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 Rev. Rul. 76-72

1976-1 C.B. 326

Section 3306 -- FUTA Definitions

IRS Headnote

FUTA; credit union on U.S. foreign military base. Services performed after 1971 by U.S. citizens for a credit union operating on a U.S. military base in a foreign country are not excepted from employment for purposes of the FUTA; Rev. Rul. 70-310 modified.

Full Text

Rev. Rul. 76-72

Advice has been requested as to the treatment under the Federal Unemployment Tax Act (chapter 23, subtitle C, Internal Revenue Code of 1954) of services performed by employees of a credit union association, exempt from Federal income tax under section 501(a) of the Code, and operating at a United States military base in a European country, as a result of amendments to the Code by the Employment Security Amendments of 1970, 1970-2 C.B. 348.

Rev. Rul. 70-310, 1970-1 C.B. 209, states that for purposes of the Act the term "employment" as defined in section 3306(c) of the Act does not include service performed outside the United States by an employee for his employer, irrespective of citizenship or residence of either, except certain services performed on or in connection with an American vessel or American aircraft. The Revenue Ruling holds, in part, that service performed by a United States citizen employee of a credit union association, an American employer, outside the United States, is excepted from "employment" as defined in section 3306(c).

The Employment Security Amendments of 1970 expanded the term "employment" for purposes of the Act to include service of whatever nature performed after December 31, 1971 outside the United States (except in a contiguous country with which the United States has an agreement relating to unemployment compensation or in the Virgin Islands) by a citizen of the United States as an employee of an American employer.

Accordingly, service performed after December 31, 1971 for the credit union association outside the United States by an employee who is a citizen of the United States, is not excepted from "employment" as defined in the Act where the remuneration for such service is $50 or more in the calendar quarter, as provided in section 3306(c)(10)(A) of the Act.

Rev. Rul. 70-310, 1970-1 C.B. 209, is modified so that it does not apply for purposes of the Federal Unemployment Tax Act to services performed after December 31, 1971, for the credit union association outside the United States by an employee who is a citizen of the United States.