Internal Revenue Service
Revenue Ruling

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 Rev. Rul. 60-71

1960-1 C.B. 394

IRS Headnote

Farmers grow peas on their farms for a canning company pursuant to a written contract whereby the canning company uses its own employees and machinery in cutting, field loading, and vining the peas. The vining is done either at the cannery or at the farm of the grower, depending upon the circumstances. Held , services performed by the canning company's employees on the farms of the growers in connection with cutting and field loading the pea vines for delivery to the vining station constitute `agricultural labor' as defined in section 3121(g) of the Federal Insurance Contributions Act. Held further , services performed by the company's employees in the vining operation do not constitute `agricultural labor.'

Full Text

Rev. Rul. 60-71

Advice has been requested whether services performed in the employ of a canning company in cutting, field loading, and `vining' peas constitute `agricultural labor' as defined in section 3121(g) of the Federal Insurance Contributions Act (chapter 21, subtitle C, Internal Revenue Code of 1954).

The company is a canner of fresh peas only. It does not own or operate any farms but enters into contracts with farmers to grow peas for its canning business. The canning company furnishes the labor and equipment to cut the pea vines and to load them on trucks for delivery to the vining stations. It also provides the labor and equipment necessary to the vining process. In some instances the vining process is conducted at the cannery and, in others, on the farms of the growers.

Under section 3121(g) of the Federal Insurance Contributions 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 or harvesting any agricultural or horticultural commodity * * *;

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(4) (A) in the employ of the operator of a farm in handling, planting, drying, packing, packaging, processing, freezing, grading, storing, or delivery to storage or to market or to a carrier for transportation to market, in its unmanufactured state, any agricultural or horticultural commodity; but only if such operator produced more than one-half of the commodity with respect to which such service is performed; * * *.

Paragraph (4)(C) of section 3121(g) of the Act provides, in part, that the provisions of paragraph (4)(A) shall not be applicable with respect to service performed in connection with commercial canning.

It is the position of the Internal Revenue Service that services performed in harvesting and field loading of agricultural commodities by employees of packers or purchasers of crops on the farms of the corps growers constitute `agricultural labor' as defined in section 3121(g)(1) of the Federal Insurance Contributions Act. See Rev. Rul. 174, C.B. 1953-2, 299, and Rev. Rul. 56-35, C.B. 1956-1, 453. Accordingly, it is held that services performed on the grower's farm by the canning company's employees in the cutting and field loading of pea vines on trucks for delivery to the vining station are a part of the harvesting operation and constitute `agricultural labor' as defined in section 3121(g)(1) of the Act.

The so-called vining process, which consists of the shelling or hulling of peas (while on the vine) by a vining machine prior to their being graded, washed, and canned, is considered to be a separate and distinct operation from the harvesting activities. A consideration of the nature of the vining process, the purposes for which the process is conducted, and the results achieved thereby lead to the conclusion that the vining of peas is conducted as a part of the canning process, a commercial operation, rather than as an integral part of the harvesting of the crop. Accordingly, it is held that services performed in the employ of the canning company in the vining of peas, irrespective of the location where the services are performed, do not constitute `agricultural labor' for purposes of the Federal Insurance Contributions Act.

This ruling is applicable also for purposes of the Federal Unemployment Tax Act and the Collection of Income Tax at Source on Wages (chapters 23 and 24, respectively, subtitle C, Internal Revenue Code of 1954.)

`Agricultural labor' performed on a farm by employees in connection with cutting and field loading pea vines is not excepted from `employment' for purposes of the taxes imposed by the Federal Insurance Contributions Act, and cash remuneration paid for such labor is subject to the taxes imposed by that Act, except as provided in section 3121(a)(8)(B) thereof.