of his failure to file a return or pay tax due solely by reason of his election.

Remuneration for agricultural labor

Section 201 (f) (1) of the bill, for which there is no corresponding provision in the House bill, amends section 3121 (a) (8) (B) of the Internal Revenue Code of 1954. Section 3121 (a) (8) (B) excludes from wages cash remuneration paid by an employer to an employee in any calendar year for agricultural labor unless such remuneration is $100 or more. The new subparagraph (B) would exclude from wages cash remuneration paid by an employer to an employee in any calendar year for agricultural labor unless (1) the cash remuneration paid in such year by the employer to the employee for such labor is $200 or more or, (2) the employee performs agricultural labor for the employer on 30 days or more during such year for cash remuneration computed on a time basis. The new subparagraph (B) of section 3121 (a) (8) provides two separate tests for determining whether cash remuneration paid by an employer to an employee in a calendar year for agricultural labor is excepted from wages. If either of the tests is met, cash remuneration paid during the year for such labor is not excepted from wages under section 3121 (a) (8) (B).

Under section 201 (k) (1) of the bill, the amendment made by section 201 (f) (1) applies with respect to remuneration paid after 1956. Crew leader

Section 201 (f) (2) of the bill, for which there is no corresponding provision in the House bill, amends section 3121 of the code by adding a new subsection (m). The new subsection (m) defines the term "crew leader" to mean an individual who furnishes individuals to perform agricultural labor for another person if such individual pays (either on his own behalf or on behalf of such person) the individuals so furnished by him for the agricultural labor performed by them and if such individual has not entered into a written agreement with such person whereby such individual has been designated as an employee of such person. Under the new subsection (m), a crew leader is deemed to be the employer, for purposes of the employee and the employer taxes imposed by sections 3101 and 3111, respectively, of the code of individuals furnished by him, as a crew leader, to perform agricultural labor for another person. Such new subsection (m) also provides that for purposes of chapter 21 (Federal Insurance Contributions Act) and chapter 2 (Tax on Self-Employment Income) a crew leader shall, with respect to any service performed by him in furnishing individuals to perform agricultural labor for another person and any service performed by him as a member of the crew, be deemed not to be an employee of such other person.

Under section 201 (k) (1) of the bill, the amendment made by section 201 (f) (2) applies with respect to service performed after 1956. Amendment relating to collection of employee tax

Section 201 (f) (3) of the bill, for which there is no corresponding provision in the House bill, amends section 3102 (a) of the code. Section 3102 (a) of the code now provides, in part, that an employer who in any calendar year pays to an employee cash remuneration to which section 3121 (a) (8) (B) of the code is applicable may deduct an amount equivalent to the employee tax imposed by section 3101

from any such payment of remuneration, even though at the time of payment the total amount of such remuneration paid to the employee by the employer in the calendar year is less than $100. The amendment made by section 201 (f) (3) merely conforms section 3102 (a) of the code to section 3121 (a) (8) (B) of the code as amended by section 201 (f) (1) of the bill.

Computation of self-employment income by farm operators

Section 201 (g) of the bill, for which there is no corresponding provision in the House bill, amends section 1402 (a) of the Internal Revenue Code of 1954. Under existing law a self-employed farmer who computes his income on the cash receipts and disbursements method may deem 50 percent of his gross income from farming to be his net earnings from self-employment attributable to farming, provided such gross income is not more than $1,800. If the gross income from farming is more than $1,800 and the net earnings from selfemployment as computed under the provisions of section 1402 (a) are less than $900, such net earnings, at his option, may be deemed to be $900. For this purpose, gross income is the excess of gross receipts from farming over the cost or other basis of property which was purchased and sold in carrying on such trade or business, adjusted in accordance with the provisions of paragraphs (1) through (7) (to the extent applicable) of section 1402 (a).

Your committee's bill changes the optional method of computing net earnings from farm self-employment, and extends the option to self-employed farmers who report income on the accrual method and to members of farm partnerships. Under your committee's bill, a farmer whose gross income from farming operations is not more than $1,200, may, at his option, deem such gross income to be his net earnings from farm self-employment; and if his gross income from farming is more than $1,200 and his net earnings from self-employment from farming operations (computed under the provisions of section 1402 without regard to the optional method of computing net earnings from self-employment) are less than $1,200, he may, at his option, deem his net earnings from self-employment to be $1,200.

