79–006 

115TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 2d Session 115–801 

TRIBAL SOCIAL SECURITY FAIRNESS ACT OF 2018 

JUNE 29, 2018.—Committed to the Committee of the Whole House on the State of 

the Union and ordered to be printed 

Mr. BRADY of Texas, from the Committee on Ways and Means, 

submitted the following 

R E P O R T 

[To accompany H.R. 6124] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on Ways and Means, to whom was referred the 

bill (H.R. 6124) to amend title II of the Social Security Act to authorize voluntary agreements for coverage of Indian tribal council 

members, and for other purposes, having considered the same, report favorably thereon with an amendment and recommend that 

the bill as amended do pass. 


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115TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 2d Session 115–801 

TRIBAL SOCIAL SECURITY FAIRNESS ACT OF 2018 

JUNE 29, 2018.—Committed to the Committee of the Whole House on the State of 

the Union and ordered to be printed 

Mr. BRADY of Texas, from the Committee on Ways and Means, 

submitted the following 

R E P O R T 

[To accompany H.R. 6124] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on Ways and Means, to whom was referred the 

bill (H.R. 6124) to (1) amend the Social Security Act to allow Indian tribal governments to enter into agreements with the Commissioner of Social Security to obtain Social Security and Medicare 

coverage with respect to the services of tribal council leaders and 

members in their capacity as tribal council members and (2) amend 

the Internal Revenue Code of 1986 (IRC) to provide that such tribal 

council members covered by an agreement under the bill are employees for Federal Insurance Contributions Act (FICA) tax purposes, report favorably thereon with an amendment and recommend that the bill as amended do pass. 

CONTENTS 

Page 

I. SUMMARY AND BACKGROUND ............................................................... 4 

II. EXPLANATION OF THE BILL ................................................................... 6 

A. Voluntary Agreements for Coverage of Services by American Indian Tribal Council Members (sec. 2 of the bill and sec. 3121 

of the Internal Revenue Code of 1986 and new sec. 218A of 

Title II of the Social Security Act) .................................................... 6 

III. VOTES OF THE COMMITTEE .................................................................... 8 

IV. BUDGET EFFECTS OF THE BILL ............................................................ 9 

A. Committee Estimate of Budgetary Effects ......................................... 9 

B. Statement Regarding New Budget Authority and Tax Expenditures Budget Authority ...................................................................... 9 

C. Cost Estimate Prepared by the Congressional Budget Office ........... 9 

V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF 

THE HOUSE .............................................................................................. 10 

A. Committee Oversight Findings and Recommendations .................... 10 

B. Statement of General Performance Goals and Objectives ................ 10 

C. Information Relating to Unfunded Mandates .................................... 10 

D. Applicability of House Rule XXI 5(b) .................................................. 10 


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E. Tax Complexity Analysis ..................................................................... 13 

F. Congressional Earmarks, Limited Tax Benefits, and Limited Tariff 

Benefits ............................................................................................... 13 

G. Duplication of Federal Programs ........................................................ 13 

H. Disclosure of Directed Rule Makings ................................................. 13 

VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED 13 

A. Text of Existing Law Amended or Repealed by the Bill, as Reported .................................................................................................. 13 

B. Changes in Existing Law Proposed by the Bill, as Reported ........... 14 

The amendment is as follows: 

Strike all after the enacting clause and insert the following: 

SECTION 1. SHORT TITLE. 

This Act may be cited as the ‘‘Tribal Social Security Fairness Act of 2018’’. 

SEC. 2. VOLUNTARY AGREEMENTS FOR COVERAGE OF SERVICES BY AMERICAN INDIAN TRIBAL COUNCIL MEMBERS. 

(a) IN GENERAL.—Title II of the Social Security Act (42 U.S.C. 401 et seq.) is 

amended by inserting after section 218 the following new section: 

‘‘VOLUNTARY AGREEMENTS FOR COVERAGE OF INDIAN TRIBAL COUNCIL MEMBERS

‘‘Purpose of Agreement 

‘‘SEC. 218A. (a)(1) The Commissioner of Social Security shall, at the request of any 

Indian tribe, enter into an agreement with such Indian tribe for the purpose of extending the insurance system established by this title to services performed by individuals as members of such Indian tribe’s tribal council. Any agreement with an Indian tribe under this section applies to all members of the tribal council, and shall 

include all services performed by individuals in their capacity as council members. 

‘‘(2) Notwithstanding section 210(a), for the purposes of this title, the term ‘employment’ includes any service included under an agreement entered into under this 

section. 

‘‘Definitions 

‘‘(b) For the purposes of this section: 

‘‘(1) The term ‘member’ means, with respect to a tribal council, an individual 

appointed or elected to serve as a member or the head of the tribal council. 

‘‘(2) The term ‘tribal council’ means the appointed or elected governing body 

of a federally recognized Indian tribe. 

‘‘Effective Date of Agreement 

‘‘(c)(1) Any agreement under this section shall be effective with respect to services 

performed after an effective date specified in such agreement, provided that such 

date may not be earlier than the first day of the next calendar month after the 

month in which the agreement is executed by both parties. 

‘‘(2) At the request of the Indian tribe at the time of the agreement, such agreement may apply with respect to services performed before such effective date for 

which there were timely paid in good faith (and not subsequently refunded) to the 

Secretary of the Treasury amounts equivalent to the sum of the taxes which would 

have been imposed by sections 3101 and 3111 of the Internal Revenue Code of 1986 

had such services constituted employment for purposes of chapter 21 of such Code. 

No agreement under this section may require payment to be made after the effective 

date specified in such agreement of any taxes with respect to services performed before such effective date. 

‘‘Duration of Agreement 

‘‘(d) No agreement under this section may be terminated on or after the effective 

date of the agreement.’’. 

(b) CONFORMING AMENDMENTS.— 

(1) SOCIAL SECURITY ACT.—Section 210(a) of the Social Security Act (42 U.S.C. 

410(a)) is amended— 

(A) in paragraph (20), by striking ‘‘or’’ at the end; 

(B) in paragraph (21), by striking the period at the end and inserting ‘‘; 

or’’; and 

(C) by inserting after paragraph (21) the following new paragraph: 


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‘‘(22) Service performed by members of Indian tribal councils as tribal council 

members in the employ of an Indian tribal government, except that this paragraph shall not apply in the case of service included under an agreement under 

section 218A.’’. 

(2) INTERNAL REVENUE CODE OF 1986.—The Internal Revenue Code of 1986 is 

amended— 

(A) in section 3121(b)— 

(i) in paragraph (20), by striking ‘‘or’’ at the end; 

(ii) in paragraph (21), by striking the period at the end and inserting 

‘‘; or’’; and 

(iii) by inserting after paragraph (21) the following new paragraph: 

‘‘(22) service performed by members of Indian tribal councils as tribal council 

members in the employ of an Indian tribal government, except that this paragraph shall not apply in the case of service included under an agreement under 

section 218A of the Social Security Act.’’; and 

(B) in section 3121(d)(4), by inserting ‘‘or 218A’’ after ‘‘section 218’’. 

(c) RULE OF CONSTRUCTION.—Nothing in this Act or the amendments made by 

this Act shall be construed to affect application of any Federal income tax withholding requirements under the Internal Revenue Code of 1986. 

I. SUMMARY AND BACKGROUND 

A. PURPOSE AND SUMMARY

H.R. 6124, as reported by the Committee on Ways and Means, 

seeks to give tribal council members the ability to elect Social Security coverage. The bill amends Title II of the Social Security Act 

to allow tribal councils to voluntarily enter into coverage agreements with the Social Security Administration (SSA). The bill also 

allows tribal council members to receive Social Security credit for 

FICA taxes paid erroneously, prior to the establishment of the coverage agreement, if these taxes were paid timely and not subsequently refunded. 

B. BACKGROUND AND NEED FOR LEGISLATION

When Social Security was established, state and local government employees were excluded from Social Security coverage due 

to concerns that the 10th Amendment prohibited the federal government from requiring states to join Social Security. The Social 

Security Amendments of 1950 added Section 218 to the Social Security Act, which allowed state and local governments to extend Social Security (and later Medicare) coverage to their employees 

through a voluntary agreement, known as a 218 agreement, between the state and the SSA. Under Section 218, the state/local 

government may only extend coverage following a vote by members 

of the retirement system through a referendum process. The agreements generally cover all positions within a coverage group, not 

just specific individuals. Once a group is covered, the employer may 

not revoke coverage and employees filling the covered positions 

may not decline coverage. 

The services performed by members of tribal councils are not covered by Social Security. In 1959, the Internal Revenue Service 

(IRS) ruled that services performed by tribal council members in 

their role as council members do not constitute ‘‘employment’’ for 

FICA tax purposes, meaning that these earnings are not subject to 

Social Security and Medicare taxes. 

In the early 2000s, the SSA began receiving inquiries regarding 

the Social Security coverage status of tribal council members, as 

some members may have been paying Social Security taxes erroVerDate Sep 11 2014 01:05 Jul 06, 2018 Jkt 079006 PO 00000 Frm 00004 Fmt 6659 Sfmt 6602 E:\HR\OC\HR801.XXX HR801

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neously and believed their earnings would count toward future benefits. In 2006, the SSA updated its program instructions to clarify 

that tribal council members’ earnings do not count toward Social 

Security benefits, consistent with the 1959 revenue ruling. The 

SSA’s instructions state that the SSA will provide benefit credits 

for payroll taxes paid erroneously prior to 2006. However, some 

tribal council members may have paid payroll taxes after this date. 

In 2015, Representatives David Reichert (R–WA) and Derek Kilmer (D–WA) exchanged letters with the Acting Commissioner of 

Social Security and the Commissioner of the IRS requesting additional information about the agencies’ policies regarding Social Security coverage for tribal council members. They also asked whether the SSA had explored extending optional Social Security coverage to tribal councils through administrative action. In response, 

the Acting Commissioner of Social Security indicated that the SSA 

does not have statutory authority to allow tribal council members 

to opt into Social Security coverage. 

To give tribal council members the same ability to elect Social 

Security coverage that state and local government employees have, 

H.R. 6124 allows tribal councils to voluntarily enter 1 into coverage 

agreements with the SSA. To address any remaining confusion 

from the IRS’s 1959 revenue ruling and the SSA’s 2006 policy clarification, the bill also allows tribal council members to receive Social 

Security credit for FICA taxes paid erroneously, prior to the establishment of the coverage agreement, if these taxes were paid timely 

and not subsequently refunded. 

C. LEGISLATIVE HISTORY

Background 

H.R. 6124 was introduced on June 15, 2018 and was referred to 

the Committee on Ways and Means. A previous version of this bill, 

H.R. 2860, was introduced on June 8, 2017 and referred to the 

Committee on Ways and Means. 

Committee action 

The Committee on Ways and Means marked up H.R. 6124, the 

‘‘Tribal Social Security Fairness Act of 2018,’’ on June 21, 2018, 

and ordered the bill, as amended, favorably reported (with a 

quorum being present). 

Committee hearings 

On June 29, 2017, Social Security Subcommittee Chairman Sam 

Johnson and Oversight Subcommittee Chairman Vern Buchanan 

held a joint hearing entitled ‘‘Complexities and Challenges of Social 

Security Coverage and Payroll Tax Compliance for State and Local 

Governments.’’ The hearing focused on the roles and responsibilities of the SSA, the IRS, and State Social Security Administrators 

in administering Social Security coverage for state and local governments. The Subcommittees received testimony from: (i) 

Marianna LaCanfora, Acting Deputy Commissioner, Office of Retirement and Disability Policy, SSA; (ii) Sunita Lough, Commissioner, Tax Exempt and Government Entities Division, IRS; and 

(iii) Maryann Motza, Legislative Committee Chair and Past President, National Conference of State Social Security Administrators. 


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1Sections 3101–3128 of the Internal Revenue Code of 1986, as amended (IRC). Statutory references herein are to IRC unless otherwise indicated. The employee portion of the taxes is collected through withholding by the employer. 2The employee portion of the HI tax (not the employer portion) is increased by an additional 

tax of 0.9 percent on wages received in excess of a threshold amount. The threshold amount 

is $250,000 in the case of a joint return, $125,000 in the case of a married individual filing a 

separate return, and $200,000 in any other case. 3Sec. 3121(b)(7)(E). In addition, under section 3121(b)(7)(F), State and local government employees who are not covered by a retirement system are generally subject to FICA taxes. Also, 

generally State and local government employees are subject to the Medicare tax unless an exception applies (for example, section 3121(u)(2)(C) provides a continuing employment exception 

with various requirements, including employment prior to April 1, 1986). 4Sec. 3121(a) and (b). Employee is defined in section 3121(d). 

Members discussed how the SSA, IRS, and State Social Security 

Administrators can improve coordination to ensure proper administration of Section 218 agreements and increase payroll tax compliance. Members also questioned the lack of Social Security coverage 

for tribal council members and discussed H.R. 2860 (an earlier 

version of H.R. 6124) with the SSA and IRS witnesses. 

II. EXPLANATION OF THE BILL 

A. VOLUNTARY AGREEMENTS FOR COVERAGE OF SERVICES BY

AMERICAN INDIAN TRIBAL COUNCIL MEMBERS

(sec. 2 of the bill and sec. 3121 of the Internal Revenue Code of 

1986, as amended and new sec. 218A of Title II of the Social Security Act) 

PRESENT LAW

Federal Insurance Contributions Act 

Federal Insurance Contributions Act (FICA) taxes on employers 

and employees finance the Old-Age, Survivors, and Disability Insurance (OASDI, also referred to as Social Security) and Hospital 

Insurance (HI, also referred to as Medicare) programs.1 The OASDI 

tax rate is 6.2 percent on both the employee and employer (for a 

total rate of 12.4 percent) and applies to employee wages up to the 

OASDI wage base ($128,400 for calendar year 2018). The HI tax 

rate is 1.45 percent on both the employee and the employer (for a 

total rate of 2.9 percent) and applies to all wages.2

FICA taxes (and coverage under the Social Security and Medicare programs) generally are mandatory, that is, employers and 

employees generally cannot choose whether FICA taxes apply. 

However, as discussed below, in the case of State and local government employees covered by a State or local government retirement 

system, a State may enter into an agreement with the SSA to cover 

one or more groups of such employees under the Social Security 

and Medicare programs. In that case, services of such employees 

constitute employment for FICA tax purposes and their wages are 

subject to FICA taxes.3

FICA taxes apply to wages, defined as remuneration for employment, which in turn is defined as service performed by an employee.4 Remuneration for service performed by an individual who 

is not an employee does not constitute wages for FICA tax purposes 

and is not subject to FICA taxes. Guidance issued by the IRS holds 

that services performed by members of Indian tribal councils in 

their capacities as such do not constitute employment for FICA tax 


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5 Rev. Rul. 59–354, 1959–2 C.B. 24. In 2006, the SSA updated its program instructions to clarify that earnings of Indian tribal council members do not count toward Social Security and 

Medicare benefits. However, the program instructions include a note stating that earnings posted for members of Indian tribal councils for tax years prior to 2006 should remain on earnings 

records and be used in applicable benefit computations. SSA POMS: RS 01901.700. 6OASDI (Social Security) benefits are provided under Title II of the Social Security Act (42 

U.S.C. secs. 401ff.). 7Sec. 226 of the Social Security Act (42 U.S.C. sec. 426). 

8Secs. 209 and 210 of the Social Security Act (42 U.S.C. secs. 409 and 410). 

9Generally, the State or local government may only extend coverage following a referendum 

process in which a vote occurs that satisfies various conditions, and if the governor of the State, 

or an official of the State designated for this purpose, certifies to the Commissioner of Social 

Security that such conditions have been met. Sec. 218 of the Social Security Act (42 U.S.C. sec. 

418). 

purposes.5 As a result, amounts paid to members of tribal councils 

for services as council members are not wages subject to FICA 

taxes. 

Social Security and Medicare benefits 

The OASDI program under the Social Security Act provides for 

the payment of benefits (Social Security benefits) to individuals 

based on wages earned as an employee and credited to the employee’s earnings record.6 Eligibility for Medicare coverage under the 

Social Security Act generally is based on eligibility for Social Security benefits and, thus, on wages credited to an employee’s earnings 

record.7 Similar definitions of wages and employment apply for 

benefit purposes as for FICA tax purposes.8 Thus, remuneration for 

service performed by an individual who is not an employee does not 

constitute wages for purposes of earning credits for Social Security 

or Medicare benefits. 

Coverage under the Social Security and Medicare programs generally is mandatory. However, coverage generally does not apply in 

the case of State and local government employees covered by a 

State or local government retirement system. In that case, if a referendum process and certain criteria are met, then at the request 

of a State, the Commissioner of Social Security will enter into an 

agreement with the State with respect to one or more coverage 

groups of such employees under the Social Security and Medicare 

programs.9 Generally, such an agreement encompasses all positions 

within such a coverage group and once covered, the employer may 

not revoke such coverage and employees filling such covered positions may not decline coverage. 

REASONS FOR CHANGE

The Committee believes that the provision would correct a longstanding inequity in the Social Security Act that currently prevents 

tribal council leaders and members (collectively, members) from 

contributing to and accessing Social Security and Medicare benefits 

with respect to services performed in their capacity as members of 

the tribal council. The bill would amend the Social Security Act 

and the IRC to allow tribal governments to opt into Social Security 

and Medicare, pay the related FICA taxes, and receive Social Security and Medicare benefits. 

