Rev. Rul. 77-159

Advice has been requested whether, under the circumstances described below, a corporation is a new organization for purposes of filing a Form SS-15, Certificate Waiving Exemption From Taxes Under the Federal Insurance Contributions Act, and a Form SS-15a, List to Accompany Certificate on Form SS-15 Waiving Exemption from Taxes Under the Federal Insurance Contributions Act, pursuant to section 3121(k) of the Federal Insurance Contributions Act (chapter 21, subtitle C, Internal Revenue Code of 1954).

A corporation that is exempt from income tax under section 501(a) of the Code as an organization described in section 501(c)(3) was incorporated for the purpose of taking over the operations of an unincorporated association. The association was exempt from income tax under section 501(a) of the Code as an organization described in section 501(c)(3) and had filed Form SS-15 and Form SS-15a in order to extend social security coverage to its employees. The association transferred to the corporation all its assets and activities.

Services performed by an employee for an organization described in section 501(c)(3) of the Code are excepted from the definition of employment under section 3121(b)(8)(B) of the Federal Insurance Contributions Act and remuneration for such services is not subject to the taxes under the Act. However, pursuant to section 3121(k) of the Code and 31.3121(k)-1 of the Employment Tax Regulations the organization may elect social security coverage by filing a Form SS-15 together with a Form SS-15a containing the names, if any, of employees who concur in the filing. Individuals who are hired after the calendar quarter in which the Form SS-15 is filed are automatically covered without signing the Form SS-15a.

Rev. Rul. 71-276, 1971-1 C.B. 289, holds that a tax exempt hospital formed to take over the operations of three other tax exempt hospitals must file new waiver certificates, Form SS-15 and Form SS-15a, in order to continue social security coverage for the employees of the three hospitals.

Accordingly, the corporation is a new organization for purposes of filing a waiver certificate pursuant to section 3121(k) of the Federal Insurance Contributions Act.