Re: Changes to the IRC in employee/employer definitions
- 26 CFR § 1.1402(c)-3 Employees.
(a) General rule.
Generally, the performance of service by an individual as an employee, as defined in the Federal Insurance Contributions Act (Chapter 21 of the Internal Revenue Code) does not constitute a trade or business within the meaning of section 1402(c) and §1.1402(c)1. However, in six cases set forth in paragraphs (b) to (g), inclusive, of this section, the performance of service by an individual is considered to constitute a trade or business within the meaning of section 1402(c) and §1.1402(c)1. (As to when an individual is an employee, see section 3121 (d) and (o) and section 3506 and the regulations under those sections in part 31 of this chapter (Employment Tax Regulations).)
The 6 cases are not cohesive and include newspaper vendors, sharecroppers [isn't it nice to see we tax the poorest of the poor!!], employees of a foreign government, ministers and members of a religious order, gov't employees paid solely on a fee basis, and most commercial fisherman.
§ 1.861-4 Compensation for labor or personal services.
(a) Compensation for labor or personal services performed wholly within the United States.
(1) Generally, compensation for labor or personal services, including fees, commissions, fringe benefits, and similar items, performed wholly within the United States is gross income from sources within the United States.
(i) The labor or services are performed by a nonresident alien individual temporarily present in the United States for a period or periods not exceeding a total of 90 days during his taxable year,
(ii) The compensation for such labor or services does not exceed in the aggregate a gross amount of $3,000, and
(iii) The compensation is for labor or services performed as an employee of, or under any form of contract with
( a ) A nonresident alien individual, foreign partnership, or foreign corporation, not engaged in trade or business within the United States, or
( b ) An individual who is a citizen or resident of the United States, a domestic partnership, or a domestic corporation, if such labor or services are performed for an office or place of business maintained in a foreign country or in a possession of the United States by such individual, partnership, or corporation.
(2) As a general rule, the term "day", as used in subparagraph (1)(i) of this paragraph, means a calendar day during any portion of which the nonresident alien individual is physically present in the United States.
(3) Solely for purposes of applying this paragraph, the nonresident alien individual, foreign partnership, or foreign corporation for which the nonresident alien individual is performing personal services in the United States shall not be considered to be engaged in trade or business in the United States by reason of the performance of such services by such individual.
(4) In determining for purposes of subparagraph (1)(ii) of this paragraph whether compensation received by the nonresident alien individual exceeds in the aggregate a gross amount of $3,000, any amounts received by the individual from an employer as advances or reimbursements for travel expenses incurred on behalf of the employer shall be omitted from the compensation received by the individual, to the extent of expenses incurred, where he was required to account and did account to his employer for such expenses and has met the tests for such accounting provided in §1.16217 and paragraph (e)(4) of §1.2745. If advances or reimbursements exceed such expenses, the amount of the excess shall be included as compensation for personal services for purposes of such subparagraph. Pensions and retirement pay attributable to labor or personal services performed in the United States are not to be taken into account for purposes of subparagraph (1)(ii) of this paragraph.
(5) For definition of the term "United States", when used in a geographical sense, see sections 638 and 7701(a)(9).
Section 638 is not very straightforward. But "United States" is simply defined in 26 USC 7701 as:
(9) United StatesThe term "United States" when used in a geographical sense includes only the States and the District of Columbia.
[This provides rule making authority for 26 CFR 1, 300, and 301]
I have discovered that many important jewels of info are often found
in the "not this" sections, especially the 1400 sections.
They can't be quite as evasive and vague when trying to
describe that which is not, as compared to the "includes."
--- In email@example.com, "Barry" <bear@...> wrote:
> I got an email saying the following:
> I'm presently trying to put together some research for an upcoming local
> State tax hearing which caused me to review the code. I was surprised to
> find some changes that seem to be an attempt at expanding the
> definitions of the terms in 3121 of the code. "Trade or Business" has
> been removed to its own rather long section- 162 and the definitions of
> "employee" have been changed to include "common law definitions." At CFR
> § 31.3121(d)-1 Who are employees there is a many pages description
> of who is an employee that doesn't seem to define an employer but
> describes pretty much any usual relationship as regular people use the
> terms. Please, check out these changes and maybe you can say on the list
> what you think they mean and how they might affect us!
> I haven't made time to do this, but, I thought I would submit it
> here and see if anyone else has seen this problem and dealt with it.
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