EXPLANATION OF PROVISION

The provision amends the Social Security Act to provide that, at 

the request of an Indian tribal government, the Commissioner of 

Social Security will enter into an agreement with the Indian tribe 


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10 Nothing in the provision is to be construed to affect the application of any Federal income 

tax withholding requirements. 

to cover services performed by individuals as members of the Indian tribe’s tribal council under the Social Security and Medicare 

programs. Accordingly, service of a member of a tribal council 

under such an agreement constitutes employment. For purposes of 

the provision, the term ‘‘tribal council’’ means the appointed or 

elected governing body of a Federally recognized Indian tribe. In 

addition, the term ‘‘member’’ means, with respect to a tribal council, an individual who is appointed or elected to serve as a member 

or the head of the tribal council. 

An agreement with an Indian tribal government under the provision applies to all members of the tribal council and must include 

all services performed by individuals in their capacity as members 

of the tribal council. An agreement will be effective with respect to 

services performed after an effective date specified in the agreement, provided that the date may not be earlier than the first day 

of the next calendar month after the month in which the agreement is executed by both parties. At the request of the Indian tribal government at the time of the agreement, the agreement may 

apply with respect to services performed before the effective date 

for which there were timely paid in good faith (and not subsequently refunded) to the Secretary of the Treasury amounts equivalent to the sum of the employee and employer Social Security and 

Medicare taxes (that is, the FICA taxes) which would have been 

imposed by the IRC had such services constituted employment for 

purposes of the IRC. No agreement under the provision may require payment to be made after the effective date of any taxes with 

respect to services performed before the effective date. No agreement under the provision may be terminated on or after the effective date of the agreement. 

The provision also amends the IRC to provide that a tribal council member covered by an agreement under the provision is an employee for FICA tax purposes. Therefore, services of a tribal council 

member covered by an agreement constitute employment for FICA 

tax purposes, and wages of the tribal council member are subject 

to FICA taxes.10

EFFECTIVE DATE

The provision is effective on the date of enactment. 

III. VOTES OF THE COMMITTEE 

In compliance with clause 3(b) of rule XIII of the House of Representatives, the following statement is made concerning the vote 

of the Committee on Ways and Means during the markup consideration of H.R. 6124, the ‘‘Tribal Social Security Fairness Act of 

2018,’’ on June 21, 2018. 

The bill, H.R. 6124, as amended, was ordered favorably reported 

to the House of Representatives by a voice vote (with a quorum 

being present). 


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IV. BUDGET EFFECTS OF THE BILL 

A. COMMITTEE ESTIMATE OF BUDGETARY EFFECTS

In compliance with clause 3(d) of rule XIII of the Rules of the 

House of Representatives, the following statement is made concerning the effects on the budget of the bill, H.R. 6124, as reported. 

The following presents the estimated Federal fiscal year budget 

receipts of the bill, H.R. 6124, as reported: 

Item 

By fiscal year, in millions of dollars— 

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2018– 

23 

2018– 

28 

H.R. 6124 1 .................................... – – – 2 1 1 1 1 1 2 2 2 2 4 13 

NOTE: Details do not add to totals due to rounding. 

1 Estimate contains the following budget effects: 

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2018– 

23 

2018– 

28 

On-budget ..................................... – – – 2 2 2 2 2 2 2 2 2 2 1 3 

Off-budget ..................................... – – – 2 1 1 1 1 1 1 1 1 1 3 10 

2 Gain of less than $500,000. 

Pursuant to clause 8 of rule XIII of the Rules of the House of 

Representatives, the following statement is made by the Joint Committee on Taxation with respect to the provisions of the bill amending the Internal Revenue Code of 1986: The gross budgetary effect 

(before incorporating macroeconomic effects) in any fiscal year is 

less than 0.25 percent of the current projected gross domestic product of the United States for that fiscal year; therefore, the bill is 

not ‘‘major legislation’’ for purposes of requiring that the estimate 

include the budgetary effects of changes in economic output, employment, capital stock, and other macroeconomic variables. 

B. STATEMENT REGARDING NEW BUDGET AUTHORITY AND TAX

EXPENDITURES BUDGET AUTHORITY

In compliance with clause 3(c)(2) of rule XIII of the Rules of the 

House of Representatives, the Committee states that the bill involves no new or increased budget authority. The Committee further states that the revenue-increasing tax provision involves no 

new tax expenditure. 

C. COST ESTIMATE PREPARED BY THE CONGRESSIONAL BUDGET

OFFICE

In compliance with clause 3(c)(3) of rule XIII of the Rules of the 

House of Representatives, requiring a cost estimate prepared by 

the CBO, the following statement by CBO is provided. 


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U.S. CONGRESS, CONGRESSIONAL BUDGET OFFICE, Washington, DC, June 28, 2018. 

Hon. KEVIN BRADY, 

Chairman, Committee on Ways and Means, 

House of Representatives, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 6124, the Tribal Social 

Security Fairness Act of 2018. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contact is Noah Meyerson. 

Sincerely, 

KEITH HALL, 

Director. 

Enclosure. 

H.R. 6124—Tribal Social Security Fairness Act of 2018 

Summary: H.R. 6124 would allow Indian tribes to enter into 

agreements with the Social Security Administration (SSA) to provide Social Security and Medicare Hospital Insurance coverage for 

members of tribal councils. 

CBO and the staff of the Joint Committee on Taxation (JCT) estimate that enacting H.R. 6124 would increase revenues by $13 

million and would increase direct spending by an insignificant 

amount over the 2019–2028 period. Because enacting HR. 6124 

would affect direct spending and revenues, pay-as-you-go procedures apply. 

CBO estimates that enacting H.R. 6124 would not increase net 

direct spending or on-budget deficits by more than $5 billion in any 

of the four consecutive 10-year periods beginning in 2029. 

CBO and the staff of JCT have not reviewed H.R. 6124 for intergovernmental or private-sector mandates. Section 4 of the Unfunded Mandates Reform Act (UMRA) excludes from the application of that act any legislative provisions that relates to the oldage, survivors, and disability insurance program under title II of 

the Social Security Act (including taxes imposed by sections 3101(a) 

and 311(a) of the Internal Revenue Code of 1986). CBO and the 

staff of JCT have determined that H.R. 6124 falls within that exclusion. 

Estimated cost to the Federal Government: The estimated budgetary effects of H.R. 6124 are shown in the following table. The 

costs of the legislation fall within budget function 650 (Social Security). 

By fiscal year, in millions of dollars— 

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2019– 

2023 

2019– 

2028 

INCREASES IN DIRECT SPENDING 

Estimated Budget Authority .............. 0 0 * * * * * * * * * * * 

Estimated Outlays ............................. 0 0 * * * * * * * * * * * 

INCREASES IN REVENUES 

Estimated Revenues .......................... 0 * 1 1 1 1 1 2 2 2 2 4 13 

On-budget ................................ 0 * * * * * * * * * * 1 3 

Off-budget ................................ 0 * 1 1 1 1 1 1 1 2 2 3 10 


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By fiscal year, in millions of dollars— 

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2019– 

2023 

2019– 

2028 

NET DECREASE (¥) IN THE DEFICIT 

Effect on the Deficit ......................... 0 * ¥1 ¥1 ¥1 ¥1 ¥1 ¥2 ¥2 ¥2 ¥2 ¥4 ¥13 

On-budget ................................ 0 * * * * * * * * * * ¥1 ¥3 

Off-budget ................................ 0 * ¥1 ¥1 ¥1 ¥1 ¥1 ¥1 ¥1 ¥2 ¥2 ¥3 ¥10 

* = between ¥$500,000 and $500,000. 

Basis of estimate: Under current law, the earnings of members 

of tribal councils of federally recognized Indian tribes are not subject to Social Security or Medicare payroll taxes under the Federal 

Insurance Contributions Act (FICA), and their earnings are not 

credited toward eligibility for Social Security or Medicare benefits. 

H.R. 6124 would amend the Social Security Act to allow Indian 

tribal governments to enter into agreements with SSA to obtain Social Security and Medicare coverage for tribal council leaders and 

members. It also would amend the Internal Revenue Code to include tribal council members as employees for FICA tax purposes 

if they are covered by an agreement under the bill. 

CBO and JCT expect that under the bill, by 2028, less than a 

tenth of eligible tribal members would choose to be covered, and an 

additional $13 million in payroll tax revenues would be collected 

over the 2019-2028 period. Of that amount, $3 million would consist of on-budget revenues from Medicare taxes and $10 million 

would be off-budget revenues from Social Security taxes. 

The additional coverage also would result in higher Social Security and Medicare outlays over the lifetime of the affected council 

members, although few of them would become eligible for Medicare 

or Social Security by 2028. CBO estimates that such outlays over 

the 10-year period would be insignificant. 

Pay-As-You-Go considerations: The Statutory Pay-As-You-Go Act 

of 2010 establishes budget-reporting and enforcement procedures 

for legislation affecting direct spending or revenues. The net 

changes in outlays and revenues that are subject to those pay-asyou-go procedures are shown in the following table. Only on-budget 

changes to outlays or revenues are subject to pay-as-you-go procedures. 

CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 6124 AS ORDERED REPORTED BY THE 

HOUSE COMMITTEE ON WAY AND MEANS ON JUNE 21, 2018 

By fiscal year, in millions of dollars— 

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2019– 

2023 

2019– 

2028 

NET INCREASE OR DECREASE (¥) IN THE ON-BUDGET DEFICIT 

Statutory Pay-As-You-Go Effect ........ 0 0 0 0 0 0 0 0 0 0 0 ¥1 ¥3 

Memorandum: 

Changes in Outlays .................. 0 0 0 0 0 0 0 0 0 0 0 0 0 

Changes in Revenues .............. 0 0 0 0 0 0 0 0 0 0 0 1 3 

Increase in long-term direct spending and deficits: CBO estimates that enacting H.R. 6124 would not increase net direct spending by more than $2.5 billion or on-budget deficits by more than 

$5 billion in any of the four consecutive 10-year periods beginning 

in 2029. 


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Mandates: CBO and the staff of JCT have not reviewed H.R. 

6124 for intergovernmental or private-sector mandates. Section 4 of 

UMRA excludes from the application of that act any legislative provisions that relates to the old-age, survivors, and disability insurance program under title II of the Social Security Act (including 

taxes imposed by sections 3101(a) and 311(a) of the Internal Revenue Code of 1986). CBO and the staff of JCT have determined 

that H.R. 6124 falls within that exclusion. 

Estimate prepared by: Federal Costs: Noah Meyerson; Federal 

Revenues: Staff of the Joint Committee on Taxation; Mandates: Rachel Austin. 

Estimate reviewed by: Sheila Dacey, Chief, Income Security and 

Education Cost Estimates Unit; Leo Lex, Deputy Assistant Director 

for Budget Analysis. 

V. OTHER MATTERS TO BE DISCUSSED UNDER THE 

RULES OF THE HOUSE 

A. COMMITTEE OVERSIGHT FINDINGS AND RECOMMENDATIONS

Pursuant to clause 3(c)(1) of rule XIII of the Rules of the House 

of Representatives, the Committee advises that the findings and 

recommendations of the Committee, based on oversight activities 

under clause 2(b)(1) of rule X of the Rules of the House of Representatives, are incorporated into the description portions of this 

report. 

B. STATEMENT OF GENERAL PERFORMANCE GOALS AND OBJECTIVES

With respect to clause 3(c)(4) of rule XIII of the Rules of the 

House of Representatives, the Committee advises that the bill contains no measure that authorizes funding, so no statement of general performance goals and objectives for which any measure authorizes funding is required. 

C. INFORMATION RELATING TO UNFUNDED MANDATES

This information is provided in accordance with section 423 of 

the Unfunded Mandates Reform Act of 1995 (Pub. L. No. 104–4). 

The Committee has determined that the bill does not contain 

Federal mandates on the private sector. The Committee has determined that the bill does not impose a Federal intergovernmental 

mandate on State, local, or tribal governments. 

D. APPLICABILITY OF HOUSE RULE XXI 5(b) 

Rule XXI 5(b) of the Rules of the House of Representatives provides, in part, that ‘‘A bill or joint resolution, amendment, or conference report carrying a Federal income tax rate increase may not 

be considered as passed or agreed to unless so determined by a 

vote of not less than three-fifths of the Members voting, a quorum 

being present.’’ The Committee has carefully reviewed the bill and 

states that the bill does not involve any Federal income tax rate 

increases within the meaning of the rule. 


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13 

E. TAX COMPLEXITY ANALYSIS

Section 4022(b) of the Internal Revenue Service Restructuring 

and Reform Act of 1998 (‘‘IRS Reform Act’’) requires the staff of the 

Joint Committee on Taxation (in consultation with the Internal 

Revenue Service and the Treasury Department) to provide a tax 

complexity analysis. The complexity analysis is required for all legislation reported by the Senate Committee on Finance, the House 

Committee on Ways and Means, or any committee of conference if 

the legislation includes a provision that directly or indirectly 

amends the Internal Revenue Code of 1986 and has widespread applicability to individuals or small businesses. 

Pursuant to clause 3(h)(1) of rule XIII of the Rules of the House 

of Representatives, the staff of the Joint Committee on Taxation 

has determined that a complexity analysis is not required under 

section 4022(b) of the IRS Reform Act because the bill contains no 

provisions that amend the Internal Revenue Code of 1986 and that 

have ‘‘widespread applicability’’ to individuals or small businesses, 

within the meaning of the rule. 

F. CONGRESSIONAL EARMARKS, LIMITED TAX BENEFITS, AND

LIMITED TARIFF BENEFITS

With respect to clause 9 of rule XXI of the Rules of the House 

of Representatives, the Committee has carefully reviewed the provisions of the bill and states that the provisions of the bill do not 

contain any congressional earmarks, limited tax benefits, or limited 

tariff benefits within the meaning of the rule. 

G. DUPLICATION OF FEDERAL PROGRAMS

In compliance with Sec. 3(c)(5) of rule XIII of the Rules of the 

House of Representatives, the Committee states that no provision 

of the bill establishes or reauthorizes: (1) a program of the Federal 

Government known to be duplicative of another Federal program, 

(2) a program included in any report from the Government Accountability Office to Congress pursuant to section 21 of Public 

Law 111–139, or (3) a program related to a program identified in 

the most recent Catalog of Federal Domestic Assistance, published 

pursuant to section 6104 of title 31, United States Code. 

H. DISCLOSURE OF DIRECTED RULE MAKINGS

In compliance with Sec. 3(i) of H. Res. 5 (115th Congress), the 

following statement is made concerning directed rule makings: The 

Committee advises that the bill requires no directed rule makings 

within the meaning of such section. 

VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS 

REPORTED 

A. TEXT OF EXISTING LAW AMENDED OR REPEALED BY THE BILL, AS

REPORTED

In compliance with clause 3(e)(1)(A) of rule XIII of the Rules of 

the House of Representatives, the text of each section proposed to 

be amended or repealed by the bill, as reported, is shown below: 


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CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with clause 3(e) of rule XIII of the Rules of the 

House of Representatives, changes in existing law made by the bill, 

as reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italic, 

and existing law in which no change is proposed is shown in 

roman): 

SOCIAL SECURITY ACT 

* * * * * * * 

TITLE II—FEDERAL OLD-AGE, SURVIVORS, AND DISABILITY 

INSURANCE BENEFITS 

* * * * * * * 

DEFINITION OF EMPLOYMENT

SEC. 210. For the purposes of this title— 

Employment 

(a) The term ‘‘employment’’ means any service performed after 

1936 and prior to 1951 which was employment for the purposes of 

this title under the law applicable to the period in which such service was performed, and any service, of whatever nature, performed 

after 1950 (A) by an employee for the person employing him, irrespective of the citizenship or residence of either, (i) within the 

United States, or (ii) on or in connection with an American vessel 

or American aircraft under a contract of service which is entered 

into within the United States or during the performance of which 

and while the employee is employed on the vessel or aircraft it 

touches at a port in the United States, if the employee is employed 

on and in connection with such vessel or aircraft when outside the 

United States, or (B) outside the United States by a citizen or resident of the United States as an employee (i) of an American employer (as defined in subsection (e) of this section), or (ii) of a foreign affiliate (as defined in section 3121(l)(6) of the Internal Revenue Code of 1986 of an American employer during any period for 

which there is in effect an agreement, entered into pursuant to section 3121(l) of such Code, with respect to such affiliate, or (C) if it 

is service, regardless of where or by whom performed, which is designated as employment or recognized as equivalent to employment 

under an agreement entered into under section 233; except that, in 

the case of service performed after 1950, such term shall not include— 

(1) Service performed by foreign agricultural workers lawfully admitted to the United States from the Bahamas, Jamaica, and the other British West Indies, or from any other 

foreign country or possession thereof, on a temporary basis to 

perform agricultural labor; 

(2) Domestic service performed in a local college club, or local 

chapter of a college fraternity or sorority, by a student who is 

enrolled and is regularly attending classes at a school, college, 

or university; 


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15 

(3)(A) Service performed by a child under the age of 18 in 

the employ of his father or mother; 

