Rev. Rul. 87-58

1987-2 C.B. 224, 1987-27 I.R.B. 12.

EXEMPTION; STATE BAR OF TEXAS

Published: July 6, 1987

Section 3306.-Definitions, 26 CFR 31.3306(c)(7)-1: Services in employ of States or their political subdivisions or instrumentalities

  Exemption; State Bar of Texas. The Service will not follow the decision in State Bar of Texas v. United States, 560 F.Supp. 21 (N.D. Texas 1983), holding that at least some of the service of the State Bar's employees was exempt from the Federal unemployment tax.

  In State Bar of Texas v. United States, 560 F. Supp. 21 (N.D. Tex. 1983), the court considered whether the State Bar of Texas (State Bar) was a part of the State of Texas, or a political subdivision of Texas, or a wholly owned instrumentality of the state or political subdivision, or, if not wholly owned, an instrumentality that is constitutionally immune from tax for purposes of section 3306(c)(7) of the Internal Revenue Code, and therefore exempt from the federal unemployment tax imposed by section 3301. The court held that at least some of the service of the State Bar's employees was exempt from the federal unemployment tax because of constitutional immunity and that the United States had waived any such taxes that might be assessable with respect to the remaining service of the State Bar's employees.

  In similar cases with respect to other professional organizations, the Internal Revenue Service will not follow the decision in State Bar of Texas.

Rev. Rul. 87-58, 1987-2 C.B. 224, 1987-27 I.R.B. 12