Rev. Rul. 71-116

The purpose of this ruling is to update and restate, under the current statute and regulations, the position set forth in S.S.T. 262, C.B. 1938-1, 381.

The question presented is whether the employees' tax imposed by section 3101 of the Federal Insurance Contributions Act (Chapter 21, subtitle C, Internal Revenue Code of 1954) attaches with respect to the total wages of a married employee (the husband) in a community property state.

Under the community property law of a particular state, the earnings of a husband or wife during their marriage become the community property of the husband and wife.

Section 3101 of the Act provides that in addition to other taxes, there is imposed on the income of every individual a tax equal to a specified percentage of the "wages" (as defined in section 3121(a) of the Act) received by him with respect to "employment" (as defined in section 3121(b)).

Section 3102 of the Act provides that the tax imposed by section 3101 shall be collected by the employer of the taxpayer, by deducting the amount of the tax from the wages as and when paid. Section 31.3101-1 of the Employment Tax Regulations provides that the employee tax is measured by the amount of wages received after 1954 with respect to the employment after 1936.

In a community property state the portion of the income to which the wife is entitled as her own is not received by her as the result of her "employment" but as the result of the community property laws. The remuneration for "employment" received by the husband is the "wages" of the husband.

Accordingly, it is held that the employees' tax imposed by the Federal Insurance Contributions Act attaches with respect to the total wages of a married employee irrespective of the fact that such wages are community property of the husband and wife.

S.S.T. 262 is superseded, since the position set forth therein is restated under current law in this Revenue Ruling.

¹ Prepared pursuant to Rev. Proc. 67-6, C.B. 1967-1, 576.