(B) Service not in the course of the employer’s trade or business, or domestic service in a private home of the employer, 

performed by an individual under the age of 21 in the employ 

of his father or mother, or performed by an individual in the 

employ of his spouse or son or daughter; except that the provisions of this subparagraph shall not be applicable to such domestic service performed by an individual in the employ of his 

son or daughter if— 

(i) the employer is a surviving spouse or a divorced individual and has not remarried, or has a spouse living in the 

home who has a mental or physical condition which results 

in such spouse’s being incapable of caring for a son, daughter, stepson, or stepdaughter (referred to in clause (ii)) for 

at least 4 continuous weeks in the calendar quarter in 

which the service is rendered, and 

(ii) a son, daughter, stepson, or stepdaughter of such employer is living in the home, and 

(iii) the son, daughter, stepson, or stepdaughter (referred 

to in clause (ii)) has not attained age 18 or has a mental 

or physical condition which requires the personal care and 

supervision of an adult for at least 4 continuous weeks in 

the calendar quarter in which the service is rendered; 

(4) Service performed by an individual on or in connection 

with a vessel not an American vessel, or on or in connection 

with an aircraft not an American aircraft, if (A) the individual 

is employed on and in connection with such vessel or aircraft 

when outside the United States and (B)(i) such individual is 

not a citizen of the United States or (ii) the employer is not an 

American employer; 

(5) Service performed in the employ of the United States or 

any instrumentality of the United States, if such service— 

(A) would be excluded from the term ‘‘employment’’ for 

purposes of this title if the provisions of paragraphs (5) 

and (6) of this subsection as in effect in January 1983 had 

remained in effect, and 

(B) is performed by an individual who— 

(i) has been continuously performing service described in subparagraph (A) since December 31, 1983, 

and for purposes of this clause— 

(I) if an individual performing service described 

in subparagraph (A) returns to the performance of 

such service after being separated therefrom for a 

period of less than 366 consecutive days, regardless of whether the period began before, on, or 

after December 31, 1983, then such service shall 

be considered continuous, 

(II) if an individual performing service described 

in subparagraph (A) returns to the performance of 

such service after being detailed or transferred to 

an international organization as described under 

section 3343 of subchapter III of chapter 33 of 

title 5, United States Code, or under section 3581 

of chapter 35 of such title, then the service perVerDate Sep 11 2014 01:05 Jul 06, 2018 Jkt 079006 PO 00000 Frm 00015 Fmt 6659 Sfmt 6602 E:\HR\OC\HR801.XXX HR801

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formed for that organization shall be considered 

service described in subparagraph (A), 

(III) if an individual performing service described in subparagraph (A) is reemployed or reinstated after being separated from such service for 

the purpose of accepting employment with the 

American Institute of Taiwan as provided under 

section 3310 of chapter 48 of title 22, United 

States Code, then the service performed for that 

Institute shall be considered service described in 

subparagraph (A), 

(IV) if an individual performing service described in subparagraph (A) returns to the performance of such service after performing service 

as a member of a uniformed service (including, for 

purposes of this clause, service in the National 

Guard and temporary service in the Coast Guard 

Reserve) and after exercising restoration or reemployment rights as provided under chapter 43 of 

title 38, United States Code, then the service so 

performed as a member of a uniformed service 

shall be considered service described in subparagraph (A), and 

(V) if an individual performing service described 

in subparagraph (A) returns to the performance of 

such service after employment (by a tribal organization) to which section 104(e)(2) of the Indian 

Self-Determination Act applies, then the service 

performed for that tribal organization shall be 

considered service described in subparagraph (A); 

or 

(ii) is receiving an annuity from the Civil Service 

Retirement and Disability Fund, or benefits (for service as an employee) under another retirement system 

established by a law of the United States for employees of the Federal Government (other than for members of the uniformed services); 

except that this paragraph shall not apply with respect to any 

such service performed on or after any date on which such individual performs— 

(C) service performed as the President or Vice President 

of the United States, 

(D) service performed— 

(i) in a position placed in the Executive Schedule 

under sections 5312 through 5317 of title 5, United 

States Code, 

(ii) as a noncareer appointee in the Senior Executive 

Service or a noncareer member of the Senior Foreign 

Service, or 

(iii) in a position to which the individual is appointed by the President (or his designee) or the Vice 

President under section 105(a)(1), 106(a)(1), or 

107(a)(1) or (b)(1) of title 3, United States Code, if the 

maximum rate of basic pay for such position is at or 

above the rate for level V of the Executive Schedule, 


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17 

(E) service performed as the Chief Justice of the United 

States, an Associate Justice of the Supreme Court, a judge 

of a United States court of appeals, a judge of a United 

States district court (including the district court of a territory), a judge of the United States Claims Court, a judge 

of the United States Court of International Trade, a judge 

of the United States Tax Court, a United States magistrate, or a referee in bankruptcy or United States bankruptcy judge, 

(F) service performed as a Member, Delegate, or Resident Commissioner of or to the Congress, 

(G) any other service in the legislative branch of the 

Federal Government if such service— 

(i) is performed by an individual who was not subject to subchapter III of chapter 83 of title 5, United 

States Code, or to another retirement system established by a law of the United States for employees of 

the Federal Government (other than for members of 

the uniformed services), on December 31, 1983, or 

(ii) is performed by an individual who has, at any 

time after December 31, 1983, received a lump-sum 

payment under section 8342(a) of title 5, United 

States Code, or under the corresponding provision of 

the law establishing the other retirement system described in clause (i), or 

(iii) is performed by an individual after such individual has otherwise ceased to be subject to subchapter III of chapter 83 of title 5, United States Code 

(without having an application pending for coverage 

under such subchapter), while performing service in 

the legislative branch (determined without regard to 

the provisions of subparagraph (B) relating to continuity of employment), for any period of time after 

December 31, 1983, 

and for purposes of this subparagraph (G) an individual is 

subject to such subchapter III or to any such other retirement system at any time only if (a) such individual’s pay 

is subject to deductions, contributions, or similar payments 

(concurrent with the service being performed at that time) 

under section 8334(a) of such title 5 or the corresponding 

provision of the law establishing such other system, or (in 

a case to which section 8332(k)(1) of such title applies) 

such individual is making payments of amounts equivalent 

to such deductions, contributions, or similar payments 

while on leave without pay, or (b) such individual is receiving an annuity from the Civil Service Retirement and Disability Fund, or is receiving benefits (for service as an employee) under another retirement system established by a 

law of the United States for employees of the Federal Government (other than for members of the uniformed services), or 

(H) service performed by an individual— 

(i) on or after the effective date of an election by 

such individual, under section 301 of the Federal Employees’ Retirement System Act of 1986, section 307 of 


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18 

the Central Intelligence Agency Retirement Act (50 

U.S.C. 2157), or the Federal Employees’ Retirement 

System Open Enrollment Act of 1997 to become subject to the Federal Employees’ Retirement System provided in chapter 84 of title 5, United States Code, or 

(ii) on or after the effective date of an election by 

such individual, under regulations issued under section 860 of the Foreign Service Act of 1980, to become 

subject to the Foreign Service Pension System provided in subchapter II of chapter 8 of title I of such 

Act; 

(6) Service performed in the employ of the United States or 

any instrumentality of the United States if such service is performed— 

(A) in a penal institution of the United States by an inmate thereof; 

(B) by any individual as an employee included under section 5351(2) of title 5, United States Code (relating to certain interns, student nurses, and other student employees 

of hospitals of the Federal Government), other than as a 

medical or dental intern or a medical or dental resident in 

training; or 

(C) by any individual as an employee serving on a temporary basis in case of fire, storm, earthquake, flood, or 

other similar emergency; 

(7) Service performed in the employ of a State, or any political subdivision thereof, or any instrumentality of any one or 

more of the foregoing which is wholly owned thereby, except 

that this paragraph shall not apply in the case of— 

(A) service included under an agreement under section 

218, 

(B) service which, under subsection (k), constitutes covered transportation service, 

(C) service in the employ of the Government of Guam or 

the Government of American Samoa or any political subdivision thereof, or of any instrumentality of any one or 

more of the foregoing which is wholly owned thereby, performed by an officer or employee thereof (including a member of the legislature of any such Government or political 

subdivision), and, for purposes of this title— 

(i) any person whose service as such an officer or 

employee is not covered by a retirement system established by a law of the United States shall not, with respect to such service, be regarded as an officer or employee of the United States or any agency or instrumentality thereof, and 

(ii) the remuneration for service described in clause 

(i) (including fees paid to a public official) shall be 

deemed to have been paid by the Government of Guam 

or the Government of American Samoa or by a political subdivision thereof or an instrumentality of any 

one or more of the foregoing which is wholly owned 

thereby, whichever is appropriate, 

(D) service performed in the employ of the District of Columbia or any instrumentality which is wholly owned 


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19 

thereby, if such service is not covered by a retirement system established by a law of the United States (other than 

the Federal Employees Retirement System provided in 

chapter 84 of title 5, United States Code); except that the 

provisions of this subparagraph shall not be applicable to 

service performed— 

(i) in a hospital or penal institution by a patient or 

inmate thereof; 

(ii) by any individual as an employee included under 

section 5351(2) of title 5, United States Code (relating 

to certain interns, student nurses, and other student 

employees of hospitals of the District of Columbia Government), other than as a medical or dental intern or 

as a medical or dental resident in training; 

(iii) by any individual as an employee serving on a 

temporary basis in case of fire, storm, snow, earthquake, flood, or other similar emergency; or 

(iv) by a member of a board, committee, or council 

of the District of Columbia, paid on a per diem, meeting, or other fee basis, 

(E) service performed in the employ of the Government 

of Guam (or any instrumentality which is wholly owned by 

such Government) by an employee properly classified as a 

temporary or intermittent employee, if such service is not 

covered by a retirement system established by a law of 

Guam; except that (i) the provisions of this subparagraph 

shall not be applicable to services performed by an elected 

official or a member of the legislature or in a hospital or 

penal institution by a patient or inmate thereof, and (ii) 

for purposes of this subparagraph, clauses (i) and (ii) of 

subparagraph (C) shall apply, or 

(F) service in the employ of a State (other than the District of Columbia, Guam, or American Samoa), of any political subdivision thereof, or of any instrumentality of any 

one or more of the foregoing which is wholly owned thereby, by an individual who is not a member of a retirement 

system of such State, political subdivision, or instrumentality, except that the provisions of this subparagraph 

shall not be applicable to service performed— 

(i) by an individual who is employed to relieve such 

individual from unemployment; 

(ii) in a hospital, home, or other institution by a patient or inmate thereof; 

(iii) by any individual as an employee serving on a 

temporary basis in case of fire, storm, snow, earthquake, flood, or other similar emergency; 

(iv) by an election official or election worker if the 

remuneration paid in a calendar year for such service 

is less than $1,000 with respect to service performed 

during any calendar year commencing on or after January 1, 1995, ending on or before December 31, 1999, 

and the adjusted amount determined under section 

218(c)(8)(B) for any calendar year commencing on or 

after January 1, 2000, with respect to service performed during such calendar year; or 


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20 

(v) by an employee in a position compensated solely 

on a fee basis which is treated pursuant to section 

211(c)(2)(E) as a trade or business for purposes of inclusion of such fees in net earnings from self employment; 

for purposes of this subparagraph, except as provided in 

regulations prescribed by the Secretary of the Treasury, 

the term ‘‘retirement system’’ has the meaning given such 

term by section 218(b)(4). 

(8)(A) Service performed by a duly ordained, commissioned, 

or licensed minister of a church in the exercise of his ministry 

or by a member of a religious order in the exercise of duties 

required by such order, except that this subparagraph shall not 

apply to service performed by a member of such an order in 

the exercise of such duties, if an election of coverage under section 3121(r) of the Internal Revenue Code of 1986 is in effect 

with respect to such order, or with respect to the autonomous 

subdivision thereof to which such member belongs; 

(B) Service performed in the employ of a church or qualified 

church-controlled organization if such church or organization 

has in effect an election under section 3121(w) of the Internal 

Revenue Code of 1986, other than service in an unrelated trade 

or business (within the meaning of section 513(a) of such 

Code); 

(9) Service performed by an individual as an employee or employee representative as defined in section 3231 of the Internal 

Revenue Code of 1986; 

(10) Service performed in the employ of— 

(A) a school, college, or university, or 

(B) an organization described in section 509(a)(3) of the 

Internal Revenue Code of 1986 if the organization is organized, and at all times thereafter is operated, exclusively 

for the benefit of, to perform the functions of, or to carry 

out the purposes of a school, college, or university and is 

operated, supervised, or controlled by or in connection with 

such school, college, or university, unless it is a school, college, or university of a State or a political subdivision 

thereof and the services in its employ performed by a student referred to in section 218(c)(5) are covered under the 

agreement between the Commissioner of Social Security 

and such State entered into pursuant to section 218; 

if such service is performed by a student who is enrolled and 

regularly attending classes at such school, college, or university; 

(11) Service performed in the employ of a foreign government 

(including service as a consular or other officer or employee or 

a nondiplomatic representative); 

(12) Service performed in the employ of an instrumentality 

wholly owned by a foreign government— 

(A) If the service is of a character similar to that performed in foreign countries by employees of the United 

States Government or of an instrumentality thereof; and 

(B) If the Secretary of State shall certify to the Secretary 

of the Treasury that the foreign government, with respect 

to whose instrumentality and employees thereof exemption 


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21 

is claimed, grants an equivalent exemption with respect to 

similar service performed in the foreign country by employees of the United States Government and of instrumentalities thereof; 

(13) Service performed as a student nurse in the employ of 

a hospital or a nurses’ training school by an individual who is 

enrolled and is regularly attending classes in a nurses’ training 

school chartered or approved pursuant to State law; 

(14)(A) Service performed by an individual under the age of 

eighteen in the delivery or distribution of newspapers or shopping news, not including delivery or distribution to any point 

for subsequent delivery or distribution; 

(B) Service performed by an individual in, and at the time 

of, the sale of newspapers or magazines to ultimate consumers, 

under an arrangement under which the newspapers or magazines are to be sold by him at a fixed price, his compensation 

being based on the retention of the excess of such price over 

the amount at which the newspapers or magazines are charged 

to him, whether or not he is guaranteed a minimum amount 

of compensation for such service, or is entitled to be credited 

with the unsold newspapers or magazines turned back; 

(15) Service performed in the employ of an international organization entitled to enjoy privileges, exemptions, and immunities as an international organization under the International 

Organizations Immunities Act (59 Stat. 669), except service 

which constitutes ‘‘employment’’ under subsection (r); 

(16) Service performed by an individual under an arrangement with the owner or tenant of land pursuant to which— 

(A) such individual undertakes to produce agricultural 

or horticultural commodities (including livestock, bees, 

poultry, and fur-bearing animals and wildlife) on such 

land, 

(B) the agricultural or horticultural commodities produced by such individual, or the proceeds therefrom, are to 

be divided between such individual and such owner or tenant, and 

(C) the amount of such individual’s share depends on the 

amount of the agricultural or horticultural commodities 

produced; 

(18) Service performed in Guam by a resident of the Republic 

of the Philippines while in Guam on a temporary basis as a 

nonimmigrant alien admitted to Guam pursuant to section 

101(a)(15)(H)(ii) of the Immigration and Nationality Act (8 

U.S.C. 1101(a)(15)(H)(ii)); 

(19) Service which is performed by a nonresident alien individual for the period he is temporarily present in the United 

States as a nonimmigrant under subparagraph (F), (J), (M), or 

(Q) of section 101(a)(15) of the Immigration and Nationality 

Act, as amended, and which is performed to carry out the purpose specified in subparagraph (F), (J), (M), or (Q) as the case 

may be; 

(20) Service (other than service described in paragraph 

(3)(A)) performed by an individual on a boat engaged in catching fish or other forms of aquatic animal life under an arrangeVerDate Sep 11 2014 01:05 Jul 06, 2018 Jkt 079006 PO 00000 Frm 00021 Fmt 6659 Sfmt 6602 E:\HR\OC\HR801.XXX HR801

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ment with the owner or operator of such boat pursuant to 

which— 

(A) such individual does not receive any additional compensation other than as provided in subparagraph (B) and 

other than case remuneration— 

(i) which does not exceed $100 per trip; 

(ii) which is contingent on a minimum catch; and 

(iii) which is paid solely for additional duties (such 

as mate, engineer, or cook) for which additional cash 

remuneration is traditional in the industry, 

(B) such individual receives a share of the boat’s (or the 

boats’ in the case of a fishing operation involving more 

than one boat) catch of fish or other forms of aquatic animal life or a share of the proceeds from the sale of such 

catch, and 

(C) the amount of such individual’s share depends on the 

amount of the boat’s (or boats’ in the case of a fishing operation involving more than one boat) catch of fish or other 

forms of aquatic animal life, 

but only if the operating crew of such boat (or each boat from 

which the individual receives a share in the case of a fishing 

operation involving more than one boat) is normally made up 

of fewer than 10 individuals; øor¿ 

(21) Domestic service in a private home of the employer 

which— 

(A) is performed in any year by an individual under the 

age of 18 during any portion of such year; and 

(B) is not the principal occupation of such employeeø.¿; 

or 

(22) Service performed by members of Indian tribal councils 

as tribal council members in the employ of an Indian tribal 

government, except that this paragraph shall not apply in the 

case of service included under an agreement under section 

218A. 

