagraph (3) of this section they are deemed to be subsequently paid. For provisions relating to the time when tips received by an employee are deemed paid to the employee, see paragraph (d) of this section.

(2) Wages are constructively paid when they are credited to the account of or set apart for an employee so that they may be drawn upon by him at any time although not then actually reduced to possession. To constitute payment in such a case (i) the wages must be credited to or set apart for the employee without any substantial limitation or restriction as to the time or manner of payment or condition upon which payment is to be made, and must be made available to him so that they may be drawn upon at any time, and their payment brought within his own control and disposition, or (ii) there is an intention by the employer to pay or to set apart or credit, and ability to pay wages when due, and failure of the employer to credit or set apart the wages is due to clerical error or inadvertence in the mechanics of payment, and because of such clerical error or inadvertence the wages are not actually available at that time. However, where the employee has authority to withhold wages from himself in the interest of the employer, his failure to reduce any of his wages to his possession shall be deemed to be in the interest of his employer and to establish the employer's intent not to pay such wages, unless there is a clear showing that such withholding was exclusively in the employee's interest. As to the time tips are deemed paid, see § 404.1026(d). For provisions relating to the treatment of deductions

from remuneration as payments of remuneration, see paragraph (c) of this section.

(3) (i) The first $50 of cash remuneration paid, either actually or constructively, by an employer to an employee in a calendar quarter for:

(a) Service not in the course of the employer's trade or business and domestic service in a private home of the employer; or

(b) Service performed by certain home workers;

Is deemed paid by the employer to the employee at the first moment of time in such calendar quarter that the sum of such cash payments made within such quarter is at least $50.

(ii) (a) The first $100 of cash remuneration paid, either actually or constructively, by an employer to an employee in the calendar year 1955 or 1956 for agricultural labor to which § 404.1027 (m) is applicable is deemed paid by the employer to the employee at the first moment of time in such calendar year that the sum of such cash payments made within such year is at least $100.

(b) Cash remuneration paid, either actually or constructively, by an employer to an employee in a calendar year after 1956 for agricultural labor to which § 404.1027 (m) is applicable, and before either of the events described in (1) or (2) of this subdivision has occurred, is deemed paid upon the occurrence of the earlier of such events, as follows:

(1) The first moment of time in such calendar year that the sum of the payments of such remuneration is at least $150; or

(2) The twentieth day in such calendar year on which the employee has performed such agricultural labor for the employer for cash remuneration computed on a time basis.

(iii) If an employer pays cash remuneration to an employee for two or more of the types of services referred to in this subparagraph, the provisions of this subparagraph are to be applied separately to the amount of remuneration attributable to each type of service.

(c) Deductions by an employer from wages of an employee. The amount of any tax which is required by section 1400 of the Internal Revenue Code of 1939 or section 3101 of the Internal Revenue Code of 1954 to be deducted by the employer from the wages of an employee is considered to be a part of the employee's wages, and is deemed to be paid to the

employee as wages at the time that the deduction is made. Other amounts deducted from wages of an employee by an employer also constitute wages paid to the employee at the time of the deduction. It is immaterial that any act of Congress, or the law of any State requires or permits such deductions and the payment thereof to the United States, a State, or any political subdivision thereof.

(d) Tips (1) In general: Except as otherwise provided in § 404.1027 (p) tips received after 1965 by an employee in the course of his employment are remuneration for employment. (For definition of the term "employee" see § 404.1004.) Tips reported by an employee to his employer in a written statement furnished to the employer pursuant to section 6053 (a) of the Internal Revenue Code of 1954 are deemed to be paid to the employee at the time the written statement is furnished to the employer. Tips received by an employee which are not reported to his employer in a written statement furnished pursuant to such section 6053 (a) are deemed to be paid to the employee at the time the tips are actually received by the employee.

(2) Tips received by employee in course of his employment: Tips are considered to be received by an employee in the course of his employment for an employer regardless of whether the tips are received by the employee from a person other than his employer or are paid to the employee by the employer. However, only those tips which are received by an employee on his own behalf (as distinguished from tips received on behalf of another employee) are considered as remuneration paid to the employee. Thus, where employees practice tip splitting (for example, where waiters pay a portion of the tips received by them to the busboys), each employee who receives a portion of a tip left by a customer of the employer is considered to have received tips in the course of his employment.

(3) See § 404.1027 (t) (3) for discussion of tips or gratuities received before 1966. [32 F.R. 11076, July 27, 1967, as amended at 34 F.R. 19971, Dec. 20, 1969]

§ 404.1027 Exclusions from wages.

(a) Annual wage limitation. (1) The term "wages" does not include that part of the remuneration paid by an employer to an employee within any calendar year:

(i) After 1950 and prior to 1955 which exceeds the first $3,600 of remuneration;

(ii) After 1954 and prior to 1959 which exceeds the first $4,200 of remuneration;

(iii) After 1958 and prior to 1966 which exceeds the first $4,800 of remuneration;

(iv) After 1965 and prior to 1968 which exceeds the first $6,600 of remuneration;

or

(v) After 1967 which exceeds the first $7,800 of remuneration;

(exclusive of remuneration excepted from wages in accordance with paragraphs (b) through (t) of this section) paid within the calendar year by an employer to the employee for employment performed by him at any time after 1936.

(2) The annual wage limitation applies only if the remuneration received during any 1 calendar year by an employee for employment performed after 1936 exceeds such limitation. The limitation in such case relates to the amount of remuneration received during any 1 calendar year for employment after 1936 and not to the amount of remuneration for employment performed in any 1 calendar year.

