Rev. Rul. 80-337

ISSUE

Is an exempt organization deemed to have filed a waiver certificate under section 3121(k)(4) of the Internal Revenue Code when it files a Form 941 covering three previous quarters and pays the taxes with respect to such periods?

FACTS

In January 1979 an organization exempt from income tax under section 501(c)(3) of the Code began withholding the taxes imposed under the Federal Insurance Contributions Act from the wages of its employees. The organization never filed a Form 941, Employer's Federal Quarterly Tax Return. In November of 1979 a new treasurer of the organization filed Forms 941 for the first three quarters and made a lump-sum payment of the withheld taxes and the employer taxes for those quarters. The organization had never filed a Form SS-15, Certificate Waiving Exemption from Taxes under the Federal Insurance Contributions Act.

LAW AND ANALYSIS

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 Code and remuneration for such services is not subject to the taxes imposed by the FICA. However, pursuant to section 3121(k), section 31.3121(k)-1 of the Employment Tax Regulations states that the organization may elect social security coverage by filing a Form SS-15.

Section 3121(k)(4) of the Code provides that if an exempt organization has not filed a certificate it will be deemed for purposes of section 3121(b)(8)(B) to have constructively filed a certificate covering employees for whom the payments were made if it paid the taxes during any period of not less than three consecutive calendar quarters. Although one payment was made in this case, that payment represents FICA taxes on wages for three consecutive quarters.

HOLDING

The organization is deemed to have filed a waiver certificate under section 3121(k)(4) of the Code.