For purposes of paragraph (20), the operating crew of a boat 

shall be treated as normally made up of fewer than 10 individuals if the average size of the operating crew on trips made 

during the preceding 4 calendar quarters consisted of fewer 

than 10 individuals. 

Included and Excluded Service 

(b) If the services performed during one-half or more of any pay 

period by an employee for the person employing him constitute employment, all the services of such employee for such period shall be 

deemed to be employment; but if the services performed during 

more than one-half of any such pay period by an employee for the 

person employing him do not constitute employment, then none of 

the services of such employee for such period shall be deemed to 

be employment. As used in this subsection, the term ‘‘pay period’’ 

means a period (of not more than thirty-one consecutive days) for 

which a payment of remuneration is ordinarily made to the employee by the person employing him. This subsection shall not be 

applicable with respect to services performed in a pay period by an 

employee for the person employing him, where any of such service 

is excepted by paragraph (9) of subsection (a). 


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American Vessel 

(c) The term ‘‘American vessel’’ means any vessel documented or 

numbered under the laws of the United States; and includes any 

vessel which is neither documented or numbered under the laws of 

the United States nor documented under the laws of any foreign 

country, if its crew is employed solely by one or more citizens or 

residents of the United States or corporations organized under the 

laws of the United States or of any State. 

American Aircraft 

(d) The term ‘‘American aircraft’’ means an aircraft registered 

under the laws of the United States. 

American Employer 

(e)(1) The term ‘‘American employer’’ means an employer which 

is (A) the United States or any instrumentality thereof, (B) a State 

or any political subdivision thereof, or any instrumentality of any 

one or more of the foregoing, (C) an individual who is a resident 

of the United States, (D) a partnership, if two-thirds or more of the 

partners are residents of the United States, (E) a trust, if all of the 

trustees are residents of the United States, or (F) a corporation organized under the laws of the United States or of any State. 

(2)(A) If any employee of a foreign person is performing services 

in connection with a contract between the United States Government (or any instrumentality thereof) and any member of any domestically controlled group of entities which includes such foreign 

person, such foreign person shall be treated as an American employer with respect to such services performed by such employee. 

(B) For purposes of this paragraph— 

(i) The term ‘‘domestically controlled group of entities’’ 

means a controlled group of entities the common parent of 

which is a domestic corporation. 

(ii) The term ‘‘controlled group of entities’’ means a controlled group of corporations as defined in section 1563(a)(1) of 

the Internal Revenue Code of 1986, except that— 

(I) ‘‘more than 50 percent’’ shall be substituted for ‘‘at 

least 80 percent’’ each place it appears therein, and 

(II) the determination shall be made without regard to 

subsections (a)(4) and (b)(2) of section 1563 of such Code. 

A partnership or any other entity (other than a corporation) 

shall be treated as a member of a controlled group of entities 

if such entity is controlled (within the meaning of section 

954(d)(3) of such Code) by members of such group (including 

any entity treated as a member of such group by reason of this 

sentence). 

(C) Subparagraph (A) shall not apply to any services to which 

paragraph (1) of section 3121(z) of the Internal Revenue Code of 

1986 does not apply by reason of paragraph (4) of such section. 

Agricultural Labor 

(f) The term ‘‘agricultural labor’’ includes all service performed— 

(1) On a farm, in the employ of any person, in connection 

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vesting any agricultural or horticultural commodity, including 

the raising, shearing, feeding, caring for, training, and management of livestock, bees, poultry, and fur-bearing animals 

and wildlife. 

(2) In the employ of the owner or tenant or other operator 

of a farm, in connection with the operation, management, conservation, improvement, or maintenance of such farm and its 

tools and equipment, or in salvaging timber or clearing land of 

brush and other debris left by a hurricane, if the major part 

of such service is performed on a farm. 

(3) In connection with the production or harvesting of any 

commodity defined as an agricultural commodity in section 

15(g) of the Agricultural Marketing Act, as amended, or in connection with the ginning of cotton, or in connection with the 

operation or maintenance of ditches, canals, reservoirs, or waterways, not owned or operated for profit, used exclusively for 

supplying and storing water for farming purposes. 

(4)(A) In the employ of the operator of a farm in handling, 

planting, drying, packing, packaging, processing, freezing, 

grading, storing, or delivering to storage or to market or to a 

carrier for transportation to market, in its unmanufactured 

state, any agricultural or horticultural commodity; but only if 

such operator produced more than one-half of the commodity 

with respect to which such service is performed. 

(B) In the employ of a group of operators of farms (other 

than a cooperative organization) in the performance of service 

described in subparagraph (A), but only if such operators produced all of the commodity with respect to which such service 

is performed. For the purposes of this subparagraph, any unincorporated group of operators shall be deemed a cooperative organization if the number of operators comprising such group is 

more than twenty at any time during the calendar year in 

which such service is performed. 

(5) On a farm operated for profit if such service is not in the 

course of the employer’s trade or business. 

The provisions of subparagraphs (A) and (B) of paragraph (4) shall 

not be deemed to be applicable with respect to service performed 

in connection with commercial canning or commercial freezing or in 

connection with any agricultural or horticultural commodity after 

its delivery to a terminal market for distribution for consumption. 

Farm 

(g) The term ‘‘farm’’ includes stock, dairy, poultry, fruit, fur-bearing animal, and truck farms, plantations, ranches, nurseries, 

ranges, greenhouses or other similar structures used primarily for 

the raising of agricultural or horticultural commodities, and orchards. 

State 

(h) The term ‘‘State’’ includes the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, and American 

Samoa. 


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25 

United States 

(i) The term ‘‘United States’’ when used in a geographical sense 

means the States, the District of Columbia, the Commonwealth of 

Puerto Rico, the Virgin Islands, Guam, and American Samoa. 

Employee 

(j) The term ‘‘employee’’ means— 

(1) any officer of a corporation; or 

(2) any individual who, under the usual common law rules 

applicable in determining the employer-employee relationship, 

has the status of an employee; or 

(3) any individual (other than an individual who is an employee under paragraph (1) or (2) of this subsection) who performs services for remuneration for any person— 

(A) as an agent-driver or commission-driver engaged in 

distributing meat products, vegetable products, fruit products, bakery products, beverages (other than milk), or 

laundry or dry-cleaning services, for his principal; 

(B) as a full-time life insurance salesman; 

(C) as a home worker performing work, according to 

specifications furnished by the person for whom the services are performed, on materials or goods furnished by 

such person which are required to be returned to such person or a person designated by him; or 

(D) as a traveling or city salesman, other than as an 

agent-driver or commission-driver, engaged upon a fulltime basis in the solicitation on behalf of, and the transmission to, his principal (except for side-line sales activities on behalf of some other person) of orders from wholesalers, retailers, contractors, or operators of hotels, restaurants, or other similar establishments for merchandise 

for resale or supplies for use in their business operations; 

if the contract of service contemplates that substantially all of 

such services are to be performed personally by such individual; except that an individual shall not be included in the 

term ‘‘employee’’ under the provisions of this paragraph if such 

individual has a substantial investment in facilities used in 

connection with the performance of such services (other than 

in facilities for transportation), or if the services are in the nature of a single transaction not part of a continuing relationship with the person for whom the services are performed. 

Covered Transportation Service 

(k)(1) Except as provided in paragraph (2), all service performed 

in the employ of a State or political subdivision in connection with 

its operation of a public transportation system shall constitute covered transportation service if any part of the transportation system 

was acquired from private ownership after 1936 and prior to 1951. 

(2) Service performed in the employ of a State or political subdivision in connection with the operation of its public transportation system shall not constitute covered transportation service 

if— 

(A) any part of the transportation system was acquired from 

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tially all service in connection with the operation of the transportation system is, on December 31, 1950, covered under a 

general retirement system providing benefits which, by reason 

of a provision of the State constitution dealing specifically with 

retirement systems of the State or political subdivisions thereof, cannot be diminished or impaired; or 

(B) no part of the transportation system operated by the 

State or political subdivision on December 31, 1950, was acquired from private ownership after 1936 and prior to 1951; 

except that if such State or political subdivision makes an acquisition after 1950 from private ownership of any part of its transportation system, then, in the case of any employee who— 

(C) became an employee of such State or political subdivision 

in connection with and at the time of its acquisition after 1950 

of such part, and 

(D) prior to such acquisition rendered service in employment 

in connection with the operation of such part of the transportation system acquired by the State or political subdivision, 

the service of such employee in connection with the operation of the 

transportation system shall constitute covered transportation service, commencing with the first day of the third calendar quarter following the calendar quarter in which the acquisition of such part 

took place, unless on such first day such service of such employee 

is covered by a general retirement system which does not, with respect to such employee, contain special provisions applicable only 

to employees described in subparagraph (C). 

(3) All service performed in the employ of a State or political subdivision thereof in connection with its operation of a public transportation system shall constitute covered transportation service if 

the transportation system was not operated by the State or political subdivision prior to 1951 and, at the time of its first acquisition (after 1950) from private ownership of any part of its transportation system, the State or political subdivision did not have a general retirement system covering substantially all service performed 

in connection with the operation of the transportation system. 

(4) For the purposes of this subsection— 

(A) The term ‘‘general retirement system’’ means any pension, annuity, retirement, or similar fund or system established 

by a State or by a political subdivision thereof for employees 

of the State, political subdivision, or both; but such term shall 

not include such a fund or system which covers only service 

performed in positions connected with the operation of its public transportation system. 

(B) A transportation system or a part thereof shall be considered to have been acquired by a State or political subdivision 

from private ownership if prior to the acquisition service performed by employees in connection with the operation of the 

system or part thereof acquired constituted employment under 

this title, and some of such employees became employees of the 

State or political subdivision in connection with and at the 

time of such acquisition. 

(C) The term ‘‘political subdivision’’ includes an instrumentality of (i) a State, (ii) one or more political subdivisions of a 

State, or (iii) a State and one or more of its political subdivisions. 


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27 

Service in the Uniformed Services 

(l)(1) Except as provided in paragraph (4), the term ‘‘employment’’ shall, notwithstanding the provisions of subsection (a) of this 

section, include— 

(A) service performed after December 1956 by an individual 

as a member of a uniformed service on active duty, but such 

term shall not include any such service which is performed 

while on leave without pay, and 

(B) service performed after December 1987 by an individual 

as a member of a uniformed service on inactive duty training. 

(2) The term ‘‘active duty’’ means ‘‘active duty’’ as described in 

paragraph (21) of section 101 of title 38, United States Code, except 

that it shall also include ‘‘active duty for training’’ as described in 

paragraph (22) of such section. 

(3) The term ‘‘inactive duty training’’ means ‘‘inactive duty training’’ as described in paragraph (23) of such section 101. 

(4)(A) Paragraph (1) of this subsection shall not apply in the case 

of any service, performed by an individual as a member of a uniformed service, which is creditable under section 3(i) of the Railroad Retirement Act of 1974. The Railroad Retirement Board shall 

notify the Commissioner of Social Security, with respect to all such 

service which is so creditable. 

(B) In any case where benefits under this title are already payable on the basis of such individual’s wages and self-employment 

income at the time such notification (with respect to such individual) is received by the Commissioner of Social Security, the 

Commissioner of Social Security shall certify no further benefits for 

payment under this title on the basis of such individual’s wages 

and self-employment income, or shall recompute the amount of any 

further benefits payable on the basis of such wages and self-employment income, as may be required as a consequence of subparagraph (A) of this paragraph. No payment of a benefit to any person 

on the basis of such individual’s wages and self-employment income, certified by the Commissioner of Social Security prior to the 

end of the month in which the Commissioner receives such notification from the Railroad Retirement Board, shall be deemed by reason of this subparagraph to have been an erroneous payment or a 

payment to which such person was not entitled. The Commissioner 

of Social Security shall, as soon as possible after the receipt of such 

notification from the Railroad Retirement Board, advise such Board 

whether or not any such benefit will be reduced or terminated by 

reason of subparagraph (A), and if any such benefit will be so reduced or terminated, specify the first month with respect to which 

such reduction or termination will be effective. 

Member of a Uniformed Service 

(m) The term ‘‘member of a uniformed service’’ means any person 

appointed, enlisted, or inducted in a component of the Army, Navy, 

Air Force, Marine Corps, or Coast Guard (including a reserve component as defined in section 101(27) of title 38, United States 

Code), or in one of those services without specification of component, or as a commissioned officer of the Coast and Geodetic Survey, the National Oceanic and Atmospheric Administration Corps, 

or the Regular or Reserve Corps of the Public Health Service, and 


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28 

any person serving in the Army or Air Force under call or conscription. The term includes— 

(1) a retired member of any of those services; 

(2) a member of the Fleet Reserve or Fleet Marine Corps Reserve; 

(3) a cadet at the United States Military Academy, a midshipman at the United States Naval Academy, and a cadet at 

the United States Coast Guard Academy or United States Air 

Force Academy; 

(4) a member of the Reserve Officers’ Training Corps, the 

Naval Reserve Officers’ Training Corps, or the Air Force Reserve Officers’ Training Corps, when ordered to annual training duty for fourteen days or more, and while performing authorized travel to and from that duty; and 

(5) any person while en route to or from, or at, a place for 

final acceptance or for entry upon active duty in the military, 

naval, or air service— 

(A) who has been provisionally accepted for such duty; or 

(B) who, under the Military Selective Service Act, has 

been selected for active military, naval, or air service; 

and has been ordered or directed to proceed to such place. 

The term does not include a temporary member of the Coast Guard 

Reserve. 

Crew Leader 

(n) The term ‘‘crew leader’’ means 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; and such individuals furnished by the crew leader to perform agricultural labor for 

another person shall be deemed to be the employees of such crew 

leader. A crew leader shall, with respect to services performed in 

furnishing individuals to perform agricultural labor for another 

person and service performed as a member of the crew, be deemed 

not to be an employee of such other person. 

Peace Corps Volunteer Service 

(o) The term ‘‘employment’’ shall, notwithstanding the provisions 

of subsection (a), include service performed by an individual as a 

volunteer or volunteer leader within the meaning of the Peace 

Corps Act. 

Medicare Qualified Government Employment 

(p)(1) For purposes of sections 226 and 226A, the term ‘‘medicare 

qualified government employment’’ means any service which would 

constitute ‘‘employment’’ as defined in subsection (a) of this section 

but for the application of the provisions of— 

(A) subsection (a)(5), or 

(B) subsection (a)(7), except as provided in paragraphs (2) 

and (3). 


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(2) Service shall not be treated as employment by reason of paragraph (1)(B) if the service is performed— 

(A) by an individual who is employed by a State or political 

subdivision thereof to relieve him from unemployment, 

(B) in a hospital, home, or other institution by a patient or 

inmate thereof as an employee of a State or political subdivision thereof or of the District of Columbia, 

(C) by an individual, as an employee of a State or political 

subdivision thereof or of the District of Columbia, serving on 

a temporary basis in case of fire, storm, snow, earthquake, 

flood or other similar emergency, 

(D) by any individual as an employee included under section 

5351(2) of title 5, United States Code (relating to certain interns, student nurses, and other student employees of hospitals 

of the District of Columbia Government), other than as a medical or dental intern or a medical or dental resident in training, 

or 

(E) by an election official or election worker if the remuneration paid in a calendar year for such service is less than $1,000 

with respect to service performed during any calendar year 

commencing on or after January 1, 1995, ending on or before 

December 31, 1999, and the adjusted amount determined 

under section 218(c)(8)(B) for any calendar year commencing 

on or after January 1, 2000, with respect to service performed 

during such calendar year. 

As used in this paragraph, the terms ‘‘State’’ and ‘‘political subdivision’’ have the meanings given those terms in section 218(b). 

(3) Service performed for an employer shall not be treated as employment by reason of paragraph (1)(B) if— 

(A) such service would be excluded from the term ‘‘employment’’ for purposes of this section if paragraph (1)(B) did not 

apply; 

(B) such service is performed by an individual— 

(i) who was performing substantial and regular service 

for remuneration for that employer before April 1, 1986, 

(ii) who is a bona fide employee of that employer on 

March 31, 1986, and 

(iii) whose employment relationship with that employer 

was not entered into for purposes of meeting the requirements of this subparagraph; and 

(C) the employment relationship with that employer has not 

been terminated after March 31, 1986. 

(4) For purposes of paragraph (3), under regulations (consistent 

with regulations established under section 3121(u)(2)(D) of the Internal Revenue Code of 1954)— 

(A) all agencies and instrumentalities of a State (as defined 

in section 218(b)) or of the District of Columbia shall be treated 

as a single employer, and 

(B) all agencies and instrumentalities of a political subdivision of a State (as so defined) shall be treated as a single employer and shall not be treated as described in subparagraph 

(A). 


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Treatment of Real Estate Agents and Direct Sellers 

(q) Notwithstanding any other provision of this title, the rules of 

section 3508 of the Internal Revenue Code of 1986 shall apply for 

purposes of this title. 

Service in the Employ of International Organizations by Certain 

Transferred Federal Employees 

(r)(1) For purposes of this title, service performed in the employ 

of an international organization by an individual pursuant to a 

transfer of such individual to such international organization pursuant to section 3582 of title 5, United States Code, shall constitute 

‘‘employment’’ if— 

(A) immediately before such transfer, such individual performed service with a Federal agency which constituted ‘‘employment’’ as defined in subsection (a), and 

(B) such individual would be entitled, upon separation from 

such international organization and proper application, to reemployment with such Federal agency under such section 

3582. 