Example. Employee A, in 1967, receives $7,000 from employer B in part payment of $8,000 due him from employment performed in 1967. In 1968 A receives from employer B the balance of $1,000 due him for employment performed in 1967, and thereafter in 1968 also receives $7,000 for employment performed in 1968 for employer B. The first $6,600 of the $7,000 received during 1967 is wages in 1967. The $1,000 received in 1968 for employment during 1967 is wages in 1968, as is also the first $6,800 paid of the $7,000 for employment during 1968 (the $1,000 for 1967 employment added to the first $6,800 paid for 1968 employment constitutes the maximum remuneration which could be creditable as wages to A in 1968). The final $200 received by A from B in 1968 is not included as wages.

(b) Payments under employer's plans or systems. (1) The term "wages" does not include 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):

(i) On account of an employee's retirement; sickness or accident disability

of an employee or any of his dependents; medical or hospitalization expenses in connection with sickness or accident disability of an employee or any of his dependents; or death of an employee or any of his dependents; or

(ii) Upon or after the termination of an employee's employment relationship because of death, retirement for disability, or retirement after attaining an age specified in such a plan or in a pension plan of the employer, other than any such payment or series of payments which would have been paid if the employee's relationship had not been so terminated.

(2) The plan or system established by an employer need not provide for payments on account of all of the specified items, but such plan or system may provide for any one or more of such items. Payments for any one or more of such items under a plan or system established by an employer solely for the dependents of his employees are not within this exclusion from wages.

(3) Dependents of an employee include the employee's husband or wife, children, and any other members of the employee's immediate family.

(4) It is immaterial for purposes of this exclusion whether the amount or possibility of such benefit payments is taken into consideration in fixing the amount of an employee's remuneration or whether such payments are required. expressly, or impliedly, by the contract of service.

(c) Retirement payments. The term "wages" does not include any payment made by an employer to an employee (including any amount paid by an employer for insurance or annuities, or into a fund, to provide for any such payment) on account of the employee's retirement. Thus, payments made to an employee on account of his retirement are excluded from wages under this exception even though not made under a plan or system.

(d) Payments on account of sickness or accident disability, or medical or hospitalization expenses. The term "wages" does not include any payment made by an employer to, or on behalf of, an employee on account of the employee's sickness or accident, disability or the medical or hospitalization expenses in connection with the employee's sickness or disability, if such payment is made after the expiration of 6 or more calendar months following the

last calendar month in which such employee worked for such employer. Such payments are excluded from wages under this exception even though not made under a plan or system. If the employee does not actually perform services for the employer during the requisite period, the existence of the employer-employee relationship during that period is immaterial.

(e) Payments from or to certain taxexempt trusts. The term "wages" does not include any payment made:

(1) By an employer, on behalf of an employee or his beneficiary, into a trust;

or

(2) To, or on behalf of, an employee or his beneficiary, from a trust;

if at the time of such payment the trust is exempt from tax under section 165 (a) of the Internal Revenue Code of 1939 with respect to payments made prior to 1955, or with respect to payments made after 1954, under section 501(a) of the Internal Revenue Code of 1954 as an organization described in section 401(a) of such Code. A payment made to an employee of such a trust for services rendered as an employee of the trust and not as a beneficiary thereof is not within this exclusion from wages.

(f) Payments under or to certain annuity plans. The term "wages" does not include any payment made:

(1) By an employer, on behalf of an employee or his beneficiary, into an annuity plan; or

(2) To, or on behalf of, an employee or his beneficiary, under an annuity plan; if at the time of such payment:

(3) With respect to payments made prior to 1955, the annuity plan meets the requirements of section 165(a) (3), (4), (5), and (6) of the Internal Revenue Code of 1939;

(4) With respect to payments made after 1954 and prior to 1963, the annuity plan meets the requirements of section 401(a) (3), (4), (5), and (6) of the Internal Revenue Code of 1954;

(5) With respect to payments made after 1962, the annuity plan is a plan described in section 403(a) of the Internal Revenue Code of 1954.

(g) Payments under or to certain bond purchase plans. The term "wages" does not include any payment made after December 31, 1962:

(1) By an employer, on behalf of an employee or his beneficiary, into a bond purchase plan; or

(2) To, or on behalf of, an employee or his beneficiary under a bond purchase plan;

if at the time of such payment the plan is a qualified bond purchase plan described in section 405(a) of the Internal Revenue Code of 1954.

(h) Payments by an employer of employees' tax or employees' contributions under a State law. The term "wages" does not include any payment by an employer (without deduction from the remuneration of, or other reimbursement from, the employee) of either:

(1) The employee tax imposed by section 1400 of the Internal Revenue Code of 1939 or section 3101 of the Internal Revenue Code of 1954; or

(2) Any payment required from an employee under a State unemployment compensation law.

(i) Payments other than in cash for certain types of services. (1) The term "wages" does not include remuneration paid in any medium other than cash:

(i) For services not in the course of the employer's trade or business; (ii) For domestic service in a private home of the employer; or

(iii) For agricultural labor.

For provisions relating to tips paid in a medium other than cash, see paragraph (p) of this section. Cash remuneration includes checks and other monetary media of exchange. Remuneration paid in any medium other than cash, such as lodging, food, clothing, car tokens, transportation passes or tickets, farm products, or other goods or commodities, for services of the prescribed character does not constitute wages. Remuneration paid in any medium other than cash for services other than those mentioned in subdivisions (i), (ii), and (iii) of this subparagraph does not come within this exclusion from wages.

(2) For provisions relating to the circumstances under which prior to 1955 services not in the course of the employer's trade or business or agricultural labor does not constitute employment, see §§ 404.1010 and 404.1008, respectively. For provisions relating to the circumstances under which cash remuneration for domestic service in a private home of the employer or for industrial home work does not constitute wages, see paragraphs (k), (1), and (0) of this section, respectively.

(j) Domestic service defined. Services of a household nature performed by an