tons are not within the exeception. For purposes of the exception, the tonnage of the vessel shall be determined in the manner provided for determining the register tonnage of merchant vessels under the laws of the United States. [32 FR 7768, May 25, 1967]

§ 404.1024 Delivery and distribution of newspapers, shopping news, and magazines.

(a) Services of individuals under age 18. Services performed by an employee under the age of 18 in the delivery or distribution of newspapers or shopping news, not including delivery or distribution (as, for example, by a regional distributor) to any point for subsequent delivery or distribution, are excepted from employment. Thus, the services performed by an employee under the age of 18 in making house-to-house delivery or sale of newspapers or shopping news, including handbills and other similar types of advertising material, are excepted from employment. The services are excepted irrespective of the form or method of compensation. Incidental services by the employee who makes the house-to-house delivery, such as services in assembling newspapers, are considered to be within the exception. The exception continues only during the time that the employee is under the age of 18.

(b) Service of individuals of any age. Services performed by an employee in, and at the time of, the sale of newspapers or magazines to ultimate consumers under and arrangement under which the newspapers or magazines are to be sold by him at a fixed price, his compensation being based on the retention of the excess of such price over the amount at which the newspapers or magazines are charged to him, are excepted from employment. The services are excepted whether or not the employee is guaranteed a minimum amount of compensation for such services, or is entitled to be credited with the unsold newspapers or magazines turned back. Moreover, the services are excepted without regard to the age of the employee. Services performed other than at the time of sale to the ultimate consumer are not within the exception. Thus, the services of a regional distributor which are antecedent to but not immediately part of the sale to the ultimate consumer are not within the exception. However, incidental services by the employee who makes the sale to the ultimate consumer, such as services

in assembling newspapers or in taking newspapers or magazines to the place of sale, are considered to be within the exception.

[32 FR 7768, May 27, 1967] § 404.1024a

Service performed in Guam by a resident of the Philippines. Service performed after 1960 by a resident of the Republic of the Philippines while in Guam on a temporary basis as a nonimmigrant alien admitted pursuant to section 101 (a) (15) (h) (ii) of the Immigration and Nationality Act is excepted from employment, irrespective of the nature of his service or by whom he is employed.

132 F.R. 7768, May 27, 1967]

§ 404.1025 International organizations.

(a) Services performed by an employee in the employ of an organization of the class specified in section 210(a) (15) of the Act as amended (sec. 210(a) (17) of the Act in effect prior to 1955) are excepted. (However, see paragraph (b) of this section relating to service for such an organization performed by a citizen of the United States.) For an organization to be within the statutory classification the following conditions must be met:

(1) It must be a public international organization in which the United States participates pursuant to treaty or authority of an act of Congress authorizing. or making an appropriation for, such participation;

(2) It must have been designated by executive order to be entitled to enjoy the privileges, exceptions, and immunities provided in the International Organizations Immunities Act;

(3) The designation must be in effect, and all conditions and limitations thereof must be met.

Such services will not be excepted if any of the foregoing conditions are not met, nor will they be excepted if such designation is withheld, or after such designation is withdrawn, by executive order from the employing organization.

(b) Effective with taxable years ending on or after December 31, 1960, servIce performed in the United States by a citizen of the United States in the employ of an international organization, which service is excepted from employment under the provisions of paragraph (a) of this section, is treated as engagement in a trade or business under the provisions

of section 211 of the Act (see § 404.1070 (d) (4)).

132 F.R. 7768, May 27, 1967]

§ 404.1025a Communist organizations.

Service in the employ of any organization which is registered, or which is required to register under the Internal Security Act of 1950 as amended by a inal order of the Subversive Activities Control Board, as a communist-action, communist-front, or communist-infiltrated organization, is excepted from employment if performed after June 30, 1956, and in a calendar quarter during any part of which the organization is so registered or the final order is in effect. 132 F.R. 7768, May 27, 1967] § 404.1025b

Nonresident aliens.