(2) For purposes of this subsection: 

(A) The term ‘‘Federal agency’’ means an agency, as defined 

in section 3581(1) of title 5, United States Code. 

(B) The term ‘‘international organization’’ has the meaning 

provided such term by section 3581(3) of title 5, United States 

Code. 

* * * * * * * 

VOLUNTARY AGREEMENTS FOR COVERAGE OF INDIAN TRIBAL COUNCIL

MEMBERS

Purpose of agreement 

SEC. 218A. (a)(1) The Commissioner of Social Security shall, at 

the request of any Indian tribe, enter into an agreement with such 

Indian tribe for the purpose of extending the insurance system established by this title to services performed by individuals as members of such Indian tribe’s tribal council. Any agreement with an Indian tribe under this section applies to all members of the tribal 

council, and shall include all services performed by individuals in 

their capacity as council members. 

(2) Notwithstanding section 210(a), for the purposes of this title, 

the term ‘‘employment’’ includes any service included under an 

agreement entered into under this section. 

Definitions 

(b) For the purposes of this section: 

(1) The term ‘‘member’’ means, with respect to a tribal council, an individual appointed or elected to serve as a member or 

the head of the tribal council. 

(2) The term ‘‘tribal council’’ means the appointed or elected 

governing body of a federally recognized Indian tribe. 


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Effective date of agreement 

(c)(1) Any agreement under this section shall be effective with respect to services performed after an effective date specified in such 

agreement, provided that such date may not be earlier than the first 

day of the next calendar month after the month in which the agreement is executed by both parties. 

(2) At the request of the Indian tribe at the time of the agreement, 

such agreement may apply with respect to services performed before 

such effective date for which there were timely paid in good faith 

(and not subsequently refunded) to the Secretary of the Treasury 

amounts equivalent to the sum of the taxes which would have been 

imposed by sections 3101 and 3111 of the Internal Revenue Code of 

1986 had such services constituted employment for purposes of 

chapter 21 of such Code. No agreement under this section may require payment to be made after the effective date specified in such 

agreement of any taxes with respect to services performed before 

such effective date. 

Duration of agreement 

(d) No agreement under this section may be terminated on or after 

the effective date of the agreement. 

* * * * * * * 

INTERNAL REVENUE CODE OF 1986 

* * * * * * * 

Subtitle C—Employment Taxes 

* * * * * * * 

CHAPTER 21—FEDERAL INSURANCE 

CONTRIBUTIONS ACT 

* * * * * * * 

Subchapter C—General Provisions 

SEC. 3121. DEFINITIONS. 

(a) WAGES.—For purposes of this chapter, the term ‘‘wages’’ 

means all remuneration for employment, including the cash value 

of all remuneration (including benefits) paid in any medium other 

than cash; except that such term shall not include— 

(1) in the case of the taxes imposed by sections 3101(a) and 

3111(a) that part of the remuneration which, after remuneration (other than remuneration referred to in the succeeding 

paragraphs of this subsection) equal to the contribution and 

benefit base (as determined under section 230 of the Social Security Act) with respect to employment has been paid to an individual by an employer during the calendar year with respect 

to which such contribution and benefit base is effective, is paid 

to such individual by such employer during such calendar year. 


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If an employer (hereinafter referred to as successor employer) 

during any calendar year acquires substantially all the property used in a trade or business of another employer (hereinafter referred to as a predecessor), or used in a separate unit 

of a trade or business of a predecessor, and immediately after 

the acquisition employs in his trade or business an individual 

who immediately prior to the acquisition was employed in the 

trade or business of such predecessor, then, for the purpose of 

determining whether the successor employer has paid remuneration (other than remuneration referred to in the succeeding paragraphs of this subsection) with respect to employment equal to the contribution and benefit base (as determined 

under section 230 of the Social Security Act) to such individual 

during such calendar year, any remuneration (other than remuneration referred to in the succeeding paragraphs of this 

subsection) with respect to employment paid (or considered 

under this paragraph as having been paid) to such individual 

by such predecessor during such calendar year and prior to 

such acquisition shall be considered as having been paid by 

such successor employer; 

(2) 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), on account of— 

(A) sickness or accident disability (but, in the case of 

payments made to an employee or any of his dependents, 

this subparagraph shall exclude from the term ‘‘wages’’ 

only payments which are received under a workman’s compensation law), or 

(B) medical or hospitalization expenses in connection 

with sickness or accident disability, or 

(C) death, except that this paragraph does not apply to 

a payment for group-term life insurance to the extent that 

such payment is includible in the gross income of the employee; 

(4) any payment on account of sickness or accident disability, 

or medical or hospitalization expenses in connection with sickness or accident disability, made by an employer to, or on behalf of, an employee after the expiration of 6 calendar months 

following the last calendar month in which the employee 

worked for such employer; 

(5) any payment made to, or on behalf of, an employee or his 

beneficiary— 

(A) from or to a trust described in section 401(a) which 

is exempt from tax under section 501(a) at the time of such 

payment unless such payment is made to an employee of 

the trust as remuneration for services rendered as such 

employee and not as a beneficiary of the trust, 

(B) under or to an annuity plan which, at the time of 

such payment, is a plan described in section 403(a), 


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(C) under a simplified employee pension (as defined in 

section 408(k)(1)), other than any contributions described 

in section 408(k)(6), 

(D) under or to an annuity contract described in section 

403(b), other than a payment for the purchase of such contract which is made by reason of a salary reduction agreement (whether evidenced by a written instrument or otherwise), 

(E) under or to an exempt governmental deferred compensation plan (as defined in subsection (v)(3)), 

(F) to supplement pension benefits under a plan or trust 

described in any of the foregoing provisions of this paragraph to take into account some portion or all of the increase in the cost of living (as determined by the Secretary 

of Labor) since retirement but only if such supplemental 

payments are under a plan which is treated as a welfare 

plan under section 3(2)(B)(ii) of the Employee Retirement 

Income Security Act of 1974, 

(G) under a cafeteria plan (within the meaning of section 

125) if such payment would not be treated as wages without regard to such plan and it is reasonable to believe that 

(if section 125 applied for purposes of this section) section 

125 would not treat any wages as constructively received, 

(H) under an arrangement to which section 408(p) applies, other than any elective contributions under paragraph (2)(A)(i) thereof, or 

(I) under a plan described in section 457(e)(11)(A)(ii) and 

maintained by an eligible employer (as defined in section 

457(e)(1)); 

(6) the payment by an employer (without deduction from the 

remuneration of the employee)— 

(A) of the tax imposed upon an employee under section 

3101, or 

(B) of any payment required from an employee under a 

State unemployment compensation law, 

with respect to remuneration paid to an employee for domestic 

service in a private home of the employer or for agricultural 

labor; 

(7)(A) remuneration paid in any medium other than cash to 

an employee for service not in the course of the employer’s 

trade or business or for domestic service in a private home of 

the employer; 

(B) cash remuneration paid by an employer in any calendar year to an employee for domestic service in a private 

home of the employer (including domestic service on a 

farm operated for profit), if the cash remuneration paid in 

such year by the employer to the employee for such service 

is less than the applicable dollar threshold (as defined in 

subsection (x)) for such year; 

(C) cash remuneration paid by an employer in any calendar year to an employee for service not in the course of 

the employer’s trade or business, if the cash remuneration 

paid in such year by the employer to the employee for such 

service is less than $100. As used in this subparagraph, 

the term ‘‘service not in the course of the employer’s trade 


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34 

or business’’ does not include domestic service in a private 

home of the employer and does not include service described in subsection (g)(5); 

(8)(A) remuneration paid in any medium other than cash for 

agricultural labor; 

(B) cash remuneration paid by an employer in any calendar year to an employee for agricultural labor unless— 

(i) the cash remuneration paid in such year by the employer to the employee for such labor is $150 or 

more, or 

(ii) the employer’s expenditures for agricultural labor in such year equal or exceed $2,500, 

except that clause (ii) shall not apply in determining 

whether remuneration paid to an employee constitutes 

‘‘wages’’ under this section if such employee (I) is employed 

as a hand harvest laborer and is paid on a piece rate basis 

in an operation which has been, and is customarily and 

generally recognized as having been, paid on a piece rate 

basis in the region of employment, (II) commutes daily 

from his permanent residence to the farm on which he is 

so employed, and (III) has been employed in agriculture 

less than 13 weeks during the preceding calendar year; 

(10) remuneration paid by an employer in any calendar year 

to an employee for service described in subsection (d)(3)(C) (relating to home workers), if the cash remuneration paid in such 

year by the employer to the employee for such service is less 

than $100; 

(11) remuneration paid to or on behalf of an employee if (and 

to the extent that) at the time of the payment of such remuneration it is reasonable to believe that a corresponding deduction is allowable under section 217 (determined without regard 

to section 274(n)); 

(12)(A) tips paid in any medium other than cash; 

(B) cash tips received by an employee in any calendar 

month in the course of his employment by an employer unless the amount of such cash tips is $20 or more; 

(13) any payment or series of payments by an employer to 

an employee or any of his dependents which is paid— 

(A) upon or after the termination of an employee’s employment relationship because of (i) death, or (ii) retirement for disability, and 

(B) under a plan established by the employer which 

makes provision for his employees generally or a class or 

classes of his employees (or for such employees or class or 

classes of employees and their dependents), 

other than any such payment or series of payments which 

would have been paid if the employee’s employment relationship had not been so terminated; 

(14) any payment made by an employer to a survivor or the 

estate of a former employee after the calendar year in which 

such employee died; 

(15) any payment made by an employer to an employee, if 

at the time such payment is made such employee is entitled to 

disability insurance benefits under section 223(a) of the Social 

Security Act and such entitlement commenced prior to the calVerDate Sep 11 2014 01:05 Jul 06, 2018 Jkt 079006 PO 00000 Frm 00034 Fmt 6659 Sfmt 6601 E:\HR\OC\HR801.XXX HR801

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endar year in which such payment is made, and if such employee did not perform any services for such employer during 

the period for which such payment is made; 

(16) remuneration paid by an organization exempt from income tax under section 501(a) (other than an organization described in section 401(a)) or under section 521 in any calendar 

year to an employee for service rendered in the employ of such 

organization, if the remuneration paid in such year by the organization to the employee for such service is less than $100; 

(18) any payment made, or benefit furnished, to or for the 

benefit of an employee if at the time of such payment or such 

furnishing it is reasonable to believe that the employee will be 

able to exclude such payment or benefit from income under 

section 127, 129, 134(b)(4), or 134(b)(5); 

(19) the value of any meals or lodging furnished by or on behalf of the employer if at the time of such furnishing it is reasonable to believe that the employee will be able to exclude 

such items from income under section 119; 

(20) any benefit provided to or on behalf of an employee if 

at the time such benefit is provided it is reasonable to believe 

that the employee will be able to exclude such benefit from income under section 74(c), 108(f)(4), 117, or 132; 

(21) in the case of a member of an Indian tribe, any remuneration on which no tax is imposed by this chapter by reason 

of section 7873 (relating to income derived by Indians from exercise of fishing rights); 

(22) remuneration on account of— 

(A) a transfer of a share of stock to any individual pursuant to an exercise of an incentive stock option (as defined in section 422(b)) or under an employee stock purchase plan (as defined in section 423(b)), or 

(B) any disposition by the individual of such stock; or 

(23) any benefit or payment which is excludable from the 

gross income of the employee under section 139B(b). 

Nothing in the regulations prescribed for purposes of chapter 24 

(relating to income tax withholding) which provides an exclusion 

from ‘‘wages’’ as used in such chapter shall be construed to require 

a similar exclusion from ‘‘wages’’ in the regulations prescribed for 

purposes of this chapter. Except as otherwise provided in regulations prescribed by the Secretary, any third party which makes a 

payment included in wages solely by reason of the parenthetical 

matter contained in subparagraph (A) of paragraph (2) shall be 

treated for purposes of this chapter and chapter 22 as the employer 

with respect to such wages. 

(b) EMPLOYMENT.—For purposes of this chapter, the term ‘‘employment’’ means any service, of whatever nature, performed (A) by 

an employee for the person employing him, irrespective of the citizenship or residence of either, (i) within the United States, or (ii) 

on or in connection with an American vessel or American aircraft 

under a contract of service which is entered into within the United 

States or during the performance of which and while the employee 

is employed on the vessel or aircraft it touches at a port in the 

United States, if the employee is employed on and in connection 

with such vessel or aircraft when outside the United States, or (B) 

outside the United States by a citizen or resident of the United 


SSpencer on DSKBBXCHB2PROD with REPORTS
36 

States as an employee for an American employer (as defined in 

subsection (h)), or (C) if it is service, regardless of where or by 

whom performed, which is designated as employment or recognized 

as equivalent to employment under an agreement entered into 

under section 233 of the Social Security Act; except that such term 

shall not include— 

(1) service performed by foreign agricultural workers lawfully admitted to the United States from the Bahamas, Jamaica, and the other British West Indies, or from any other 

foreign country or possession thereof, on a temporary basis to 

perform agricultural labor; 

(2) domestic service performed in a local college club, or local 

chapter of a college fraternity or sorority, by a student who is 

enrolled and is regularly attending classes at a school, college, 

or university; 

(3)(A) service performed by a child under the age of 18 in the 

employ of his father or mother; 

(B) service not in the course of the employer’s trade or 

business, or domestic service in a private home of the employer, performed by an individual under the age of 21 in 

the employ of his father or mother, or performed by an individual in the employ of his spouse or son or daughter; 

except that the provisions of this subparagraph shall not 

be applicable to such domestic service performed by an individual in the employ of his son or daughter if— 

(i) the employer is a surviving spouse or a divorced 

individual and has not remarried, or has a spouse living in the home who has a mental or physical condition which results in such spouse’s being incapable of 

caring for a son, daughter, stepson, or stepdaughter 

(referred to in clause (ii)) for at least 4 continuous 

weeks in the calendar quarter in which the service is 

rendered, and 

(ii) a son, daughter, stepson, or stepdaughter of such 

employer is living in the home, and 

(iii) the son, daughter, stepson, or stepdaughter (referred to in clause (ii)) has not attained age 18 or has 

a mental or physical condition which requires the personal care and supervision of an adult for at least 4 

continuous weeks in the calendar quarter in which the 

service is rendered; 

(4) service performed by an individual on or in connection 

with a vessel not an American vessel, or on or in connection 

with an aircraft not an American aircraft, if (A) the individual 

is employed on and in connection with such vessel or aircraft, 

when outside the United States and (B)(i) such individual is 

not a citizen of the United States or (ii) the employer is not an 

American employer; 

(5) service performed in the employ of the United States or 

any instrumentality of the United States, if such service— 

(A) would be excluded from the term ‘‘employment’’ for 

purposes of this title if the provisions of paragraphs (5) 

and (6) of this subsection as in effect in January 1983 had 

remained in effect, and 

(B) is performed by an individual who— 


SSpencer on DSKBBXCHB2PROD with REPORTS
37 

(i) has been continuously performing service described in subparagraph (A) since December 31, 1983, 

and for purposes of this clause— 

(I) if an individual performing service described 

in subparagraph (A) returns to the performance of 

such service after being separated therefrom for a 

period of less than 366 consecutive days, regardless of whether the period began before, on, or 

after December 31, 1983, then such service shall 

be considered continuous, 

(II) if an individual performing service described 

in subparagraph (A) returns to the performance of 

such service after being detailed or transferred to 

an international organization as described under 

section 3343 of subchapter III of chapter 33 of 

title 5, United States Code, or under section 3581 

of chapter 35 of such title, then the service performed for that organization shall be considered 

service described in subparagraph (A), 

(III) if an individual performing service described in subparagraph (A) is reemployed or reinstated after being separated from such service for 

the purpose of accepting employment with the 

American Institute in Taiwan as provided under 

section 3310 of chapter 48 of title 22, United 

States Code, then the service performed for that 

Institute shall be considered service described in 

subparagraph (A), 

(IV) if an individual performing service described in subparagraph (A) returns to the performance of such service after performing service 

as a member of a uniformed service (including, for 

purposes of this clause, service in the National 

Guard and temporary service in the Coast Guard 

Reserve) and after exercising restoration or reemployment rights as provided under chapter 43 of 

title 38, United States Code, then the service so 

performed as a member of a uniformed service 

shall be considered service described in subparagraph (A), and 

(V) if an individual performing service described 

in subparagraph (A) returns to the performance of 

such service after employment (by a tribal organization) to which section 104(e)(2) of the Indian 

Self-Determination Act applies, then the service 

performed for that tribal organization shall be 

considered service described in subparagraph (A); 

or 

(ii) is receiving an annuity from the Civil Service 

Retirement and Disability Fund, or benefits (for service as an employee) under another retirement system 

established by a law of the United States for employees of the Federal Government (other than for members of the uniformed service); 


SSpencer on DSKBBXCHB2PROD with REPORTS
38 

except that this paragraph shall not apply with respect to any 

such service performed on or after any date on which such individual performs— 

(C) service performed as the President or Vice President 

of the United States, 

(D) service performed— 

(i) in a position placed in the Executive Schedule 

under sections 5312 through 5317 of title 5, United 

States Code, 

(ii) as a noncareer appointee in the Senior Executive 

Service or a noncareer member of the Senior Foreign 

Service, or 

(iii) in a position to which the individual is appointed by the President (or his designee) or the Vice 

