CHAPTER I

DEFINITIONS

SECTION 1101 (a) AND (b) OF THE ACT

(a) When used in this Act

(1) The term "State" (except when used in section 531) includes Alaska, Hawaii, and the District of Columbia.

(2) The term “United States” when used in a geographical sense means the States, Alaska, Hawaii, and the District of Columbia. (3) The term "person" means an individual, a trust or estate, a partnership, or a corporation.

(4) The term "corporation" includes associations, joint-stock companies, and insurance companies.

(5) The term "shareholder" includes a member in an association, joint-stock company, or insurance company.

(6) The term "employee" includes an officer of a corporation. (b) The terms "includes" and "including" when used in a definition contained in this Act shall not be deemed to exclude other things otherwise within the meaning of the term defined.

SECTION 811 OF THE ACT

When used in this title

(a) The term "wages" means all remuneration for employment, including the cash value of all remuneration paid in any medium other than cash; except that such term shall not include that part of the remuneration which, after remuneration equal to $3,000 has been paid to an individual by an employer with respect to employment during any calendar year, is paid to such individual by such employer with respect to employment during such calendar year.

(b) The term “employment” means any service, of whatever nature, performed within the United States by an employee for his employer, except

(1) Agricultural labor;

(2) Domestic service in a private home;

(3) Casual labor not in the course of the employer's trade or business;

(4) Service performed by an individual who has attained the age of sixty-five;

(5) Service performed as an officer or member of the crew of a vessel documented under the laws of the United States or of any foreign country;

(6) Service performed in the employ of the United States Government or of an instrumentality of the United States;

(7) Service performed in the employ of a State, a political subdivision thereof, or an instrumentality of one or more States or political subdivisions;

(8) Service performed in the employ of a corporation, community chest, fund, or foundation, organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private shareholder or individual.

SECTION 11 OF THE CARRIERS TAXING ACT

The term "employment", as defined in subsection (b) of section 811 of Title VIII of the Social Security Act, shall not include service performed in the employ of a carrier as defined in subdivision (a) of section 1 of this Act.

ARTICLE 1. General definitions and use of terms.-As used in these regulations

(a) The terms defined in the above provisions of law shall have the meanings so assigned to them.

(b) Person includes an individual, a corporation, a partnership, a trust or estate, a joint-stock company, an association, or a syndicate, group, pool, joint venture or other unincorporated organization or group, through or by means of which any business, financial operation, or venture is carried on. It includes a guardian, committee, trustee, executor, administrator, trustee in bankruptcy, receiver, assignee for the benefit of creditors, conservator, or any person acting in a fiduciary capacity.

(c) Act means the Social Security Act (Public, No. 271, Seventyfourth Congress; 49 Stat. 620).

(d) Carriers Taxing Act means the Act entitled "An Act To levy an excise tax upon carriers and an income tax upon their employees, and for other purposes", approved August 29, 1935 (Public, No. 400, Seventy-fourth Congress; 49 Stat. 974).

(e) Tax means either the employees' tax or the employers' tax as respectively defined in this article.

(f) Employees' tax means the tax imposed by section 801 of the Act.

(g) Employers' tax means the tax imposed by section 804 of the Act.

(h) Secretary means the Secretary of the Treasury.

(i) Commissioner means the Commissioner of Internal Revenue. (j) Collector means collector of internal revenue.

(k) Social Security Board means the board established pursuant to Title VII of the Act.

(7) The cross references in these regulations to other portions of the regulations, when the word "see" is used, are made only for convenience, and shall be given no legal effect.

SECTION 811(b) OF THE ACT

The term "employment” means any service, of whatever nature, performed within the United States by an employee for his employer, except

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ART. 2. Employment.-All services performed within the United States by an employee for his employer, unless specifically excepted by section 811 (b) of the Act or section 11 of the Carriers Taxing Act, constitute "employment" within the meaning of Title VIII of the Act. To constitute an employment the legal relationship of employer and employee must exist between the person for whom the services are performed and the individual who performs them, and the services involved must be performed within the United States, that is, within any of the several States, the District of Columbia, or the Territory of Alaska or Hawaii. (See articles 3 and 4 as to who are employees and employers, respectively, and articles 5 to 13, inclusive, relating to excepted services.)

To the extent that an employee performs services outside of the United States for the person who employs him, he is not in an employment.

