Internal Revenue Service
Revenue Ruling

TaxLinks.com   sm

 Rev. Rul. 56-87

1956-1 C.B. 463

IRS Headnote

A summer music camp, which is exempt from Federal income tax under section 501(a) of the Internal Revenue Code of 1954 as an organization of the character described in section 501(c)(3) of the Code, elected to waive its corresponding exemption from tax under the Federal Insurance Contributions Act. In addition to music courses, the camp offers regular courses of instruction in various other arts and employs some of its students on a part-time basis in conducting its activities. Held , the camp qualifies as a `school, college, or university' within the meaning of section 3121(b)(10)(B) of the Act and the services performed for the camp by students who are enrolled and are regularly attending classes at the camp are excepted from `employment' by such section.

Full Text

Rev. Rul. 56-87

Advice has been requested relative to the status of a summer music camp for purposes of the taxes imposed by the Federal Insurance Contributions Act (chapter 21, subtitle C, Internal Revenue Code of 1954). The camp offers regular courses of instruction in music and various other arts during the summer months. Its educational activities are arranged on a divisional basis and include junior, intermediate, high school and university courses. The university division is operated as the summer session of a state university and credits toward degrees are earned by students enrolled in this division. The camp is exempt from Federal income tax under section 501(a) of the Code as an organization of the character described in section 501(c)(3) thereof and has elected to waive its corresponding exemption from tax under the Federal Insurance Contributions Act provided by section 3121(b)(8)(B) of the Act. Specifically, the camp desires a ruling as to (1) whether it has the status of a `school, college or university' within the meaning of section 3121(b)(10)(B) of the Federal Insurance Contributions Act, and (2) whether the services performed for the camp by its students who are enrolled and regularly attending classes at the camp are excepted from `employment' under section 3121(b)(10)(B) of the Act.

Section 3121(b)(10)(B) of the Federal Insurance Contributions Act provides that services performed in the employ of a school, college, or university are excepted from employment if such services are performed by a student who is enrolled and is regularly attending classes at such school, college, or university. In defining the term `school, college, or university,' section 408.219 of Regulations 128, applicable to the Internal Revenue Code of 1954 by virtue of Treasury Decision 6091, C.B. 1954-2, 47, provides that such term is to be given its commonly or generally accepted meaning. Therefore, and on the basis of the facts presented, it is held that the instant camp qualifies as a `school, college, or university' within the meaning of section 3121(b)(10)(B), supra .

By reason of its exemption from Federal income tax and the provisions of section 3121(b)(8)(B), supra , the camp is not liable for the taxes imposed by the Federal Insurance Contributions Act unless it waives its exemption under section 3121(b)(8)(B). Furthermore, even though exemption under such section is waived by the camp, liability for such taxes is not incurred with respect to any services performed in its employ which are excepted from `employment' under any other section of the Act. Since the camp qualifies as a `school, college, or university' within the meaning of section 3121(b)(10)(B) of the Act, services performed for it by its students who are enrolled and are regularly attending classes are excepted from `employment' under such section and the camp is not liable for the taxes imposed by the Act with respect to the remuneration for such services.