President under section 105(a)(1), 106(a)(1), or 107 

(a)(1) or (b)(1) of title 3, United States Code, if the 

maximum rate of basic pay for such position is at or 

above the rate for level V of the Executive Schedule, 

(E) service performed as the Chief Justice of the United 

States, an Associate Justice of the Supreme Court, a judge 

of a United States court of appeals, a judge of a United 

States district court (including the district court of a territory), a judge of the United States Court of Federal 

Claims, a judge of the United States Court of International 

Trade, a judge of the United States Tax Court, a United 

States magistrate judge, or a referee in bankruptcy or 

United States bankruptcy judge, 

(F) service performed as a Member, Delegate, or Resident Commissioner of or to the Congress, 

(G) any other service in the legislative branch of the 

Federal Government if such service— 

(i) is performed by an individual who was not subject to subchapter III of chapter 83 of title 5, United 

States Code, or to another retirement system established by a law of the United States for employees of 

the Federal Government (other than for members of 

the uniformed services), on December 31, 1983, or 

(ii) is performed by an individual who has, at any 

time after December 31, 1983, received a lump-sum 

payment under section 8342(a) of title 5, United 

States Code, or under the corresponding provision of 

the law establishing the other retirement system described in clause (i), or 

(iii) is performed by an individual after such individual has otherwise ceased to be subject to subchapter III of chapter 83 of title 5, United States Code 

(without having an application pending for coverage 

under such subchapter), while performing service in 

the legislative branch (determined without regard to 

the provisions of subparagraph (B) relating to continuity of employment), for any period of time after 

December 31, 1983, 

and for purposes of this subparagraph (G) an individual is 

subject to such subchapter III or to any such other retirement system at any time only if (a) such individual’s pay 


SSpencer on DSKBBXCHB2PROD with REPORTS
39 

is subject to deductions, contributions, or similar payments 

(concurrent with the service being performed at that time) 

under section 8334(a) of such title 5 or the corresponding 

provision of the law establishing such other system, or (in 

a case to which section 8332(k)(1) of such title applies) 

such individual is making payments of amounts equivalent 

to such deductions, contributions, or similar payments 

while on leave without pay, or (b) such individual is receiving an annuity from the Civil Service Retirement and Disability Fund, or is receiving benefits (for service as an employee) under another retirement system established by a 

law of the United States for employees of the Federal Government (other than for members of the uniformed services), or 

(H) service performed by an individual— 

(i) on or after the effective date of an election by 

such individual, under section 301 of the Federal Employees’ Retirement System Act of 1986, section 307 of 

the Central Intelligence Agency Retirement Act (50 

U.S.C. 2157), or the Federal Employees’ Retirement 

System Open Enrollment Act of 1997, to become subject to the Federal Employees’ Retirement System provided in chapter 84 of title 5, United States Code, or 

(ii) on or after the effective date of an election by 

such individual, under regulations issued under section 860 of the Foreign Service Act of 1980, to become 

subject to the Foreign Service Pension System provided in subchapter II of chapter 8 of title I of such 

Act; 

(6) service performed in the employ of the United States or 

any instrumentality of the United States if such service is performed— 

(A) in a penal institution of the United States by an inmate thereof; 

(B) by any individual as an employee included under section 5351(2) of title 5, United States Code (relating to certain interns, student nurses, and other student employees 

of hospitals of the Federal Government), other than as a 

medical or dental intern or a medical or dental resident in 

training; or 

(C) by any individual as an employee serving on a temporary basis in case of fire, storm, earthquake, flood, or 

other similar emergency; 

(7) service performed in the employ of a State, or any political subdivision thereof, or any instrumentality of any one or 

more of the foregoing which is wholly owned thereby, except 

that this paragraph shall not apply in the case of— 

(A) service which, under subsection (j), constitutes covered transportation service, 

(B) service in the employ of the Government of Guam or 

the Government of American Samoa or any political subdivision thereof, or of any instrumentality of any one or 

more of the foregoing which is wholly owned thereby, performed by an officer or employee thereof (including a member of the legislature of any such Government or political 


SSpencer on DSKBBXCHB2PROD with REPORTS
40 

subdivision), and, for purposes of this title with respect to 

the taxes imposed by this chapter— 

(i) any person whose service as such an officer or 

employee is not covered by a retirement system established by a law of the United States shall not, with respect to such service, be regarded as an employee of 

the United States or any agency or instrumentality 

thereof, and 

(ii) the remuneration for service described in clause 

(i) (including fees paid to a public official) shall be 

deemed to have been paid by the Government of Guam 

or the Government of American Samoa or by a political subdivision thereof or an instrumentality of any 

one or more of the foregoing which is wholly owned 

thereby, whichever is appropriate, 

(C) service performed in the employ of the District of Columbia or any instrumentality which is wholly owned 

thereby, if such service is not covered by a retirement system established by a law of the United States (other than 

the Federal Employees Retirement System provided in 

chapter 84 of title 5, United States Code); except that the 

provisions of this subparagraph shall not be applicable to 

service performed— 

(i) in a hospital or penal institution by a patient or 

inmate thereof; 

(ii) by any individual as an employee included under 

section 5351(2) of title 5, United States Code (relating 

to certain interns, student nurses, and other student 

employees of hospitals of the District of Columbia Government), other than as a medical or dental intern or 

as a medical or dental resident in training; 

(iii) by any individual as an employee serving on a 

temporary basis in case of fire, storm, snow, earthquake, flood or other similar emergency; or 

(iv) by a member of a board, committee, or council 

of the District of Columbia, paid on a per diem, meeting, or other fee basis, 

(D) service performed in the employ of the Government 

of Guam (or any instrumentality which is wholly owned by 

such Government) by an employee properly classified as a 

temporary or intermittent employee, if such service is not 

covered by a retirement system established by a law of 

Guam; except that (i) the provisions of this subparagraph 

shall not be applicable to services performed by an elected 

official or a member of the legislature or in a hospital or 

penal institution by a patient or inmate thereof, and (ii) 

for purposes of this subparagraph, clauses (i) and (ii) of 

subparagraph (B) shall apply, 

(E) service included under an agreement entered into 

pursuant to section 218 of the Social Security Act, or 

(F) service in the employ of a State (other than the District of Columbia, Guam, or American Samoa), of any political subdivision thereof, or of any instrumentality of any 

one or more of the foregoing which is wholly owned thereby, by an individual who is not a member of a retirement 


SSpencer on DSKBBXCHB2PROD with REPORTS
41 

system of such State, political subdivision, or instrumentality, except that the provisions of this subparagraph 

shall not be applicable to service performed— 

(i) by an individual who is employed to relieve such 

individual from unemployment; 

(ii) in a hospital, home, or other institution by a patient or inmate thereof; 

(iii) by any individual as an employee serving on a 

temporary basis in case of fire, storm, snow, earthquake, flood, or other similar emergency; 

(iv) by an election official or election worker if the 

remuneration paid in a calendar year for such service 

is less than $1,000 with respect to service performed 

during any calendar year commencing on or after January 1, 1995, ending on or before December 31, 1999, 

and the adjusted amount determined under section 

218(c)(8)(B) of the Social Security Act for any calendar 

year commencing on or after January 1, 2000, with respect to service performed during such calendar year; 

or 

(v) by an employee in a position compensated solely 

on a fee basis which is treated pursuant to section 

1402(c)(2)(E) as a trade or business for purposes of inclusion of such fees in net earnings from self-employment; 

for purposes of this subparagraph, except as provided in 

regulations prescribed by the Secretary, the term ‘‘retirement system’’ has the meaning given such term by section 

218(b)(4) of the Social Security Act; 

(8)(A) service performed by a duly ordained, commissioned, 

or licensed minister of a church in the exercise of his ministry 

or by a member of a religious order in the exercise of duties 

required by such order, except that this subparagraph shall not 

apply to service performed by a member of such an order in 

the exercise of such duties, if an election of coverage under 

subsection (r) is in effect with respect to such order, or with respect to the autonomous subdivision thereof to which such 

member belongs; 

(B) service performed in the employ of a church or qualified church-controlled organization if such church or organization has in effect an election under subsection (w), 

other than service in an unrelated trade or business (within the meaning of section 513(a)); 

(9) service performed by an individual as an employee or employee representative as defined in section 3231; 

(10) service performed in the employ of— 

(A) a school, college, or university, or 

(B) an organization described in section 509(a)(3) if the 

organization is organized, and at all times thereafter is operated, exclusively for the benefit of, to perform the functions of, or to carry out the purposes of a school, college, 

or university and is operated, supervised, or controlled by 

or in connection with such school, college, or university, 

unless it is a school, college, or university of a State or a 

political subdivision thereof and the services performed in 


SSpencer on DSKBBXCHB2PROD with REPORTS
42 

its employ by a student referred to in section 218(c)(5) of 

the Social Security Act are covered under the agreement 

between the Commissioner of Social Security and such 

State entered into pursuant to section 218 of such Act; 

if such service is performed by a student who is enrolled and 

regularly attending classes at such school, college, or university; 

(11) service performed in the employ of a foreign government 

(including service as a consular or other officer or employee or 

a nondiplomatic representative); 

(12) service performed in the employ of an instrumentality 

wholly owned by a foreign government— 

(A) if the service is of a character similar to that performed in foreign countries by employees of the United 

States Government or of an instrumentality thereof; and 

(B) if the Secretary of State shall certify to the Secretary 

of the Treasury that the foreign government, with respect 

to whose instrumentality and employees thereof exemption 

is claimed, grants an equivalent exemption with respect to 

similar service performed in the foreign country by employees of the United States Government and of instrumentalities thereof; 

(13) service performed as a student nurse in the employ of 

a hospital or a nurses’ training school by an individual who is 

enrolled and is regularly attending classes in a nurses’ training 

school chartered or approved pursuant to State law; 

(14)(A) service performed by an individual under the age of 

18 in the delivery or distribution of newspapers or shopping 

news, not including delivery or distribution to any point for 

subsequent delivery or distribution; 

(B) service performed by an individual in, and at the 

time of, the sale of newspapers or magazines to ultimate 

consumers, under an arrangement under which the newspapers or magazines are to be sold by him at a fixed price, 

his compensation being based on the retention of the excess of such price over the amount at which the newspapers or magazines are charged to him, whether or not 

he is guaranteed a minimum amount of compensation for 

such service, or is entitled to be credited with the unsold 

newspapers or magazines turned back; 

(15) service performed in the employ of an international organization, except service which constitutes ‘‘employment’’ 

under subsection (y); 

(16) service performed by an individual under an arrangement with the owner or tenant of land pursuant to which— 

(A) such individual undertakes to produce agricultural 

or horticultural commodities (including livestock, bees, 

poultry, and fur-bearing animals and wildlife) on such 

land, 

(B) the agricultural or horticultural commodities produced by such individual, or the proceeds therefrom, are to 

be divided between such individual and such owner or tenant, and 


SSpencer on DSKBBXCHB2PROD with REPORTS
43 

(C) the amount of such individual’s share depends on the 

amount of the agricultural or horticultural commodities 

produced; 

(18) service performed in Guam by a resident of the Republic 

of the Philippines while in Guam on a temporary basis as a 

nonimmigrant alien admitted to Guam pursuant to section 

101(a)(15)(H)(ii) of the Immigration and Nationality Act (8 

U.S.C. 1101(a)(15)(H)(ii)); 

(19) Service which is performed by a nonresident alien individual for the period he is temporarily present in the United 

States as a nonimmigrant under subparagraph (F), (J), (M), or 

(Q) of section 101(a)(15) of the Immigration and Nationality 

Act, as amended, and which is performed to carry out the purpose specified in subparagraph (F), (J), (M), or (Q), as the case 

may be; 

(20) service (other than service described in paragraph 

(3)(A)) performed by an individual on a boat engaged in catching fish or other forms of aquatic animal life under an arrangement with the owner or operator of such boat pursuant to 

which— 

(A) such individual does not receive any cash remuneration other than as provided in subparagraph (B) and other 

than cash remuneration— 

(i) which does not exceed $100 per trip; 

(ii) which is contingent on a minimum catch; and 

(iii) which is paid solely for additional duties (such 

as mate, engineer, or cook) for which additional cash 

remuneration is traditional in the industry, 

(B) such individual receives a share of the boat’s (or the 

boats’ in the case of a fishing operation involving more 

than one boat) catch of fish or other forms of aquatic animal life or a share of the proceeds from the sale of such 

catch, and 

(C) the amount of such individual’s share depends on the 

amount of the boat’s (or the boats’ in the case of a fishing 

operation involving more than one boat) catch of fish or 

other forms of aquatic animal life, 

but only if the operating crew of such boat (or each boat from 

which the individual receives a share in the case of a fishing 

operation involving more than one boat) is normally made up 

of fewer than 10 individuals; øor¿ 

(21) domestic service in a private home of the employer 

which— 

(A) is performed in any year by an individual under the 

age of 18 during any portion of such year; and 

(B) is not the principal occupation of such employeeø.¿; 

or 

(22) service performed by members of Indian tribal councils 

as tribal council members in the employ of an Indian tribal 

government, except that this paragraph shall not apply in the 

case of service included under an agreement under section 218A 

of the Social Security Act. 

For purposes of paragraph (20), the operating crew of a boat shall 

be treated as normally made up of fewer than 10 individuals if the 


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44 

average size of the operating crew on trips made during the preceding 4 calendar quarters consisted of fewer than 10 individuals. 

(c) INCLUDED AND EXCLUDED SERVICE.—For purposes of this 

chapter, if the services performed during one-half or more of any 

pay period by an employee for the person employing him constitute 

employment, all the services of such employee for such period shall 

be deemed to be employment; but if the services performed during 

more than one-half of any such pay period by an employee for the 

person employing him do not constitute employment, then none of 

the services of such employee for such period shall be deemed to 

be employment. As used in this subsection, the term ‘‘pay period’’ 

means a period (of not more than 31 consecutive days) for which 

a payment of remuneration is ordinarily made to the employee by 

the person employing him. This subsection shall not be applicable 

with respect to services performed in a pay period by an employee 

for the person employing him, where any of such service is excepted by subsection (b)(9). 

(d) EMPLOYEE.—For purposes of this chapter, the term ‘‘employee’’ means— 

(1) any officer of a corporation; or 

(2) any individual who, under the usual common law rules 

applicable in determining the employer-employee relationship, 

has the status of an employee; or 

(3) any individual (other than an individual who is an employee under paragraph (1) or (2)) who performs services for remuneration for any person— 

(A) as an agent-driver or commission-driver engaged in 

distributing meat products, vegetable products, fruit products, bakery products, beverages (other than milk), or 

laundry or dry-cleaning services, for his principal; 

(B) as a full-time life insurance salesman; 

(C) as a home worker performing work, according to 

specifications furnished by the person for whom the services are performed, on materials or goods furnished by 

such person which are required to be returned to such person or a person designated by him; or 

(D) as a traveling or city salesman, other than as an 

agent-driver or commission-driver, engaged upon a fulltime basis in the solicitation on behalf of, and the transmission to, his principal (except for side-line sales activities on behalf of some other person) of orders from wholesalers, retailers, contractors, or operators of hotels, restaurants, or other similar establishments for merchandise 

for resale or supplies for use in their business operations; 

if the contract of service contemplates that substantially all of 

such services are to be performed personally by such individual; except that an individual shall not be included in the 

term ‘‘employee’’ under the provisions of this paragraph if such 

individual has a substantial investment in facilities used in 

connection with the performance of such services (other than 

in facilities for transportation), or if the services are in the nature of a single transaction not part of a continuing relationship with the person for whom the services are performed; or 


SSpencer on DSKBBXCHB2PROD with REPORTS
45 

(4) any individual who performs services that are included 

under an agreement entered into pursuant to section 218 or 

218A of the Social Security Act. 

(e) STATE, UNITED STATES, AND CITIZEN.—For purposes of this 

chapter— 

(1) STATE.—The term ‘‘State’’ includes the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, 

Guam, and American Samoa. 

(2) UNITED STATES.—The term ‘‘United States’’ when used in 

a geographical sense includes the Commonwealth of Puerto 

Rico, the Virgin Islands, Guam, and American Samoa. 

An individual who is a citizen of the Commonwealth of Puerto Rico 

(but not otherwise a citizen of the United States) shall be considered, for purposes of this section, as a citizen of the United States. 

(f) AMERICAN VESSEL AND AIRCRAFT.—For purposes of this chapter, the term ‘‘American vessel’’ means any vessel documented or 

numbered under the laws of the United States; and includes any 

vessel which is neither documented or numbered under the laws of 

the United States nor documented under the laws of any foreign 

country, if its crew is employed solely by one or more citizens or 

residents of the United States or corporations organized under the 

laws of the United States or of any State; and the term ‘‘American 

aircraft’’ means an aircraft registered under the laws of the United 

States. 

(g) AGRICULTURAL LABOR.—For purposes of this chapter, the 

term ‘‘agricultural labor’’ includes all service performed— 

(1) on a farm, in the employ of any person, in connection 

with cultivating the soil, or in connection with raising or harvesting any agricultural or horticultural commodity, including 

the raising, shearing, feeding, caring for, training, and management of livestock, bees, poultry, and fur-bearing animals 

and wildlife; 

(2) in the employ of the owner or tenant or other operator 

of a farm, in connection with the operation, management, conservation, improvement, or maintenance of such farm and its 

tools and equipment, or in salvaging timber or clearing land of 

brush and other debris left by a hurricane, if the major part 

of such service is performed on a farm; 

(3) in connection with the production or harvesting of any 

commodity defined as an agricultural commodity in section 

15(g) of the Agricultural Marketing Act, as amended (12 U.S.C. 

