Rev. Rul. 58-514

SECTION 1. BACKGROUND.

.01 The Social Security Amendments of 1958, P.L. 85-840, approved August 28, 1958, C.B. 1958-3, 85, amended sections 3121(b)(8)(B) and 3121(k)(1) of the Federal Insurance Contributions Act (Chapter 21, subtitle C, Internal Revenue Code of 1954), relating to services performed in the employ of organizations described in section 501(c)(3) of the Internal Revenue Code, which are exempt from income tax under section 501(a) of the Code. Section 3121(k)(1) previously was amended by the Social Security Amendments of 1956, as explained in Rev. Rul. 57-11, C.B. 1957-1,344.

.02 Public Law 85-785, approved August 27, 1958, C.B. 1958-3, 83, amended section 403(a) of the Social Security Amendments of 1954, which also had been amended by the Social Security Amendments of 1956, as explained in Rev. Rul. 57-11, supra .

SEC. 2. PURPOSE.

The purpose of this Revenue Ruling is to set forth the present provisions of sections 3121(b)(8)(B) and 3121(k)(1) of the Federal Insurance Contributions Act, and section 403 of the Social Security Amendment of 1954, and to explain the effect of the amendments referred to above.

SEC. 3. SCOPE.

The provisions of this Revenue Ruling are interim in nature and are subject to modification by regulations to follow. However, any such modification shall not render invalid any act performed pursuant to, and in accordance, with, the provisions of this Revenue Ruling.

SEC. 4. SECTIONS 3121(b)(8)(B) AND 3121(k)(1) OF THE FEDERAL INSURANCE CONTRIBUTIONS ACT.

.01 Section 3121(b)(8) of the Federal Insurance Contributions Act, as amended by section 405(b) of the Social Security Amendments of 1958, provides an exception form the term `employment' and reads in part, as follows:

(B) service performed in the employ of a religious, charitable, educational, or other organization described in section 501(c)(3) which is exempt from income tax under section 501(a), but this subparagraph shall not apply to service performed during the period for which a certificate, filed pursuant to subsection (k) (or the corresponding subsection of prior law), is in effect if such service is performed by an employee-

(i) whose signature appears on the list filed by such organization under subsection (k) (or the corresponding subsection of prior law),

(ii) who became an employee of such organization after the calendar quarter in which the certificate (other than a certificate referred to in clause (iii)) was filed, or

(iii) who, after the calendar quarter in which the certificate was filed with respect to a group described in section 3121(k)(1)(E), became a member of such group. except that this subparagraph shall apply with respect to service performed by an employee as a member of a group described in section 3121(k)(1)(E) with respect to which no certificate is in effect;

.02 Section 3121(k) of the Federal Insurance Contributions Act, as amended by section 405(a) of the Social Security Amendments of 1958, provides, in part, as follows:

(k) EXEMPTION OF RELIGIOUS, CHARITABLE, AND CERTAIN OTHER ORGANIZATIONS.-

(1) WAIVER OF EXEMPTION BY ORGANIZATION.-

(A) An organization described in section 501(c)(3) which is exempt from income tax under section 501(a) may file a certificate (in such form and manner, and with such official, as may be prescribed by regulations made under this chapter) certifying that it desires to have the insurance system established by title II of the Social Security Act extended to service performed by its employees and that at least two-thirds of its employees concur in the filing of the certificate. Such certificate may be filed only if it is accompanied by a list containing the signature, address, and social security account number (if any) of each employee who concurs in the filing of the certificate. Such list may be amended at any time prior to the expiration of the twenty-fourth month following the calendar quarter in which the certificate is filed by filing with the prescribed official a supplemental list or lists containing the signature, address, and social security account number (if any) of each additional employee who concurs in the filing of the certificate. The list and any supplemental list shall be filed in such form and manner as may be prescribed by regulations made under this chapter.

(B) The certificate shall be in effect (for purposes of subsection (b)(8)(B) and for purposes of section 210(a)(8)(B) of the Social Security Act) for the period beginning with whichever of the following may be designated by the organization:

(i) the first day of the calendar quarter in which the certificate is filed,

(ii) the first day of the calendar quarter succeeding such quarter, or

(iii) the first day of any calendar quarter preceding the calendar quarter in which the certificate is filed, except that, in the case of a certificate filed prior to January 1, 1960, such date may not be earlier than January 1, 1956, and in the case of a certificate filed after 1959, such date may not be earlier than the first day of the fourth calendar quarter preceding the quarter in which such certificate is filed.

