Rev. Rul. 74-109

Advice has been requested whether, under the circumstances described below, services performed by graduate students and research assistants who work for a university during the summer vacation months are excepted from "employment" under section 3121(b)(10) of the Federal Insurance Contributions Act (chapter 21, subtitle C, Internal Revenue Code of 1954).

Certain graduate students and research assistants who work for the university use the summer months to conduct research related to Ph.D. dissertations or for independent study and research related to preliminary examinations. These students do not register for courses or attend classes but are considered by the university to research which is an integral part of be engaged full time in the study and their degree programs.

The university is exempt from Federal income tax under section 501(a) of the Code as an organization described in section 501(c)(3), and has filed with the Internal Revenue Service an effective Form SS-15, Certificate Waiving Exemption from Taxes Under the Federal Insurance Contributions Act, together with an accompanying list of employees who concur in the filing, Form SS-15a. Therefore, the services of its employees are "employment" unless otherwise excepted therefrom. See section 3121(b)(8)(B) of the Federal Insurance Contributions Act.

Section 3121(b)(10)(B) of the Act excepts from the definition of "employment" service performed in the employ of a school, college, or university if such service is performed by a student who is enrolled and is regularly attending classes at such school, college, or university. In addition, section 3121(b)(10)(A) of the Act excepts from "employment" service performed in any calendar quarter in the employ of any organization exempt from Federal income tax under section 501(a) (other than an organization described in section 401(a)) or under section 521, if the remuneration for such service is less than $50.

For their services to be excepted from "employment," it is necessary that the students be enrolled and be regularly attending classes at the university. The fact that the students are graduate students or research assistants does not prevent their services from being excepted from "employment." Rev. Rul. 72-142, 1972-1 C.B. 317, holds that services performed for a university by a student during the summer vacation, when he is not enrolled or regularly attending classes, are not excepted from "employment" if he earns $50 or more in the calendar quarters of the summer vacation.

Although, in the instant case, the students are considered by the university to be engaged full time in independent study and research during the summer, they are not enrolled and regularly attending classes during this period. Accordingly, if the remuneration earned by a student in the calendar quarters of the summer vacation period amounts to $50 or more, the services performed are not excepted from "employment" under section 3121(b)(10) of the Federal Insurance Contributions Act.