1141j), or in connection with the ginning of cotton, or in connection with the operation or maintenance of ditches, canals, 

reservoirs, or waterways, not owned or operated for profit, used 

exclusively for supplying and storing water for farming purposes; 

(4)(A) in the employ of the operator of a farm in handling, 

planting, drying, packing, packaging, processing, freezing, 

grading, storing, or delivering to storage or to market or to a 

carrier for transportation to market, in its unmanufactured 

state, any agricultural or horticultural commodity; but only if 

such operator produced more than one-half of the commodity 

with respect to which such service is performed; 

(B) in the employ of a group of operators of farms (other 

than a cooperative organization) in the performance of 


SSpencer on DSKBBXCHB2PROD with REPORTS
46 

service described in subparagraph (A), but only if such operators produced all of the commodity with respect to 

which such service is performed. For purposes of this subparagraph, any unincorporated group of operators shall be 

deemed a cooperative organization if the number of operators comprising such group is more than 20 at any time 

during the calendar year in which such service is performed; 

(C) the provisions of subparagraphs (A) and (B) shall not 

be deemed to be applicable with respect to service performed in connection with commercial canning or commercial freezing or in connection with any agricultural or horticultural commodity after its delivery to a terminal market for distribution for consumption; or 

(5) on a farm operated for profit if such service is not in the 

course of the employer’s trade or business. 

As used in this subsection, the term ‘‘farm’’ includes stock, dairy, 

poultry, fruit, fur-bearing animal, and truck farms, plantations, 

ranches, nurseries, ranges, greenhouses or other similar structures 

used primarily for the raising of agricultural or horticultural commodities, and orchards. 

(h) AMERICAN EMPLOYER.—For purposes of this chapter, the term 

‘‘American employer’’ means an employer which is— 

(1) the United States or any instrumentality thereof, 

(2) an individual who is a resident of the United States, 

(3) a partnership, if two-thirds or more of the partners are 

residents of the United States, 

(4) a trust, if all of the trustees are residents of the United 

States, or 

(5) a corporation organized under the laws of the United 

States or of any State. 

(i) COMPUTATION OF WAGES IN CERTAIN CASES.— 

(1) DOMESTIC SERVICE.—For purposes of this chapter, in the 

case of domestic service described in subsection (a)(7)(B), any 

payment of cash remuneration for such service which is more 

or less than a whole-dollar amount shall, under such conditions 

and to such extent as may be prescribed by regulations made 

under this chapter, be computed to the nearest dollar. For the 

purpose of the computation to the nearest dollar, the payment 

of a fractional part of a dollar shall be disregarded unless it 

amounts to one-half dollar or more, in which case it shall be 

increased to $1. The amount of any payment of cash remuneration so computed to the nearest dollar shall, in lieu of the 

amount actually paid, be deemed to constitute the amount of 

cash remuneration for purposes of subsection (a)(7)(B). 

(2) SERVICE IN THE UNIFORMED SERVICES.—For purposes of 

this chapter, in the case of an individual performing service, as 

a member of a uniformed service, to which the provisions of 

subsection (m)(1) are applicable, the term ‘‘wages’’ shall, subject to the provisions of subsection (a)(1) of this section, include 

as such individual’s remuneration for such service only (A) his 

basic pay as described in chapter 3 and section 1009 of title 37, 

United States Code, in the case of an individual performing 

service to which subparagraph (A) of such subsection (m)(1) applies, or (B) his compensation for such service as determined 


SSpencer on DSKBBXCHB2PROD with REPORTS
47 

under section 206(a) of title 37, United States Code, in the case 

of an individual performing service to which subparagraph (B) 

of such subsection (m)(1) applies. 

(3) PEACE CORPS VOLUNTEER SERVICE.—For purposes of this 

chapter, in the case of an individual performing service, as a 

volunteer or volunteer leader within the meaning of the Peace 

Corps Act, to which the provisions of section 3121(p) are applicable, the term ‘‘wages’’ shall, subject to the provisions of subsection (a)(1) of this section, include as such individual’s remuneration for such service only amounts paid pursuant to section 5(c) or 6(1) of the Peace Corps Act. 

(4) SERVICE PERFORMED BY CERTAIN MEMBERS OF RELIGIOUS

ORDERS.—For purposes of this chapter, in any case where an 

individual is a member of a religious order (as defined in subsection (r)(2)) performing service in the exercise of duties required by such order, and an election of coverage under subsection (r) is in effect with respect to such order or with respect 

to the autonomous subdivision thereof to which such member 

belongs, the term ‘‘wages’’ shall, subject to the provisions of 

subsection (a)(1), include as such individual’s remuneration for 

such service the fair market value of any board, lodging, clothing, and other perquisites furnished to such member by such 

order or subdivision thereof or by any other person or organization pursuant to an agreement with such order or subdivision, 

except that the amount included as such individual’s remuneration under this paragraph shall not be less than $100 a 

month. 

(5) SERVICE PERFORMED BY CERTAIN RETIRED JUSTICES AND

JUDGES.—For purposes of this chapter, in the case of an individual performing service under the provisions of section 294 

of title 28, United States Code (relating to assignment of retired justices and judges to active duty), the term ‘‘wages’’ shall 

not include any payment under section 371(b) of such title 28 

which is received during the period of such service. 

(j) COVERED TRANSPORTATION SERVICE.—For purposes of this 

chapter— 

(1) EXISTING TRANSPORTATION SYSTEMS - GENERAL RULE.— Except as provided in paragraph (2), all service performed in 

the employ of a State or political subdivision in connection 

with its operation of a public transportation system shall constitute covered transportation service if any part of the transportation system was acquired from private ownership after 

1936 and prior to 1951. 

(2) EXISTING TRANSPORTATION SYSTEMS - CASES IN WHICH NO

TRANSPORTATION EMPLOYEES, OR ONLY CERTAIN EMPLOYEES, 

ARE COVERED.—Service performed in the employ of a State or 

political subdivision in connection with the operation of its 

public transportation system shall not constitute covered transportation service if— 

(A) any part of the transportation system was acquired 

from private ownership after 1936 and prior to 1951, and 

substantially all service in connection with the operation of 

the transportation system was, on December 31, 1950, covered under a general retirement system providing benefits 

which, by reason of a provision of the State constitution 


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48 

dealing specifically with retirement systems of the State or 

political subdivisions thereof, cannot be diminished or impaired; or 

(B) no part of the transportation system operated by the 

State or political subdivision on December 31, 1950, was 

acquired from private ownership after 1936 and prior to 

1951; 

except that if such State or political subdivision makes an acquisition after 1950 from private ownership of any part of its 

transportation system, then, in the case of any employee who— 

(C) became an employee of such State or political subdivision in connection with and at the time of its acquisition after 1950 of such part, and 

(D) prior to such acquisition rendered service in employment (including as employment service covered by an 

agreement under section 218 of the Social Security Act) in 

connection with the operation of such part of the transportation system acquired by the State or political subdivision, 

the service of such employee in connection with the operation 

of the transportation system shall constitute covered transportation service, commencing with the first day of the third calendar quarter following the calendar quarter in which the acquisition of such part took place, unless on such first day such 

service of such employee is covered by a general retirement 

system which does not, with respect to such employee, contain 

special provisions applicable only to employees described in 

subparagraph (C). 

(3) TRANSPORTATION SYSTEMS ACQUIRED AFTER 1950.—All 

service performed in the employ of a State or political subdivision thereof in connection with its operation of a public transportation system shall constitute covered transportation service if the transportation system was not operated by the State 

or political subdivision prior to 1951 and, at the time of its first 

acquisition (after 1950) from private ownership of any part of 

its transportation system, the State or political subdivision did 

not have a general retirement system covering substantially all 

service performed in connection with the operation of the 

transportation system. 

(4) DEFINITIONS.—For purposes of this subsection— 

(A) The term ‘‘general retirement system’’ means any 

pension, annuity, retirement, or similar fund or system established by a State or by a political subdivision thereof 

for employees of the State, political subdivision, or both; 

but such term shall not include such a fund or system 

which covers only service performed in positions connected 

with the operation of its public transportation system. 

(B) A transportation system or a part thereof shall be 

considered to have been acquired by a State or political 

subdivision from private ownership if prior to the acquisition service performed by employees in connection with the 

operation of the system or part thereof acquired constituted employment under this chapter or subchapter A of 

chapter 9 of the Internal Revenue Code of 1939 or was covered by an agreement made pursuant to section 218 of the 


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49 

Social Security Act and some of such employees became 

employees of the State or political subdivision in connection with and at the time of such acquisition. 

(C) The term ‘‘political subdivision’’ includes an instrumentality of— 

(i) a State, 

(ii) one or more political subdivisions of a State, or 

(iii) a State and one or more of its political subdivisions. 

(l) AGREEMENTS ENTERED INTO BY AMERICAN EMPLOYERS WITH

RESPECT TO FOREIGN AFFILIATES.— (1) AGREEMENT WITH RESPECT TO CERTAIN EMPLOYEES OF

FOREIGN AFFILIATE.—The Secretary shall, at the American employer’s request, enter into an agreement (in such manner and 

form as may be prescribed by the Secretary) with any American employer (as defined in subsection (h)) who desires to 

have the insurance system established by title II of the Social 

Security Act extended to service performed outside the United 

States in the employ of any 1 or more of such employer’s foreign affiliates (as defined in paragraph (6)) by all employees 

who are citizens or residents of the United States, except that 

the agreement shall not apply to any service performed by, or 

remuneration paid to, an employee if such service or remuneration would be excluded from the term ‘‘employment’’ or 

‘‘wages’’, as defined in this section, had the service been performed in the United States. Such agreement may be amended 

at any time so as to be made applicable, in the same manner 

and under the same conditions, with respect to any other foreign affiliate of such American employer. Such agreement shall 

be applicable with respect to citizens or residents of the United 

States who, on or after the effective date of the agreement, are 

employees of and perform services outside the United States 

for any foreign affiliate specified in the agreement. Such agreement shall provide— 

(A) that the American employer shall pay to the Secretary, at such time or times as the Secretary may by regulations prescribe, amounts equivalent to the sum of the 

taxes which would be imposed by sections 3101 and 3111 

(including amounts equivalent to the interest, additions to 

the taxes, additional amounts, and penalties which would 

be applicable) with respect to the remuneration which 

would be wages if the services covered by the agreement 

constituted employment as defined in this section; and 

(B) that the American employer will comply with such 

regulations relating to payments and reports as the Secretary may prescribe to carry out the purposes of this subsection. 

(2) EFFECTIVE PERIOD OF AGREEMENT.—An agreement entered into pursuant to paragraph (1) shall be in effect for the 

period beginning with the first day of the calendar quarter in 

which such agreement is entered into or the first day of the 

succeeding calendar quarter, as may be specified in the agreement; except that in case such agreement is amended to include the services performed for any other affiliate and such 

amendment is executed after the first month following the first 


SSpencer on DSKBBXCHB2PROD with REPORTS
50 

calendar quarter for which the agreement is in effect, the 

agreement shall be in effect with respect to service performed 

for such other affiliate only after the calendar quarter in which 

such amendment is executed. Notwithstanding any other provision of this subsection, the period for which any such agreement is effective with respect to any foreign entity shall terminate at the end of any calendar quarter in which the foreign 

entity, at any time in such quarter, ceases to be a foreign affiliate as defined in paragraph (6). 

(3) NO TERMINATION OF AGREEMENT.—No agreement under 

this subsection may be terminated, either in its entirety or 

with respect to any foreign affiliate, on or after June 15, 1989. 

(4) DEPOSITS IN TRUST FUNDS.—For purposes of section 201 

of the Social Security Act, relating to appropriations to the 

Federal Old-Age and Survivors Insurance Trust Fund and the 

Federal Disability Insurance Trust Fund, such remuneration— 

(A) paid for services covered by an agreement entered 

into pursuant to paragraph (1) as would be wages if the 

services constituted employment, and 

(B) as is reported to the Secretary pursuant to the provisions of such agreement or of the regulations issued under 

this subsection, 

shall be considered wages subject to the taxes imposed by this 

chapter. 

(5) OVERPAYMENTS AND UNDERPAYMENTS.— (A) If more or less than the correct amount due under 

an agreement entered into pursuant to this subsection is 

paid with respect to any payment of remuneration, proper 

adjustments with respect to the amounts due under such 

agreement shall be made, without interest, in such manner and at such times as may be required by regulations 

prescribed by the Secretary. 

(B) If an overpayment cannot be adjusted under subparagraph (A), the amount thereof shall be paid by the 

Secretary, through the Fiscal Service of the Treasury Department, but only if a claim for such overpayment is filed 

with the Secretary within two years from the time such 

overpayment was made. 

(6) FOREIGN AFFILIATE DEFINED.—For purposes of this subsection and section 210(a) of the Social Security Act— 

(A) IN GENERAL.—A foreign affiliate of an American employer is any foreign entity in which such American employer has not less than a 10-percent interest. 

(B) DETERMINATION OF 10-PERCENT INTEREST.—For purposes of subparagraph (A), an American employer has a 

10-percent interest in any entity if such employer has such 

an interest directly (or through one or more entities)— 

(i) in the case of a corporation, in the voting stock 

thereof, and 

(ii) in the case of any other entity, in the profits 

thereof. 

(7) AMERICAN EMPLOYER AS SEPARATE ENTITY.—Each American employer which enters into an agreement pursuant to 

paragraph (1) of this subsection shall, for purposes of this subsection and section 6413(c)(2)(C), relating to special refunds in 


SSpencer on DSKBBXCHB2PROD with REPORTS
51 

the case of employees of certain foreign entities, be considered 

an employer in its capacity as a party to such agreement separate and distinct from its identity as a person employing individuals on its own account. 

(8) REGULATIONS.—Regulations of the Secretary to carry out 

the purposes of this subsection shall be designed to make the 

requirements imposed on American employers with respect to 

services covered by an agreement entered into pursuant to this 

subsection the same, so far as practicable, as those imposed 

upon employers pursuant to this title with respect to the taxes 

imposed by this chapter. 

(m) SERVICE IN THE UNIFORMED SERVICES.—For purposes of this 

chapter— 

(1) INCLUSION OF SERVICE.—The term ‘‘employment’’ shall, 

notwithstanding the provisions of subsection (b) of this section, 

include— 

(A) service performed by an individual as a member of 

a uniformed service on active duty, but such term shall not 

include any such service which is performed while on leave 

without pay, and 

(B) service performed by an individual as a member of 

a uniformed service on inactive duty training. 

(2) ACTIVE DUTY.—The term ‘‘active duty’’ means ‘‘active 

duty’’ as described in paragraph (21) of section 101 of title 38, 

United States Code, except that it shall also include ‘‘active 

duty for training’’ as described in paragraph (22) of such section. 

(3) INACTIVE DUTY TRAINING.—The term ‘‘inactive duty training’’ means ‘‘inactive duty training’’ as described in paragraph 

(23) of such section 101. 

(n) MEMBER OF A UNIFORMED SERVICE.—For purposes of this 

chapter, the term ‘‘member of a uniformed service’’ means any person appointed, enlisted, or inducted in a component of the Army, 

Navy, Air Force, Marine Corps, or Coast Guard (including a reserve component as defined in section 101(27) of title 38, United 

States Code), or in one of those services without specification of 

component, or as a commissioned officer of the Coast and Geodetic 

Survey, the National Oceanic and Atmospheric Administration 

Corps, or the Regular or Reserve Corps of the Public Health Service, and any person serving in the Army or Air Force under call or 

conscription. The term includes— 

(1) a retired member of any of those services; 

(2) a member of the Fleet Reserve or Fleet Marine Corps Reserve; 

(3) a cadet at the United States Military Academy, a midshipman at the United States Naval Academy, and a cadet at 

the United States Coast Guard Academy or United States Air 

Force Academy; 

(4) a member of the Reserve Officers’ Training Corps, the 

Naval Reserve Officers’ Training Corps, or the Air Force Reserve Officers’ Training Corps, when ordered to annual training duty for fourteen days or more, and while performing authorized travel to and from that duty; and 


SSpencer on DSKBBXCHB2PROD with REPORTS
52 

(5) any person while en route to or from, or at, a place for 

final acceptance or for entry upon active duty in the military, 

naval, or air service— 

(A) who has been provisionally accepted for such duty; or 

(B) who, under the Military Selective Service Act, has 

been selected for active military, naval, or air service; 

and has been ordered or directed to proceed to such place. 

The term does not include a temporary member of the Coast Guard 

Reserve. 

(o) CREW LEADER.—For purposes of this chapter, the term ‘‘crew 

leader’’ means 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; and such individuals furnished by the 

crew leader to perform agricultural labor for another person shall 

be deemed to be the employees of such crew leader. For purposes 

of this chapter and chapter 2, a crew leader shall, with respect to 

service performed in furnishing individuals to perform agricultural 

labor for another person and service performed as a member of the 

crew, be deemed not to be an employee of such other person. 

