Internal Revenue Service
Revenue Ruling

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 Rev. Rul. 70-52

1970-1 C.B. 206

IRS Headnote

Services performed on a farm in the employ of any person in connection with baling hay and straw, threshing grain, shelling corn, and hulling almonds constitute "agricultural labor"; Em.T. 445 superseded.

Full Text

Rev. Rul. 70-52 /1/

The purpose of this Revenue Ruling is to update and restate, under the current statute and regulations, the position set forth in Em.T. 445, C.B. 1943, 1072.

The questions presented are whether certain services, performed on a farm in the employ of any person, are "agricultural labor" for purposes of the Federal Insurance Contributions Act, the Federal Unemployment Tax Act, and the Collection of Income Tax at Source on Wages (chapters 21, 23, and 24, respectively, subtitle C, Internal Revenue Code of 1954).

Section 3121(g)(1) of Chapter 21 of the Code provides, in part, that the term "agricultural labor" includes all services performed "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, * * *". Section 3306(k)(1) of chapter 23 of the Code provides a similar definition of the term "agricultural labor" and section 3401(a)(2) of chapter 24 of the Code provides that for purposes of that chapter the term "wages" does not include remuneration paid for agricultural labor as that term is defined in section 3121(g).

The services in question are performed on the farm in connection with baling hay, baling straw, threshing grain, shelling corn, and hulling almonds, as set forth in the situations described below.

Situation 1

The baling of hay is accomplished by the use of a stationary baler and a pick-up baler. When a stationary baler is used, the hay may be stacked in the field or elsewhere on the farm before it is baled, or it may be baled in the field shortly after it is cut. When a pick-up baler is used, it is operated in the field a short time after the hay is cut, and the hay is picked up and baled in one operation.

The baling of hay is a common method of gathering or harvesting the crop. The period of time between cutting and baling the hay varies for the reason that it may be stored in stacks or in farm buildings prior to baling, but the storing is merely an interruption in the gathering or harvesting process. Thus, the baling of hay that has been stored for several weeks or months constitutes harvesting notwithstanding the period of storage.

It is held that the baling of hay on the farm by the use of either the stationary or pick-up baler is a harvesting operation within the meaning of sections 3121(g)(1) and 3306(k)(1) of the Code. Accordingly, services performed on the farm in the employ of any person in connection with such baling are "agricultural labor" for purposes of chapters 21, 23, and 24 of the Code.

Situation 2

The baling of straw increased materially with the advent of the combine, which cuts and threshes small grains in one operation. The straw is left in windrows in the field by the combine and is then baled, either by a stationary baler or by a pick-up baler. The baled straw is then stacked in the barn or otherwise protected from the weather, unless it is sold immediately for shipment.

The baling of straw is identical in all respects to the baling of hay and is the common method of gathering or harvesting the crop. Accordingly, it is held that the baling of straw is a harvesting operation within the meaning of the above-mentioned sections of the Code and services performed on the farm in the employ of any person in connection with such baling are "agricultural labor" for purposes of chapters 21, 23, and 24 of the Code.

Situation 3

The threshing of grain is performed on the farm, either by employees of the farmer-producer or by employees of the owner of the thresher who is not the producer. The threshing follows close upon the reaping of the grain and may be done by means of a combine, which performs the reaping as well as the threshing in one operation, or by means of an ordinary thresher. Usually the grain crop is not stored or marketed until it is threshed.

It is held that the threshing of grain is a part of the harvesting operation and the services performed on the farm in the employ of any person in connection with the operation are "agricultural labor" for purposes of chapters 21, 23, and 24 of the Code.

Situation 4

The shelling of corn is done on the farm by the farmer-producer who uses his own corn sheller or by a custom operator. The custom operator owns a corn sheller and usually operates the machinery but the farmer-producer furnishes men for shoveling the ear corn into the sheller and disposing of the shelled corn. The shelling of the corn is the last step in the harvesting process, which results in a commodity ready for removal from the farm.

It is held that services performed on the farm in the employ of any person in connection with shelling corn are "agricultural labor" for purposes of chapters 21, 23, and 24 of the Code.

Situation 5

Almonds growing on the tree develop thin, leathery, inedible protective hulls. Upon maturity the hulls split partly open and the almonds are ready for harvesting. They are then collected and are promptly hulled by the use of a hulling machine located on the farm or, when circumstances require it, the unhulled almonds are transported to a neighbor grower's farm and his machine is used. The hulling machines are operated by farm laborers and the hulling operations do not include the shelling of almonds. The grower has no market for unhulled almonds.

It is held that services performed on the farm in the employ of any person in connection with the raising and harvesting of almonds, including the hulling of such almonds are "agricultural labor" for purposes of chapters 21, 23, and 24 of the Code.

Em.T. 445 is superseded, since the positions set forth therein are restated under current law in this Revenue Ruling.

/1/ Prepared pursuant to Rev. Proc. 67-6, C.B. 1967-1, 576.