Internal Revenue Service
Revenue Ruling

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 Rev. Rul. 78-54

1978-1 C.B. 36

Sec. 117

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Rev. Rul. 78-54

The National Labor Relations Board (NLRB) in Cedars-Sinai Medical Center and Cedars-Sinai Housestaff Association, 223 NLRB No. 57 (1976), held that "housestaff" (interns and residents) at the Cedars-Sinai hospitals were engaged primarily in graduate educational training and the "housestaff" were students rather than employees within the meaning of the National Labor Relations Act (NLRA).

Whether a person is an "employee" under the NLRA depends upon whether Congress intended to secure to that individual "freedom of employees' organization and collective bargaining." National Labor Relations Board v. Hearst Publication, Inc., 322 U.S. 111 (1944). The standards used for determining whether individuals are employees for purposes of labor relations are not the same as those used for purposes of Federal taxation. See United States v. Silk, 331 U.S. 704 (1947), 1947-2 C.B. 167. The NLRB's ruling that "housestaff" are not employees under the NLRA is not binding on the Service in cases arising under the Internal Revenue Code. See Paseiro v. Commissioner, T.C. Memo. 1977-359.