(a) In general. Service performed after December 31, 1961, by a nonresident alien, while he is temporarily in the United States as a nonimmigrant under subparagraph (F) (dealing with certain types of allen students, and their allen spouses and minor children) or (J) (dealing with certain types of participants in programs designated by the Secretary of State and their alien spouses and minor children) of section 101(a) (15) of the Immigration and Nationality Act as amended, is excepted from employment if it is performed to carry out a purpose for which the alien was admitted. For the purposes of this section, any alien temporarily in the United States as a nonimmigrant under either of such subparagraphs is deemed to be a nonresident alien; and any alien admitted to the United States as an exchange visitor under section 201 of the U.S. Information and Educational Exchange Act of 1948 is deemed to be a nonresident alien temporarily in the United States as a nonimmigrant under such subparagraph (J).

(b) Spouses and children. Service performed by a nonresident alien's alien spouse or minor child, who is also temporarily present in the United States as a nonimmigrant under subparagraph (F) or (J) of section 101(a) (15) of the Immigration and Nationality Act as amended, is not excepted from employment by this section unless such spouse or child was himself (or herself) admitted for a purpose specified in such subparagraph (F) or (J) and the service is performed to carry out such purpose. 132 F.R. 7768, May 27, 1967]

§ 404.1026 Wages.

(a) General. (1) Whether remuneration paid after 1950 for employment performed after 1936 constitutes wages is determined under section 209 of the Act. This section and § 404.1027 (relating to the statutory exclusions from wages) apply with respect only to remuneration paid after 1950 for employment performed after 1936. Whether remuneration paid after 1936 and prior to 1940 for employment performed after 1936 constitutes wages shall be determined in accordance with the applicable provisions of law and Regulations No. 2 (20 CFR, 1938 ed., Part 402). Whether remuneration paid after 1939 and prior to 1951 for employment performed after 1936 constitutes wages shall be determined in accordance with the applicable provisions of law and Part 403 of this chapter (Regulations No. 3).

(2) The term "wages" means all remuneration for employment unless specifically excepted under section 209 of the Act (see § 404.1027).

(3) The name by which the remuneration for employment is designated is immaterial. Thus, salaries, fees, bonuses, and commissions on sales or on insurance premiums are wages within the meaning of the Act if paid as compensation for employment.

(4) Generally, the basis upon which the remuneration is paid is immaterial in determining whether the remuneration constitutes wages. Thus, it may be paid on the basis of piecework or a percentage of profits; and it may be paid hourly, daily, weekly, monthly, or annually. See, however, § 404.1027(m) (3) relating to the treatment of cash remuneration computed on a time basis for agricultural labor.

(5) Generally, the medium in which the remuneration is paid is also immaterial. It may be paid in cash or in something other than cash, as for example, goods, lodging, food, or clothing. Remuneration paid in items other than cash is computed on the basis of the fair value of such items at the time of payment. See, however, § 404.1027(1) relating to the treatment of remuneration paid in any medium other than cash for services not in the course of the employer's trade or business, for domestic service in a private home of the employer, or for agricultural labor, § 404.1027 (o) for services described in section 209(j) of the Act (relating to home workers), and

§ 404.1027 (p) relating to tips paid in a medium other than cash.

(6) Ordinarily, facilities or privileges (such as entertainment, medical services, or so-called "courtesy" discounts on purchases), furnished or offered by an employer to his employees generally are not considered as remuneration for employment if such facilities or privileges are of relatively small value and are offered or furnished by the employer merely as a means of promoting the health, good will, contentment, or efficiency of his employees. The term "facilities or privileges," however, does not ordinarily include the value of meals or lodging furnished to employees. The value of these items is wages where:

(i) It is agreed as part of the contract of employment that the employer is to furnish to the employee daily meals or regular lodging or both; or

(ii) The value of such items forms an appreciable part of the total remuneration. For example, the value of meals or lodging furnished to hospital, restaurant, or hotel employees or to seamen or other employees aboard vessels, would generally be wages because either one or both of these conditions are met.

(7) Amounts of so-called "vacation allowances" paid to an employee constitute wages. Thus, the salary of an employee on vacation, paid notwithstanding his absence from work, constitutes wages.

(8) Amounts paid specifically-either as advances or reimbursements-for traveling or other bona fide ordinary and necessary expenses incurred or reasonably expected to be incurred in the business of the employer are not wages. Traveling and other reimbursed expenses must be identified either by making a separate payment or by specifically indicating the separate amounts where both wages and expense allowances are combined in a single payment.

(9) Remuneration for employment, unless such remuneration is specifically excepted under section 209 of the Act, constitutes wages even though at the time paid the relationship of employer and employee no longer exists between the person in whose employ the services werc performed and the individual who performed them.