(C) In the case of service performed by an employee whose name appears on a supplemental list filed after the first month following the calendar quarter in which the certificate is filed, the certificate shall be in effect (for purposes of subsection (b)(8)(B) and for purposes of section 210(a)(8)(B) of the Social Security Act) only with respect to service performed by such individual for the period beginning with the first day of the calendar quarter in which such supplemental list is filed.

(D) The period for which a certificate filed pursuant to this subsection or the corresponding subsection of prior law is effective may be terminated by the organization, effective at the end of a calendar quarter, upon giving 2 years' advance notice in writing, but only if, at the time of the receipt of such notice, the certificate has been in effect for a period of not less than 8 years. The notice of termination may be revoked by the organization by giving, prior to the close of the calendar quarter specified in the notice of termination, a written notice of such revocation. Notice of termination or revocation thereof shall be filed in such form and manner, and with such official, as may be prescribed by regulations made under this chapter.

(E) If an organization described in subparagraph (A) employs both individuals who are in positions covered by a pension, annuity, retirement, or similar fund or system established by a State or by a political subdivision thereof and individuals who are not in such positions, the organization shall divide its employees into two separate groups. One group shall consist of all employees who are in positions covered by such a fund or system and (1) are members of such fund or system, or (ii) are not members of such fund or system but are eligible to become members thereof; and the other group shall consist of all remaining employees. An organization which has so divided its employees into two groups may file a certificate pursuant to subparagraph (A) with respect to the employees in one of the pursuant to subparagraph (A) with respect to the employees in concur in the filing of the certificate. The organization may also file such a certificate with respect to the employees in the other group if at least two-thirds of the employees in such other group concur in the filing of such certificate.

(F) An organization which filed a certificate under this subsection after 1955 but prior to the enactment of this subparagraph may file a request at any time before 1960 to have such certificate effective, with respect to the service of individuals who concurred in the filing of such certificate (initially or through the filing of a supplemental list) prior to enactment of this subparagraph and who concur in the filing of such new request, for the period beginning with the first day of any calendar quarter preceding the first calendar quarter for which it was effective and following the last calendar quarter of 1955. Such request shall be filed with such official and in such form and manner as may be prescribed by regulations made under this chapter. If a request is filed pursuant to this subparagraph-

(i) for purposes of computing interest and for purposes of section 6651 (relating to addition to tax for failure to file tax return), the due date for the return and payment of the tax for any calendar quarter resulting from the filing of such request shall be the last day of the calendar month following the calendar quarter in which the request is filed; and

(ii) the statutory period for the assessment of such tax shall not expire before the expiration of 3 years from such due date.

(G) If a certificate filed pursuant to this paragraph is effective for one or more calendar quarters prior to the quarter in which the certificate is filed, then-

(i) for purposes of computing interest and for purposes of section 6651 (relating to addition to tax for failure to file tax return), the due date for the return and payment of the tax for such prior calendar quarters resulting from the filing of such certificate shall be the last day of the calendar month following the calendar quarter in which the certificate is filed; and

(ii) the statutory period for the assessment of such tax shall not expire before the expiration of 3 years from such due date.

SEC. 5. WAIVER CERTIFICATES.

The procedures and rules stated in paragraphs (a) and (b) of section 31.3121(k)(1) of the Employment Tax Regulations, C.B. 1956-2, at page 675, are applicable in describing the organizations which may file waiver certificates and the employees who may concur in such filing, and are applicable to the execution and filing of the certificates. However, in applying such regulations, the amended law and the provisions of this Revenue Ruling should be kept in mind.

SEC. 6. EFFECTIVE DATE OF WAIVER CERTIFICATE FILED AFTER AUGUST 28, 1958.

.01 A waiver certificate filed by an organization after August 28, 1958, will become effective on whichever of the following dates the organization may designate, and such date must be specified in the waiver certificate:

(1) The first day of the calendar quarter in which the waiver certificate is filed with the District Director,

(2) The first day of the following calendar quarter, or

(3) The first day of any calendar quarter beginning after 1955 and before the quarter in which the certificate is filed, provided, however, that a waiver certificate filed after 1959 may not be made effective for a calendar quarter earlier than the fourth calendar quarter preceding the calendar quarter in which the certificate is filed. For example, a certificate filed in December 1959 may be made effective as early as January 1, 1956; but a certificate filed in January 1960 may not be made effective for a calendar quarter prior to the quarter beginning January 1, 1959.

