Rev. Rul. 72-142

The purpose of this Revenue Ruling is to update and restate, under the current statute and regulations, the position set forth in S.S.T. 404, C.B. 1940-2, 262.

The question presented is whether, under the circumstances described below, services performed for a university by a student during the summer vacation between two academic years are excepted from employment under the Federal Insurance Contributions Act (chapter 21, subtitle C, Internal Revenue Code of 1954).

The student was enrolled and regularly attended classes at the university during which period he was also employed by the university. His work for the university was not limited to the academic year and continued through the summer vacation when he did not attend classes. The university is exempt from Federal income tax under section 501(a) of the Code as an organization described in section 501(c)(3), and has an effective certificate waiving exemption from taxes under the Federal Insurance Contributions Act, Form SS-15, on file. Therefore, the services of its employees are "employment" unless otherwise excepted therefrom. See section 3121(b)(8)(B) of the Federal Insurance Contributions Act.

Section 3121(b)(10)(B) of the Act excepts from "employment" service performed in the employ of a school, college, or university if such service is performed by a student who is enrolled and is regularly attending classes at such school, college, or university. In addition, section 3121(b)(10)(A) excepts from "employment" service performed in any calendar quarter in the employ of any organization exempt from income tax under section 501(a) (other than an organization described in section 401(a)) or under section 521, if the remuneration for such service is less than $50.

Thus, services performed for the university by the student when he is not enrolled or not regularly attending classes at the university are "employment" unless excluded by the "$50 earned in a quarter" test.

In the instant case the student was not enrolled and not attending classes during the summer vacation period. Accordingly, it is held that if the remuneration earned in the calendar quarters of the summer vacation period amounted to $50 or more, his services would be "employment" and the "wages" therefor would be subject to the Federal Insurance Contributions Act taxes.

S.S.T. 404 is superseded, since the position set forth therein is restated under current law in this Revenue Ruling.

¹ Prepared pursuant to Rev. Proc. 67-6, C.B. 1967-1, 576.