Example: A is employed by B during January 1966, in employment and is entitled to receive remuneration of $100 for the services performed for B during the month. A leaves the employ of B on January 31, 1966. On February 15, 1966 (when A is no longer

an employee of B), B pays A the remuneration of $100 which was earned for the services performed in January. The $100 is wages within the meaning of the Act.

(b) When paid and received. (1) In general, wages are received by an employee at the time they are paid by the employer to the employee. Wages are paid by an employer at the time that they are actually or constructively paid unless under subparagraph (3) of this paragraph they are deemed to be subsequently paid. For provisions relating to the time when tips received by an employee are deemed paid to the employee. see paragraph (d) of this section.

(2) Wages are constructively paid when they are credited to the account of or set apart for an employee so that they may be drawn upon by him at any time although not then actually reduced to possession. To constitute payment in such a case (1) the wages must be credited to or set apart for the employee without any substantial limitation or restriction as to the time or manner of payment or condition upon which payment is to be made, and must be made available to him so that they may be drawn upon at any time, and their payment brought within his own control and disposition, or (ii) there is an intention by the employer to pay or to set apart or credit, and ability to pay wages when due, and failure of the employer to credit or set apart the wages is due to clerical error or inadvertence in the mechanics of payment, and because of such clerical error or inadvertence the wages are not actually available at that time. However, where the employee has authority to withhold wages from himself in the interest of the employer, his failure to reduce any of his wages to his possession shall be deemed to be in the interest of his employer and to establish the employer's intent not to pay such wages, unless there is a clear showing that such withholding was exclusively in the employee's interest. As to the time tips are deemed paid, see § 404.1026(d). For provisions relating to the treatment of deductions from remuneration as payments of remuneration, see paragraph (c) of this section.

(3) (1) The first $50 of cash remuneration paid, either actually or constructively, by an employer to an employee in a calendar quarter for:

(a) Service not in the course of the employer's trade or business and domes

tic service in a private home the employer; or

(b) Service performed by certain home workers;

Is deemed paid by the employer to the employee at the first moment of time in such calendar quarter that the sum of such cash payments made within such quarter is at least $50.

(1) (a) The first $100 of cash remuneration paid, either actually or constructively, by an employer to an employee in the calendar year 1955 or 1956 for agricultural labor to which § 404.1027 (m) is applicable is deemed paid by the employer to the employee at the first moment of time in such calendar year that the sum of such cash payments made within such year is at least $100.

(b) Cash remuneration paid, either actually or constructively, by an employer to an employee in a calendar year after 1956 for agricultural labor to which § 404.1027 (m) is applicable, and before either of the events described in (1) or (2) of this subdivision has occurred, is deemed paid upon the occurrence of the earlier of such events, as follows:

(1) The first moment of time in such calendar year that the sum of the payments of such remuneration is at least $150; or

(2) The twentieth day in such calendar year on which the employee has performed such agricultural labor for the employer for cash remuneration computed on a time basis.

(iii) If an employer pays cash remuneration to an employee for two or more of the types of services referred to in this subparagraph, the provisions of this subparagraph are to be applied separately to the amount of remuneration attributable to each type of service.

(c) Deductions by an employer from wages of an employee. The amount of any tax which is required by section 1400 of the Internal Revenue Code of 1939 or section 3101 of the Internal Revenue Code of 1954 to be deducted by the employer from the wages of an employee is considered to be a part of the employee's wages, and is deemed to be paid to the employee as wages at the time that the deduction is made. Other amounts deducted from wages of an employee by an employer also constitute wages paid to the employee at the time of the deduction. It is immaterial that any act of Congress, or the law of any State requires or permits such deductions and

the payment thereof to the United States, a State, or any political subdivision thereof.

(d) Tips. (1) In general: Except as otherwise provided in $ 404.1027 (p) tips received after 1965 by an employee in the course of his employment are remuneration for employment. (For definition of the term "employee" see § 404.1004.) Tips reported by an employee to his employer in a written statement furnished to the employer pursuant to section 6053(a) of the Internal Revenue Code of 1954 are deemed to be paid to the employee at the time the written statement is furnished to the employer. Tips received by an employee which are not reported to his employer in a written statement furnished pursuant to such section 6053 (a) are deemed to be paid to the employee at the time the tips are actually received by the employee.