.02 It is important that employees who are eligible to concur in the filing of a waiver certificate be informed of its proposed effective date before or at the time they are given the opportunity to sign the list of concurring employees.

SEC. 7. EMPLOYEES WHO SIGN SUPPLEMENTAL LISTS.

.01 If waiver certificate is filed after August 28, 1958 .-If an employee does not sign the original list (Form SS-15a) accompanying a waiver certificate which is filed after August 28, 1958, a supplemental list (Form SS-15a Supplement) signed by such employee may be filed with the District Director at any time prior to the expiration of the twenty-fourth month following the calendar quarter in which the certificate is filed. If the supplemental list is filed on or before the last day of the first month following the quarter in which the certificate is filed, the certificate will be effective, in the case of any employee whose signature appears on the supplemental list, with respect to services performed on and after the effective date specified in the certificate. However, if the supplemental list is filed after such first month (but within the twenty-four month period) the certificate will be effective with respect to services performed by the employee during the period beginning with the first day of the quarter in which the supplemental list is filed.

.02 If waiver certificate was filed before August 29, 1958 .-The Social Security Amendments of 1958 make no change in the law and the rules governing the filing of a supplemental list (Form SS-15a Supplement) of employees who concur in the filing of a waiver certificate which was filed before August 29, 1958. Accordingly, if an employee did not sign the original list (Form SS-15a) accompanying a waiver certificate which was filed before August 29, 1958, a supplemental list signed by such employee may be filed before January 1, 1959, or at any time thereafter which is not later than the expiration of the twenty-fourth month following the first calendar quarter for which the certificate originally was in effect. If the supplemental list is filed after the first month following such first calendar quarter, the certificate will be effective, in the case of any employee whose signature appears on the supplemental list, with respect to services performed on or after the first day of the calendar quarter following the quarter in which the supplemental list is filed. If the supplemental list is filed on or before the last day of the first month following the first calendar quarter for which the certificate originally was in effect, the certificate will be effective, in the case of any employee whose signature appears on the supplemental list, with respect to services performed on or after the first day of the first calendar quarter for which the certificate originally was in effect.

SEC. 8. RETROACTIVE COVERAGE FOR EMPLOYEES OF ORGANIZATION WHICH FILED WAIVER CERTIFICATE BEFORE AUGUST 29, 1958.

.01 Retroactive coverage may be obtained for certain employees or former employees of an organization which filed a waiver certificate after 1955 but before August 29, 1958. The coverage may be obtained if the organization files a request with the District Director at any time before 1960. The period of retroactivity may begin with the first day of any calendar quarter after 1955 and prior to the calendar quarter for which the certificate is effective.

.02 The retroactive coverage will be applicable only to those individuals who concurred in the filing of the organization's waiver certificate (initially or through the filing of a supplemental list before August 29, 1958) and who also concur in the filing of the request for retroactive coverage. Such individuals will have retroactive coverage for the period beginning on the date specified in the request, which date shall not be earlier than January 1, 1956, and ending at the close of the calendar quarter immediately preceding the quarter in which the individual's original coverage was effective.

.03 A new form, Form SS-15b, will be provided for use by the organization in filing the request and by the individuals who concur in the request.

.04 Only one request on Form SS-15b may be filed by an organization.

SEC. 9. INDIVIDUALS EMPLOYED AFTER WAIVER CERTIFICATE IS FILED.

If an individual is in the employ of an organization in the same quarter in which the certificate is filed, and does not sign the original list of concurring employees on Form SS-15a, such employee can be covered only through the filing of a supplemental list as described in section 7. However, an individual who is hired or reemployed by an organization after the calendar quarter in which the organization filed a waiver certificate is immediately covered, and it is not necessary for such employee to sign a supplemental list. See section 10, below, as to the rule applicable to employees of an organization having employees in positions covered by a retirement system of a State or of a political subdivision thereof.

SEC. 10. WAIVER CERTIFICATES FILED AFTER AUGUST 28, 1958, BY ORGANIZATIONS HAVING EMPLOYEES COVERED BY RETIREMENT SYSTEM OF STATE OR POLITICAL SUBDIVISION THEREOF.

