Rev. Rul. 70-484

The purpose of this Revenue Ruling is to update and restate, under the current statute and regulations, the position set forth in S.S.T. 250, C.B. 1938-1, 440.

The question presented is whether services performed by employees of volunteer fire departments organized under the laws of the State of Pennsylvania are excepted from "employment" under the provisions of section 3121(b)(7) of the Federal Insurance Contributions Act and section 3306(c)(7) of the Federal Unemployment Tax Act (chapters 21 and 23, respectively, subtitle C, Internal Revenue Code of 1954).

Under the laws of the State of Pennsylvania (Purdon's Pennsylvania Statutes Annotated, Title 53, section 65704) townships have the authority to purchase out of the general township fund, or contribute to the purchase of, fire engines and fire apparatus for the use of the township and to appropriate moneys to fire companies located therein for the operation and maintenance thereof, and for the purchase and maintenance of fire apparatus, and for the construction, repair, and maintenance of fire company houses, in order to secure fire protection for the inhabitants of the township.

The property and grounds belonging to volunteer fire departments are, under Title 72, section 5453.202 of the Statutes, exempt from all county, borough, town, township, road, poor, county institution district, and school taxes.

Title 53, Section 39352 of the Statutes, defines "employee" for city pension plan purposes to mean any volunteer fireman who becomes a member of the pension fund who is a driver of fire-fighting apparatus or ambulances regularly employed and paid by a volunteer fire company. For purposes of the state workmen's compensation laws members of volunteer fire companies or volunteer fire departments of the various cities, boroughs, incorporated towns, and townships are declared employees of such cities, boroughs, incorporated towns, and townships for all purposes of the Act.

Section 3121(b)(7) of the Federal Insurance Contributions Act excepts from "employment" service performed in the employ of a State, or any political subdivision thereof, or any instrumentality of any one or more of the foregoing which is wholly owned thereby, with exceptions not here material. Section 3306(c)(7) of the Federal Unemployment Tax Act contains a similar provision.

In the instant case the volunteer fire departments were created pursuant to State Statute; its members are employees of the political subdivisions creating them for purposes of the State workmen's compensation laws; and drivers regularly employed by the fire department are employees for purposes of city pension plans.

Accordingly, it is held that services performed by employees of volunteer fire departments created under the laws of the State of Pennsylvania are services "performed in the employ of a State, or any political subdivision thereof, or any instrumentality of any one or more of the foregoing which is wholly owned thereby" within the meaning of sections 3121(b)(7) and 3306(c)(7) of the Federal Insurance Contributions Act and the Federal Unemployment Tax Act respectively. Remuneration for such services is not subject to the taxes imposed by the Acts cited. However, under section 3402(a), chapter 24, subtitle C of the Code, the volunteer fire departments are responsible for withholding income tax from wages paid its employees.

When social security coverage is desired for employees whose services are excepted, as here, from "employment" by section 3121(b)(7) of the Federal Insurance Contributions Act, the coverage may be obtained only pursuant to an agreement between the State and the Secretary of Health, Education, and Welfare entered into under section 218 of the Social Security Act, as amended.

S.S.T. 250 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.