Rev. Rul. 56-615

Advice has been requested by an individual as to his status for self-employment tax purposes with respect to the performance of services, over a period of several years, as a foreign language teacher and tutor for a Federal agency under a contract. The agency has determined, pursuant to the provisions of section 3122 of the Federal Insurance Contributions Act (chapter 21, subtitle C, Internal Revenue Code of 1954), that the relationship of employer and employee does not exist between it and the individual for purposes of the taxes imposed under that Act.

The taxes imposed by the Federal Insurance Contributions Act attach to `wages' paid for `employment' as those terms are defined in section 3121 of that Act. Section 3122 of the Act provides, with respect to services performed in the employ of the United States or a whollyowned instrumentality thereof, that the determination whether an individual has performed services which constitute `employment' and the determination of the amount of the remuneration for such services which constitute `wages,' as defined in section 3121, supra , shall be Made by the head of the Federal agency or instrumentality having control of such services or by such agents as he may designate.

Inasmuch as section 3122, supra , imposes upon the Federal agency having control of the services the responsibility for making determinations of the Federal Insurance Contributions Act, its determinations under such section are final an conclusive with respect to liability for the taxes imposed under that Act. Therefore, since the Federal agency has determined that the relationship of employer and employee does not exist between it and the individual engaged as a teacher and tutor in the instant case, the taxes imposed by the Federal Insurance Comtributions Act are not applicable to the remuneration paid to him for services performed for the agency.

Since the Federal agency has determined that the individual is not an employee for purposes of the Federal Insurance Contributions Act taxes, the responsibility for determining his status for self-employment tax purposes devolves upon the Internal Revenue Service. It is the conclusion of the Service that the performance of the service under the circumstances presented constitutes the carrying on of a `trade or business,' within the meaning of section 1402(c) of the Self-Employment Contributions Act of 1954 chapter 2, subtitle A, Internal Revenue Code of 1954 . Accordingly, the amounts received by him for the services here involved are includible in computing his net earnings from self-employment under such Act.