A new rule applies to the filing of a waiver certificate after August 28, 1958, by an organization which employs both individuals who are in positions covered by a pension, annuity, retirement, or similar fund or system established by a State or by a political subdivision thereof and individuals who are not in such positions. For the purpose of filing a waiver certificate or certificates such an organization shall divide its employees into two separate groups. One group shall consist of all employees who are in positions covered by such a fund or system and (i) are members of such fund or system, or (ii) are not members of such fund or system but are eligible to become members thereof. The other group shall consist of all remaining employees. The two groups of employees may not be combined for the purpose of filing a waiver certificate. If it is desired to obtain coverage for either group of employees a waiver certificate may be filed with respect to the employees in such group provided that two-thirds of the employees in such group concur in the filing of the certificate. If it is desired to obtain social security coverage for both groups of employees two waiver certificates must be filed by the employing organization. In general, the rules governing coverage under waiver certificates are to be applied in the same manner as if each group were deemed to have a different employer. If a certificate is filed for the coverage of one group of employees, and the other group is not covered, an employee who becomes a member of the noncovered group will not be covered by the certificate filed with respect to the covered group. If a certificate is filed with respect to a group, and an employee becomes a member of that group in the same quarter in which the certificate was filed and does not sign the original list of concurring employees on Form SS-15a, such employee (even though he may have been covered under a certificate filed with respect to the other group) can be covered only through the filing of a supplemental list as described in section 7.01. However, if an employee becomes a member of a covered group after the calendar quarter in which the certificate was filed for such group, such employee will be covered by the certificate without the necessity of signing a supplemental list.

SEC. 11. DUE DATE OF RETURNS AND TAX PAYMENTS FOR QUARTERS COVERED RETROACTIVELY.

.01 If a waiver certificate filed after August 28, 1959, is effective, as provided in section 6.01(3), above, for one or more calendar quarters prior to the quarter in which the certificate is filed, then the due date for the return and payment of the employer tax and employee tax for any such prior calendar quarter resulting from the filing of such certificate is the last day of the calendar month following the calendar quarter in which the certificate is filed.

.02 If a request is filed for retroactive coverage for one or more calendar quarters, as provided in section 8, above, the due date for the return and payment of the employer tax and employee tax for any calendar quarter resulting from the filing of such request is the last day of the calendar month following the calendar quarter in which the request is filed.

SEC. 12. SECTION 403 OF THE SOCIAL SECURITY AMENDMENTS OF 1954.

.01 Section 403 of the Social Security Amendments of 1954, as amended by section 401 of the Social Security Amendments of 1956 and by Public Law 85-785, approved August 27, 1958, provides as follows:

SEC. 403. (a) IN ANY CASE IN WHICH-

(1) an individual has been employed, at any time subsequent to 1950 and prior to the enactment of the Social Security Amendments of 1956, by an organization which is described in section 501(c)(3) of the Internal Revenue Code of 1954 and which is exempt from income tax under section 501(a) of such Code but which did not have in effect, during the entire period in which the individual was so employed, a valid waiver certificate under section 1426(i)(1) of the Internal Revenue Code of 1939 or section 3121(k)(1) of the Internal Revenue Code of 1954;

(2) the service performed by such individual as an employee of such organization during the period subsequent to 1950 and prior to 1957 would have constituted employment (as defined in section 210 of the Social Security Act and section 1426(b) of the Internal Revenue Code of 1939 or section 3121(b) of the Internal Revenue Code of 1954, as the case may be, at the time such service was performed) if such organization had filed prior to the performance of such service such a certificate accompanied by a list of the signatures of employees who concurred in the filing of such certificate and such individual's signature had appeared on such list;

(3) the taxes imposed by sections 1400 and 1410 of the Internal Revenue Code of 1939 or sections 3101 and 3111 of the Internal Revenue Code of 1954, as the case may be, have been paid with respect to any part of the remuneration paid to such individual by such organization for such service performed during the period in which such organization did not have a valid waiver certificate in effect;

(4) part of such taxes have been paid prior to the enactment of the Social Security Amendments of 1956;

(5) so much of such taxes as have been paid prior to the enactment of the Social Security Amendments of 1956 have been paid by such organization in good faith and without knowledge that a valid waiver certificate had been necessary or upon the assumption that a valid waiver certificate had been filed by it under section 142(i)(1) of the Internal Revenue Code of 1939 or section 3121(k)(1) of the Internal Revenue Code of 1954, as the case may be; and

(6) no refund of such taxes has been obtained, the amount of such remuneration with respect to which such taxes have been paid shall, upon the request of such individual (filed in such form and manner, and with such official, as may be prescribed by regulations under chapter 21 of the Internal Revenue Code of 1954), be deemed to constitute remuneration for employment as defined in section 210 of the Social Security Act and section 1426(b) of the Internal Revenue Code of 1939 or section 3121(b) of the Internal Revenue Code of 1954, as the case may be.