The place where the contract for services is entered into and the citizenship or residence of the employee or of the employer are immaterial. Thus, the employee and the employer may be citizens and residents of a foreign country and the contract for the services may be entered into in a foreign country, and yet, if the employee under such contract actually performs services within the United States, there may be to that extent an employment within the meaning of Title VIII of the Act.

ART. 3. Who are employees. Every individual is an employee within the meaning of Title VIII of the Act if he performs services in an employment as defined in section 811(b) (see article 2).

However, the relationship between the person for whom such services are performed and the individual who performs such services must as to those services be the legal relationship of employer and employee. Generally such relationship exists when the person for whom services are performed has the right to control and direct the individual who performs the services, not only as to the result to be accomplished by the work but also as to the details and means by which that result is accomplished. That is, an employee is subject to the will and control of the employer not only as to what shall be done but how it shall be done. In this connection, it is not necessary that the employer actually direct or control the manner in which the services are performed; it is sufficient if he has the right to do so. The right to discharge is also an important factor indicating that the per

son possessing that right is an employer. Other factors characteristic of an employer, but not necessarily present in every case, are the furnishing of tools and the furnishing of a place to work, to the individual who performs the services. In general, if an individual is subject to the control or direction of another merely as to the result to be accomplished by the work and not as to the means and methods for accomplishing the result, he is an independent contractor. An individual performing services as an independent contractor is not as to such services an employee.

Generally, physicians, lawyers, dentists, veterinarians, contractors, subcontractors, public stenographers, auctioneers, and others who follow an independent trade, business, or profession, in which they offer their services to the public, are independent contractors and not employees.

Whether the relationship of employer and employee exists will in doubtful cases be determined upon an examination of the particular facts of each case.

If the relationship of employer and employee exists, the designation or description of the relationship by the parties as anything other than that of employer and employee is immaterial. Thus, if such relationship exists, it is of no consequence that the employee is designated as a partner, coadventurer, agent, or independent contractor.

The measurement, method, or designation of compensation is also immaterial, if the relationship of employer and employee in fact exists.

Title VIII of the Act makes no distinction between classes or grades of employees. Thus, superintendents, managers, and other superior employees are employees. An officer of a corporation is an employee of the corporation, but a director, as such, is not. A director may be an employee of the corporation, however, if he performs services for the corporation other than those required by attendance at and participation in meetings of the board of directors. ART. 4. Who are employers.-Every person is an employer who employs one or more individuals in an employment, that is, for the performance within the United States of services not specifically excepted. The number of individuals employed by the employer and the period during which any such individual is so employed is immaterial. (For definition of employment see article 2, and for excepted services see articles 5 to 13, inclusive.)

An employer may be an individual, a corporation, a partnership, a trust or estate, a joint-stock company, an association, or a syndicate, group, pool, joint venture, or other unincorporated organization, group, or entity. An employer may be a person acting in a fiduciary capacity or on behalf of another, such as a guardian,

committee, trustee, executor or administrator, trustee in bankruptcy, receiver, assignee for the benefit of creditors, or conservator.

SECTION 811(b) OF THE ACT

The term “employment" means any service, of whatever nature, performed within the United States by an employee for his employer, except

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ART. 5. Excepted services generally.-Even though an individual performs services within the United States for the person who employs him, if the services are of a class which is specifically excepted by section 811(b) of the Act or section 11 of the Carriers Taxing Act, they are excluded for the purposes of the tax.

The exception attaches to the services performed by the employee and not to the employee as an individual; and the exception applies only for the period during which the individual is rendering services in an excepted class.

Example: A, who operates a farm and also a grocery store, employs B for $10 a week. B works on the farm five days of the week and works for one day of the week as a clerk in the grocery store. If the services which B performs on the farm constitute "agricultural labor" (see article 6), such services are excepted; the services performed as a clerk in the grocery store are, however, not excepted. In computing the amount of "wages" paid to B the part of the weekly salary of $10 which is attributable to the work on the farm is excluded, while the amount which is attributable to the work performed in the grocery store is included.

ART. 6. Agricultural labor.—The term "agricultural labor" includes all services performed

(a) By an employee, on a farm, in connection with the cultivation of the soil, the raising and harvesting of crops, or the raising, feeding, or management of live stock, bees, and poultry; or

(b) By an employee in connection with the processing of articles from materials which were produced on a farm; also the packing, packaging, transportation, or marketing of those materials or articles. Such services do not constitute agricultural labor, however, unless they are performed by an employee of the owner or tenant of the farm on which the materials in their raw or natural state were produced, and unless such processing, packing, packaging, transportation, or marketing is carried on as an incident to ordinary farming