(p) PEACE CORPS VOLUNTEER SERVICE.—For purposes of this 

chapter, the term ‘‘employment’’ shall, notwithstanding the provisions of subsection (b) of this section, include service performed by 

an individual as a volunteer or volunteer leader within the meaning of the Peace Corps Act. 

(q) TIPS INCLUDED FOR BOTH EMPLOYEE AND EMPLOYER TAXES.— 

For purposes of this chapter, tips received by an employee in the 

course of his employment shall be considered remuneration for 

such employment (and deemed to have been paid by the employer 

for purposes of subsections (a) and (b) of section 3111). Such remuneration shall be deemed to be paid at the time a written statement including such tips is furnished to the employer pursuant to 

section 6053(a) or (if no statement including such tips is so furnished) at the time received; except that, in determining the employer’s liability in connection with the taxes imposed by section 

3111 with respect to such tips in any case where no statement including such tips was so furnished (or to the extent that the statement so furnished was inaccurate or incomplete), such remuneration shall be deemed for purposes of subtitle F to be paid on the 

date on which notice and demand for such taxes is made to the employer by the Secretary. 

(r) ELECTION OF COVERAGE BY RELIGIOUS ORDERS.— 

(1) CERTIFICATE OF ELECTION BY ORDER.—A religious order 

whose members are required to take a vow of poverty, or any 

autonomous subdivision of such order, may file a certificate (in 

such form and manner, and with such official, as may be prescribed by regulations under this chapter) electing to have the 

insurance system established by title II of the Social Security 

Act extended to services performed by its members in the exercise of duties required by such order or such subdivision thereof. Such certificate of election shall provide that— 


SSpencer on DSKBBXCHB2PROD with REPORTS
53 

(A) such election of coverage by such order or subdivision 

shall be irrevocable; 

(B) such election shall apply to all current and future 

members of such order, or in the case of a subdivision 

thereof to all current and future members of such order 

who belong to such subdivision; 

(C) all services performed by a member of such an order 

or subdivision in the exercise of duties required by such 

order or subdivision shall be deemed to have been performed by such member as an employee of such order or 

subdivision; and 

(D) the wages of each member, upon which such order 

or subdivision shall pay the taxes imposed by sections 

3101 and 3111, will be determined as provided in subsection (i)(4). 

(2) DEFINITION OF MEMBER.—For purposes of this subsection, 

a member of a religious order means any individual who is 

subject to a vow of poverty as a member of such order and who 

performs tasks usually required (and to the extent usually required) of an active member of such order and who is not considered retired because of old age or total disability. 

(3) EFFECTIVE DATE FOR ELECTION.— (A) A certificate of election of coverage shall be in effect, 

for purposes of subsection (b)(8) and for purposes of section 

210(a)(8) of the Social Security Act, for the period beginning with whichever of the following may be designated by 

the order or subdivision thereof: 

(i) the first day of the calendar quarter in which the 

certificate is filed, 

(ii) the first day of the calendar quarter succeeding 

such quarter, or 

(iii) the first day of any calendar quarter preceding 

the calendar quarter in which the certificate is filed, 

except that such date may not be earlier than the first 

day of the twentieth calendar quarter preceding the 

quarter in which such certificate is filed. 

Whenever a date is designated under clause (iii), the election shall apply to services performed before the quarter in 

which the certificate is filed only if the member performing 

such services was a member at the time such services were 

performed and is living on the first day of the quarter in 

which such certificate is filed. 

(B) If a certificate of election filed pursuant to this subsection is effective for one or more calendar quarters prior 

to the quarter in which such certificate is filed, then— 

(i) for purposes of computing interest and for purposes of section 6651 (relating to addition to tax for 

failure to file tax return), the due date for the return 

and payment of the tax for such prior calendar quarters resulting from the filing of such certificate shall 

be the last day of the calendar month following the 

calendar quarter in which the certificate is filed; and 

(ii) the statutory period for the assessment of such 

tax shall not expire before the expiration of 3 years 

from such due date. 


SSpencer on DSKBBXCHB2PROD with REPORTS
54 

(s) CONCURRENT EMPLOYMENT BY TWO OR MORE EMPLOYERS.— 

For purposes of sections 3102, 3111, and 3121(a)(1), if two or more 

related corporations concurrently employ the same individual and 

compensate such individual through a common paymaster which is 

one of such corporations, each such corporation shall be considered 

to have paid as remuneration to such individual only the amounts 

actually disbursed by it to such individual and shall not be considered to have paid as remuneration to such individual amounts actually disbursed to such individual by another of such corporations. 

(u) APPLICATION OF HOSPITAL INSURANCE TAX TO FEDERAL, 

STATE, AND LOCAL EMPLOYMENT.— 

(1) FEDERAL EMPLOYMENT.—For purposes of the taxes imposed by sections 3101(b) and 3111(b), subsection (b) shall be 

applied without regard to paragraph (5) thereof. 

(2) STATE AND LOCAL EMPLOYMENT.—For purposes of the 

taxes imposed by sections 3101(b) and 3111(b)— 

(A) IN GENERAL.—Except as provided in subparagraphs 

(B) and (C), subsection (b) shall be applied without regard 

to paragraph (7) thereof. 

(B) EXCEPTION FOR CERTAIN SERVICES.—Service shall not 

be treated as employment by reason of subparagraph (A) 

if— 

(i) the service is included under an agreement under 

section 218 of the Social Security Act, or 

(ii) the service is performed— 

(I) by an individual who is employed by a State 

or political subdivision thereof to relieve him from 

unemployment, 

(II) in a hospital, home, or other institution by 

a patient or inmate thereof as an employee of a 

State or political subdivision thereof or of the District of Columbia, 

(III) by an individual, as an employee of a State 

or political subdivision thereof or of the District of 

Columbia, serving on a temporary basis in case of 

fire, storm, snow, earthquake, flood or other similar emergency, 

(IV) by any individual as an employee included 

under section 5351(2) of title 5, United States 

Code (relating to certain interns, student nurses, 

and other student employees of hospitals of the 

District of Columbia Government), other than as a 

medical or dental intern or a medical or dental 

resident in training, 

(V) by an election official or election worker if 

the remuneration paid in a calendar year for such 

service is less than $1,000 with respect to service 

performed during any calendar year commencing 

on or after January 1, 1995, ending on or before 

December 31, 1999, and the adjusted amount determined under section 218(c)(8)(B) of the Social 

Security Act for any calendar year commencing on 

or after January 1, 2000, with respect to service 

performed during such calendar year, or 


SSpencer on DSKBBXCHB2PROD with REPORTS
55 

(VI) by an individual in a position described in 

section 1402(c)(2)(E). 

As used in this subparagraph, the terms ‘‘State’’ and ‘‘political subdivision’’ have the meanings given those terms in 

section 218(b) of the Social Security Act. 

(C) EXCEPTION FOR CURRENT EMPLOYMENT WHICH CONTINUES.—Service performed for an employer shall not be 

treated as employment by reason of subparagraph (A) if— 

(i) such service would be excluded from the term 

‘‘employment’’ for purposes of this chapter if subparagraph (A) did not apply; 

(ii) such service is performed by an individual— 

(I) who was performing substantial and regular 

service for remuneration for that employer before 

April 1, 1986, 

(II) who is a bona fide employee of that employer on March 31, 1986, and 

(III) whose employment relationship with that 

employer was not entered into for purposes of 

meeting the requirements of this subparagraph; 

and 

(iii) the employment relationship with that employer 

has not been terminated after March 31, 1986. 

(D) TREATMENT OF AGENCIES AND INSTRUMENTALITIES.— 

For purposes of subparagraph (C), under regulations— 

(i) All agencies and instrumentalities of a State (as 

defined in section 218(b) of the Social Security Act) or 

of the District of Columbia shall be treated as a single 

employer. 

(ii) All agencies and instrumentalities of a political 

subdivision of a State (as so defined) shall be treated 

as a single employer and shall not be treated as described in clause (i). 

(3) MEDICARE QUALIFIED GOVERNMENT EMPLOYMENT.—For 

purposes of this chapter, the term ‘‘medicare qualified government employment’’ means service which— 

(A) is employment (as defined in subsection (b)) with the 

application of paragraphs (1) and (2), but 

(B) would not be employment (as so defined) without the 

application of such paragraphs. 

(v) TREATMENT OF CERTAIN DEFERRED COMPENSATION AND SALARY REDUCTION ARRANGEMENTS.— 

(1) CERTAIN EMPLOYER CONTRIBUTIONS TREATED AS WAGES.— 

Nothing in any paragraph of subsection (a) (other than paragraph (1)) shall exclude from the term ‘‘wages’’— 

(A) any employer contribution under a qualified cash or 

deferred arrangement (as defined in section 401(k)) to the 

extent not included in gross income by reason of section 

402(e)(3) or consisting of designated Roth contributions (as 

defined in section 402A(c)), or 

(B) any amount treated as an employer contribution 

under section 414(h)(2) where the pickup referred to in 

such section is pursuant to a salary reduction agreement 

(whether evidenced by a written instrument or otherwise). 


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56 

(2) TREATMENT OF CERTAIN NONQUALIFIED DEFERRED COM- PENSATION PLANS.— (A) IN GENERAL.—Any amount deferred under a nonqualified deferred compensation plan shall be taken into 

account for purposes of this chapter as of the later of— 

(i) when the services are performed, or 

(ii) when there is no substantial risk of forfeiture of 

the rights to such amount. 

The preceding sentence shall not apply to any excess parachute payment (as defined in section 280G(b)) or to any 

specified stock compensation (as defined in section 4985) 

on which tax is imposed by section 4985. 

(B) TAXED ONLY ONCE.—Any amount taken into account 

as wages by reason of subparagraph (A) (and the income 

attributable thereto) shall not thereafter be treated as 

wages for purposes of this chapter. 

(C) NONQUALIFIED DEFERRED COMPENSATION PLAN.—For 

purposes of this paragraph, the term ‘‘nonqualified deferred compensation plan’’ means any plan or other arrangement for deferral of compensation other than a plan 

described in subsection (a)(5). 

(3) EXEMPT GOVERNMENTAL DEFERRED COMPENSATION

PLAN.—For purposes of subsection (a)(5), the term ‘‘exempt governmental deferred compensation plan’’ means any plan providing for deferral of compensation established and maintained 

for its employees by the United States, by a State or political 

subdivision thereof, or by an agency or instrumentality of any 

of the foregoing. Such term shall not include— 

(A) any plan to which section 83, 402(b), 403(c), 457(a), 

or 457(f)(1) applies, 

(B) any annuity contract described in section 403(b), and 

(C) the Thrift Savings Fund (within the meaning of subchapter III of chapter 84 of title 5, United States Code). 

(w) EXEMPTION OF CHURCHES AND QUALIFIED CHURCH-CONTROLLED ORGANIZATIONS.— (1) GENERAL RULE.—Any church or qualified church-controlled organization (as defined in paragraph (3)) may make an 

election within the time period described in paragraph (2), in 

accordance with such procedures as the Secretary determines 

to be appropriate, that services performed in the employ of 

such church or organization shall be excluded from employment for purposes of title II of the Social Security Act and this 

chapter. An election may be made under this subsection only 

if the church or qualified church-controlled organization states 

that such church or organization is opposed for religious reasons to the payment of the tax imposed under section 3111. 

(2) TIMING AND DURATION OF ELECTION.—An election under 

this subsection must be made prior to the first date, more than 

90 days after July 18, 1984, on which a quarterly employment 

tax return for the tax imposed under section 3111 is due, or 

would be due but for the election, from such church or organization. An election under this subsection shall apply to current 

and future employees, and shall apply to service performed 

after December 31, 1983. The election may be revoked by the 

church or organization under regulations prescribed by the 


SSpencer on DSKBBXCHB2PROD with REPORTS
57 

Secretary. The election shall be revoked by the Secretary if 

such church or organization fails to furnish the information required under section 6051 to the Secretary for a period of 2 

years or more with respect to remuneration paid for such services by such church or organization, and, upon request by the 

Secretary, fails to furnish all such previously unfurnished information for the period covered by the election. Any revocation 

under the preceding sentence shall apply retroactively to the 

beginning of the 2-year period for which the information was 

not furnished. 

(3) DEFINITIONS.— 

(A) For purposes of this subsection, the term ‘‘church’’ 

means a church, a convention or association of churches, 

or an elementary or secondary school which is controlled, 

operated, or principally supported by a church or by a convention or association of churches. 

(B) For purposes of this subsection, the term ‘‘qualified 

church-controlled organization’’ means any church-controlled tax-exempt organization described in section 

501(c)(3), other than an organization which— 

(i) offers goods, services, or facilities for sale, other 

than on an incidental basis, to the general public, 

other than goods, services, or facilities which are sold 

at a nominal charge which is substantially less than 

the cost of providing such goods, services, or facilities; 

and 

(ii) normally receives more than 25 percent of its 

support from either (I) governmental sources, or (II) 

receipts from admissions, sales of merchandise, performance of services, or furnishing of facilities, in activities which are not unrelated trades or businesses, 

or both. 

(x) APPLICABLE DOLLAR THRESHOLD.—For purposes of subsection 

(a)(7)(B), the term ‘‘applicable dollar threshold’’ means $1,000. In 

the case of calendar years after 1995, the Commissioner of Social 

Security shall adjust such $1,000 amount at the same time and in 

the same manner as under section 215(a)(1)(B)(ii) of the Social Security Act with respect to the amounts referred to in section 

215(a)(1)(B)(i) of such Act, except that, for purposes of this paragraph, 1993 shall be substituted for the calendar year referred to 

in section 215(a)(1)(B)(ii)(II) of such Act. If any amount as adjusted 

under the preceding sentence is not a multiple of $100, such 

amount shall be rounded to the next lowest multiple of $100. 

(y) SERVICE IN THE EMPLOY OF INTERNATIONAL ORGANIZATIONS

BY CERTAIN TRANSFERRED FEDERAL EMPLOYEES.— 

(1) IN GENERAL.—For purposes of this chapter, service performed in the employ of an international organization by an individual pursuant to a transfer of such individual to such 

international organization pursuant to section 3582 of title 5, 

United States Code, shall constitute ‘‘employment’’ if— 

(A) immediately before such transfer, such individual 

performed service with a Federal agency which constituted 

‘‘employment’’ under subsection (b) for purposes of the 

taxes imposed by sections 3101(a) and 3111(a), and 


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58 

(B) such individual would be entitled, upon separation 

from such international organization and proper application, to reemployment with such Federal agency under 

such section 3582. 

(2) DEFINITIONS.—For purposes of this subsection— 

(A) FEDERAL AGENCY.—The term ‘‘Federal agency’’ 

means an agency, as defined in section 3581(1) of title 5, 

United States Code. 

(B) INTERNATIONAL ORGANIZATION.—The term ‘‘international organization’’ has the meaning provided such 

term by section 3581(3) of title 5, United States Code. 

(z) TREATMENT OF CERTAIN FOREIGN PERSONS AS AMERICAN EM- PLOYERS.— 

(1) IN GENERAL.—If any employee of a foreign person is performing services in connection with a contract between the 

United States Government (or any instrumentality thereof) 

and any member of any domestically controlled group of entities which includes such foreign person, such foreign person 

shall be treated for purposes of this chapter as an American 

employer with respect to such services performed by such employee. 

(2) DOMESTICALLY CONTROLLED GROUP OF ENTITIES.—For 

purposes of this subsection— 

(A) IN GENERAL.—The term ‘‘domestically controlled 

group of entities’’ means a controlled group of entities the 

common parent of which is a domestic corporation. 

(B) CONTROLLED GROUP OF ENTITIES.—The term ‘‘controlled group of entities’’ means a controlled group of corporations as defined in section 1563(a)(1), except that— 

(i) ‘‘more than 50 percent’’ shall be substituted for 

‘‘at least 80 percent’’ each place it appears therein, and 

(ii) the determination shall be made without regard 

to subsections (a)(4) and (b)(2) of section 1563. 

A partnership or any other entity (other than a corporation) shall be treated as a member of a controlled group of 

entities if such entity is controlled (within the meaning of 

section 954(d)(3)) by members of such group (including any 

entity treated as a member of such group by reason of this 

sentence). 

(3) LIABILITY OF COMMON PARENT.—In the case of a foreign 

person who is a member of any domestically controlled group 

of entities, the common parent of such group shall be jointly 

and severally liable for any tax under this chapter for which 

such foreign person is liable by reason of this subsection, and 

for any penalty imposed on such person by this title with respect to any failure to pay such tax or to file any return or 

statement with respect to such tax or wages subject to such 

tax. No deduction shall be allowed under this title for any liability imposed by the preceding sentence. 

(4) PROVISIONS PREVENTING DOUBLE TAXATION.— (A) AGREEMENTS.—Paragraph (1) shall not apply to any 

services which are covered by an agreement under subsection (l). 

(B) EQUIVALENT FOREIGN TAXATION.—Paragraph (1) 

shall not apply to any services if the employer establishes 


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59 

to the satisfaction of the Secretary that the remuneration 

paid by such employer for such services is subject to a tax 

imposed by a foreign country which is substantially equivalent to the taxes imposed by this chapter. 

(5) CROSS REFERENCE.—For relief from taxes in cases covered 

by certain international agreements, see sections 3101(c) and 

3111(c). 

* * * * * * * 

Æ 


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