(b) In any case in which-

(1) an individual has been employed, at any time subsequent to 1950 and prior to the enactment of the Social Security Amendments of 1956, by an organization which has filed a valid waiver certificate under section 1426(i)(1) of the Internal Revenue Code of 1939 or section 3121(k)(1) of the Internal Revenue Code of 1954:

(2) the service performed by such individual during the time he was so employed would have constituted employment (as defined in section 210 of the Social Security Act and section 1426(b) of the Internal Revenue Code of 1939 or section 3121(b) of the Internal Revenue Code of 1954, as the case may be, at the time such service was performed) if such individual's signature had appeared on the list of signatures of employees who concurred in the filing of such certificate;

(3) the taxes imposed by sections 1400 and 1410 of the Internal Revenue Code of 1939 or sections 3101 and 3111 of the Internal Revenue Code of 1954, as the case may be, have been paid prior to the enactment of the Social Security Amendments of 1956 with respect to any part of the remuneration paid to such individual by such organization for such service; and

(4) no refund of such taxes has been obtained, the amount of such remuneration with respect to which such taxes have been paid shall, upon the request of such individual (filed on or before January 1, 1959, and in such form and manner, and with such official, as may be prescribed by regulations made under chapter 21 of the Internal Revenue Code of 1954), be deemed to constitute remuneration for employment as defined in section 210 of the Social Security Act and section 1426(b) of the Internal Revenue Code of 1939 or section 3121(b) of the Internal Revenue Code of 1954, as the case may be, and such individual shall be deemed to have concurred in the filing of the waiver certificate filed by such organization under section 1426(i)(1) of the Internal Revenue Code of 1939 or section 3121(k)(1) of the Internal Revenue Code of 1954.

.02 The date of enactment of the Social Security Amendments of 1956, referred to above, was August 1, 1956.

SEC. 13. RULES AND PROCEDURES FOR FILING REQUESTS UNDER SECTION 403 OF SOCIAL SECURITY AMENDMENTS OF 1954, AS AMENDED.

.01 In general .-The procedures and rules stated in section 408.216(c) and (d) of Regulations 128, as added by Treasury Decision 6176, C.B. 1956-1, 661, are applicable to the execution and filing of requests under section 403 of the Social Security Amendments of 1954, as amended, to the effect of the requests, and to the optional tax payments under section 403(a). However, in applying these provisions, the amendments described in subsections .02 and .03, below, should be kept in mind.

.02 Amendments made to subsection (a) of Section 403 of the Social Security Amendments of 1954 .-Pursuant to section 403(a) of the Social Security Amendments of 1954, as amended, an individual who, as an employee, performed services during all or a portion of the period after December 31, 1950, and prior to August 1, 1956, for an organization which did not have a valid waiver certificate on Form SS-15 in effect during the entire period in which such individual was so employed may, under certain circumstances, request that the remuneration received by him for services performed after 1950 and before 1957 be deemed to constitute remuneration for employment for purposes of the taxes imposed under the Federal Insurance Contributions Act and for purposes of title II of the Social Security Act. The taxes imposed by the Federal Insurance Contributions Act must have been paid before August 1, 1956, with respect to some part of the remuneration paid to such individual by the employing organization for services performed by him during the period (beginning after 1950 and ending before 1957) in which the organization did not have a valid waiver certificate in effect. So much of such taxes as were paid before August 1, 1956, must have been paid by the employing organization in good faith and without knowledge that a waiver certificate was necessary or upon the assumptions that a valid waiver certificate had been field.

.03 Amendment made to subsection (b) of Section 403 of the Social Security Amendments of 1954 .-Section 403(b) of the Social Security Amendments of 1954 was amended by section 401 of the Social Security Amendments of 1956 to provide that an individual who, as an employee, performed services during all or a portion of the period after December 31, 1950, and prior to August 1, 1956, for an organization which filed a valid waiver certificate, but who failed to sign the list of concurring employees, may request on or before January 1, 1959, that the remuneration received by him for such services be deemed to constitute remuneration for employment for purposes of the taxes imposed by the Federal Insurance Contributions Act and for purposes of title II of the Social Security Act. Section 403(b) was not further amended by the Social Security Amendments of 1958.

SEC. 14. FOR FURTHER INFORMATION.

For forms, and for information about requests, waiver certificates, tax returns, and tax payments, communicate with your District Director of Internal Revenue.