In the case of a member of a farm partnership whose distributive share of the gross income of the partnership (after the gross income of the partnership has been reduced by the sum of all payments made by the partnership to members thereof which constitute guaranteed payments within the meaning of section 707 (c) of the code is not more than $1,200, the partner may, at his option, deem such distributive share of the gross income of the partnership to be his distributive share of income described in section 702 (a) (9) of the code derived from the partnership, and may use such figure in computing his net earnings from self-employment. If the partner's distributive share of the gross income of a farm partnership, computed as provided in the preceding sentence, is more than $1,200 and his distributive share (whether or not distributed) of income described in section 702 (a) (9) derived from such farm partnership (computed under sec. 1402 (a) of the code without regard to the optional method provided in that section for computing net earnings from self-employment) is less than $1,200, the distributive share of income described in section 702 (a) (9) derived from such farm partnership may, at his option, be deemed to be $1,200 for purposes of computing his net earnings from selfemployment.

Section 201 (g) of your committee bill further amends section 1402 (a) of the code to provide, for purposes of computing net earnings from farm self-employment under the optional method, that in any case in which the income is computed under an accrual method, the term "gross income" means gross income from the trade or business carried on by the individual or by the partnership, adjusted in accordance with the provisions of paragraphs (1) through (7) of section 1402 (a). The amendment further provides that for purposes of determining whether an individual (including a member of a partnership) has gross income from farming operations of not more than $1,200 or has gross income from such operations of $1,200 or more, such individual shall aggregate his gross income derived from all farming activities carried on by him as a sole proprietor, any payment which he receives from a farm partnership of which he is a member and which is a guaranteed payment within the meaning of section 707 (c) of the code, and his distributive share of the gross income of each farm partnership of which he is a member (computed in accordance with the provisions of section 1402 (a) of the code as amended by section 201 (g) of the bill).

Under section 201 (a) (1), the amendment made by section 201 (g) applies with respect to taxable years ending after 1956.

Foreign subsidiaries

Section 201 (h) of the bill, for which there is no corresponding provision in the House bill, amends section 3121 (1) (8) (A) of the code. Section 3121 (1) (8) now defines the term "foreign subsidiary," for purposes of the contract coverage made available under section 3121 (1), as (1) a foreign corporation more than 50 percent of the voting stock of which is owned by a United States corporation, and (2) a foreign corporation more than 50 percent of the voting stock of which is owned by the foreign corporation described in (1). Section 201 (h) would reduce the ownership requirements provided in respect of the foreign corporation described in (1) from "more than 50 percent" to "not less than 20 percent." This would have the effect of permitting coverage by contract, pursuant to section 3121 (1), of certain services performed outside the United States by United States citizens employed by a foreign corporation 20 percent or more of the voting stock of which is owned by a United States corporation.

The amendment made by section 201 (h) becomes effective upon enactment of the bill.

Filing of supplemental lists by nonprofit organizations

Section 201 (i) of the bill, which corresponds to section 201 (g) of the House bill except for a change in date noted in the following paragraph, amends section 3121 (k) (1) of the Internal Revenue Code of 1954, relating to waivers of tax exemption which may be filed by certain religious, charitable, etc., organizations. Pursuant to section 3121 (k), such an organization may file a certificate waiving exemption from tax under chapter 21 of such code only if two-thirds or more of its employees concur in the filing of such certificate, and such certificate is accompanied by a list containing the signature, address, and social security account number (if any) of each employee who concurs. As originally enacted, section 3121 (k) permitted additions to the list of employees concurring in the filing of a certificate only if a supplemental list was filed within the period ending on

the last day of the first month following the first calendar quarter for which the certificate is in effect. However, section 3121 (k) was amended by section 207 (a) of the Social Security Amendments of 1954 so as to permit additions to the list within a period of 24 months after the first calendar quarter for which the certificate is in effect. This amendment had the effect of permitting additions to lists accompanying certificates filed as early as the second calendar quarter of 1952, but made no provision for additions to any list of concurring employees in the case of a certificate filed prior to that quarter.

Section 201 (i) would permit amendment of the list accompanying any certificate, effective now or in the future, by the filing of a supplemental list at any time before the expiration of 24 months following the first calendar quarter for which the certificate is effective or at any time before January 1, 1959 (rather than January 1, 1958, as provided in the House bill) whichever is the later. This amendment would take effect upon enactment of the bill. However, the date on which a supplemental list becomes effective with respect to service performed by an individual whose signature appears on such list would continue to be governed by existing law.

