Rev. Rul. 66-240

Revenue Ruling 65-139, C.B. 1965-1, 31, holds that payments made to enrollees in work-training programs established under title 1-B of the Economic Opportunity Act of 1964, Public Law 88-452, 42 U.S.C. 2701, are compensation for services includible in the gross income of the enrollees under section 61(a) of the Internal Revenue Code of 1954 and subject to the withholding of income tax at source on wages. Immediately before the concluding paragraph, this revenue ruling contains the statement, `It is apparent that an employer-employee relationship exists between the sponsors of the work-training programs and the participants in such programs.' Inquiry has been made whether this statement was intended to limit the conclusion of the revenue ruling to the situation described. This statement, however, was not intended to be a necessary part of the factual basis for the conclusion reached in the revenue ruling. The basis for the conclusion reached in Revenue Ruling 65-139 is that enrollees receive wages for services performed, even though such services may embody some degree of training. Held , the conclusion in Revenue Ruling 65-139 is applicable irrespective of who employs a participant in a work-training program.

Revenue Ruling 65-139, C.B. 1965-1, 31, is hereby clarified.