Internal Revenue Service
Revenue Ruling

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 Rev. Rul. 56-14

1956-1 C.B. 450

Section 5081 -- Distilled Spirits Occupational Tax

IRS Headnote

Services performed on a farm by employees of a contractor in cleaning and treating seed wheat which is to be planted by the grower thereof constitute `agricultural labor' within the meaning of section 3121(g) of the Federal Insurance Contributions Act. Such cleaning services as are performed on nonfarm areas, services performed in moving, maintaining and repairing the contractor's equipment, and clerical, collection and other similar services relating to his business operations, do not constitute `agricultural labor' within the meaning of that section.

Full Text

Rev. Rul. 56-14

The Internal Revenue Service has been requested to determine whether services performed in connection with treating seed wheat constitute `agricultural labor' within the meaning of section 3121(g) of the Federal Insurance Contributions Act (chapter 21, subtitle C, Internal Revenue Code of 1954).

It is customary for many farmers to retain sufficient wheat from their threshed wheat crop to serve as seed for the next crop. This seed wheat is held in grain storage bins or in small elevators which may be located either on farm or nonfarm properties.

In the instant case, an individual contracts with farmers to treat their seed wheat for rust, smut, etc. He owns the necessary treating equipment, furnishes the supplies and chemicals used, and hires and pays his own helpers. He transports his treating equipment to the various locations where the seed wheat is stored, treats the seed and receives a fixed fee per bushel of wheat treated. He is not a farmer or wheat grower and does not own, buy, or have any interest in any of the wheat he handles.

Under section 3121(g) of the Act, 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 * * * any agricultural or horticultural commodity, * * *;

(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, * * * if the major part of such service is performed on a farm;

It is position of the Service that the cleaning or treating of seeds by, or for, the grower thereof, which were obtained by retaining a portion of his crop and which are used exclusively by the grower for planting purposes, are operations of the type contemplated by paragraph (1), section 3121(g), supra . Accordingly, such services constitute `agricultural labor' within the meaning of that paragraph when performed `on a farm,' without regard to whether the services are performed in the employ of the grower or of a commercial handler. However, services performed by employees of commercial handlers on nonfarm property in cleaning or treating seeds, or at any location in cleaning or treating seeds which are to be sold, do not come within the meaning of that paragraph. Furthermore, services performed by such employees in moving seed cleaning and treating equipment from one location to another, as well as in maintaining and repairing such equipment, and clerical, collection and other similar services relating to seed cleaning operations conducted by a commercial handler, do not constitute `agricultural labor' within the meaning of paragraph (2), section 3121 (g), supra .

In accordance with the above-stated position, it is held that services performed on a farm by employees of the contractor in the instant case, in connection with the treating of seed wheat which is to be planted by the grower thereof, constitute `agricultural labor' within the meaning of section 3121(g) of the Federal Insurance Contributions Act. However, services performed by the contractor's employees in treating seed wheat on nonfarm property, services performed in treating seed wheat which is to be sold, services relating to the moving, maintenance and repair of the seed cleaning equipment, and clerical, bookkeeping, supervisory and administrative services relating to his seed treating operations, do not constitute `agricultural labor' within the meaning of that section.

The remuneration for `agricultural labor' received by an employee of the contractor constitutes `wages' if it meets the `$100-a-year' test in section 3121(a)(8)(B) of the Federal Insurance Contributions Act. For examples showing how the test is to be applied, see Revenue Ruling 55-707, C.B. 1955-2, 420. Liability for the taxes imposed by such Act is incurred with respect to such `wages' and with respect to any other `wages' which the employee receives from the contractor for nonagricultural services, subject to the limitation provided by section 3121(a)(1) of that Act.