Effective date for waiver certificate filed by nonprofit organizations

Section 201 (j) of the bill, which corresponds to section 201 (h) of the House bill, amends section 3121 (k) (1) of the Internal Revenue Code of 1954 so as to provide an optional effective date for certificates filed under such section after 1956. Under present law a certificate filed under section 3121 (k) of such code becomes effective on the first day of the calendar quarter following the quarter in which the certificate is filed. Under such section as amended by section 201 (j) of the bill, a certificate filed after 1956 may be made effective on the first day of the calendar quarter in which the certificate is filed or the first day of the succeeding calendar quarter, whichever is specified by the organization.

Tax rates

Section 202 (a) of the House bill would amend section 1401 of the Internal Revenue Code of 1954 to provide for progressive increases in the rates of the tax upon self-employment income, as now provided for taxable years beginning after 1955.

Section 202 (b) and (c) of the House bill would amend sections 3101 and 3111, respectively, of the code to provide for progressive increases in the rates of the employee and employer taxes, as now provided for calendar years after 1955.

These amendments have been deleted by your committee, thereby continuing in effect the tax rates now provided in sections 1401, 3101, and 3111 of the code in respect of the self-employment tax, the employee tax, and the employer tax, respectively.

AMENDMENT OF SECTION 403 OF SOCIAL SECURITY AMENDMENTS OF 1954

Service for certain tax-exempt organizations

Section 401 of the bill, for which there is no corresponding provision in the House bill, amends subsection (a) and subsection (b) of section 403 of the Social Security Amendments of 1954.

Subsection (a) of section 403 of the Social Security Amendments of 1954 now provides that certain services performed before 1955 by

an individual employed prior to September 1, 1954, by an organization exempt from income tax as an organization described in section 101 (6) of the Internal Revenue Code of 1939 may be deemed to be "employment," as defined in section 1426 (b) of the 1939 code, even though the organization had not filed a valid waiver certificate under section 1426 (1) of the 1939 code before September 1, 1954, but only if certain conditions prescribed in such section 403 are met and the individual so requests in accordance with regulations of the Secretary of the Treasury or his delegate.

Section 401 of the bill amends subsection (a) of section 403 of the Social Security Amendments of 1954 so as to extend application of such subsection (a) to services of the same type as those to which the subsection is now applicable performed before 1957 by an individual employed by such an organization prior to the date of enactment of the bill.

Subsection (b) of section 403 of the Social Security Amendments of 1954 now provides that certain services performed for an organization exempt from income tax as an organization described in section 101 (6) of the Internal Revenue Code of 1939 by an individual who was employed by such organization prior to September 1, 1954, and who failed to concur in the waiver certificate filed by such organization under section 1426 (1) of the 1939 code, may be deemed to be "employment," as defined in section 1426 (b) of the 1939 code, but only if certain conditions are met and the individual so requests on or before January 1, 1957, in accordance with regulations of the Secretary of the Treasury or his delegate. If such request is made, the individual is deemed to have signed the original list of employees concurring in the waiver certificate filed by the organization.

Section 401 of the bill amends subsection (b) of section 403 of the Social Security Amendments of 1954 so as to extend application of such subsection (b) to services of the same type as those to which the subsection is now applicable performed by an individual employed by such an organization prior to the date of enactment of the bill, if the individual makes the request provided for in such subsection on or before January 1, 1959.

TITLE III-AMENDMENTS TO PUBLIC ASSISTANCE PROVISIONS OF THE SOCIAL SECURITY ACT

The first section of title III of the bill contains a declaration of purpose. The remainder of the title is divided into five parts: Part I which provides for separate Federal matching funds under titles I, IV, X, and XIV of the Social Security Act of State public assistance expenditures for medical care; part II which relates to provision of services for self-support or self-care in titles IV, X, and XIV of the Social Security Act; part III which contains two small amendments to title IV of the act; part IV which provides for Federal aid for research and training in public welfare; and part V which temporarily extends the formula now in effect for determining the relative Federal share of public assistance expenditures under titles I, IV, X, and XIV of the

act.

There were no provisions in the House bill comparable to those included in this title.