(2) Tips received by employee in course of his employment: Tips are considered to be received by an employee in the course of his employment for an employer regardless of whether the tips are received by the employee from a person other than his employer or are paid to the employee by the employer. However, only those tips which are received by an employee on his own behalf (as distinguished from tips received on behalf of another employee) are considered as remuneration paid to the employee. Thus, where employees practice tip splitting (for example, where waiters pay a portion of the tips received by them to the busboys), each employee who receives a portion of a tip left by a customer of the employer is considered to have received tips in the course of his employment.

(3) See § 404.1027(t) (3) for discussion of tips or gratuities received before 1966.

(e) Remuneration for service performed by certain members of religious orders. In any case where an individual is a member of a religious order as defined in 404.1015a (b) and performing service in the exercise of duties required by such order, and an election of coverage under section 3121 (r) of the Internal Revenue Code of 1954 is in effect with respect to such order or the autonomous subdivision thereof to which such member belongs, the term "wages" shall, subject to the provisions of section 3121(a)(1) of the Internal Revenue Code of 1954 (relating to definition of wages), include as such individual's re

muneration for such service the fair market value of any board, lodging, clothing, and other perquisites furnished to such member by such order or subdivision or by any other person or organization pursuant to an agreement (whether written or oral) with such order or subdivision. Such other perquisites shall include any cash either paid by such order or subdivision or paid by another employer and not required by such order or subdivision to be remitted to it. For purposes of this section, perquisites shall be considered to be furnished over the period during which the member receives the benefit of them. In no case shall the amount included as such individual's remuneration under this paragraph be less than $100 a month. All relevant facts and elements of value shall be considered in every case. Where the fair market value of any board, locging, clothing, and other perquisites furnished to all members of an electing religious order or autonomous subdivision (or to all in a group of members) does not vary significantly, such order or subdivision may treat all of its members (or all in such group of members) as having a uniform wage.

132 FR. 11076, July 27, 1967, as amended at 34 FR 19971, Dec. 20, 1969; 40 FR 23288, May 29, 1975]

§ 404.1027 Exclusions from wages.

(a) Annual wage limitation. (1) The term "wages" does not include that part of the remuneration paid by an employer to an employee within any calendar year:

(i) After 1950 and prior to 1955 which exceeds the first $3.600 of remuneration;

(ii) After 1954 and prior to 1959 which exceeds the first $4,200 of remuneration;

(iii) After 1958 and prior to 1966 which exceeds the first $4,800 of remuneration;

(iv) After 1965 and prior to 1968 which exceeds the first $6,600 of remuneration; (v) After 1967 and prior to 1972 which exceeds the first $7,800 of remuneration;

(vi) After 1971 and prior to 1973 which exceeds the first $9,000 of remuneration;

(vii) After 1972 and prior to 1974 which exceeds the first $10,800 of remuneration;

(vill) After 1973 and prior to 1975 which exceeds the first $13,200 of remuneration; or

(ix) After 1974 which exceeds an amount equal to the contribution and benefit base as determined under section

230 of the Act which is effective for such calendar year;

(exclusive of remuneration excepted from wages in accordance with paragraphs (b) through (u) of this section) paid within the calendar year by an employer to the employee for employment performed by him at any time after 1936.

(2) The annual wage limitation applies only if the remuneration received during any 1 calendar year by an employee for employment performed after 1936 exceeds such limitation. The limitation in such case relates to the amount of remuneration received during any 1 calendar year for employment after 1936 and not to the amount of remuneration for employment performed in any 1 calendar year.

Example. Employee A, in 1967, receives $7.000 from employer B in part payment of $8.000 due him from employment performed in 1967. In 1968 A receives from employer B the balance of $1,000 due him for employment performed in 1967, and thereafter in 1968 also receives $7,000 for employment performed in 1968 for employer B. The first $6,600 of the $7,000 received during 1967 is wages in 1967. The $1,000 received in 1968 for employment during 1967 is wages in 1968, as is also the first $6,800 paid of the $7,000 for employment during 1968 (the $1,000 for 1967 employment added to the first $6,800 paid for 1968 employment constitutes the maximum remuneration which could be creditable as wages to A in 1968). The final $200 received by A from B in 1968 is not included as wages.

(b) Payments under employer's plans or systems. (1) The term "wages" does not include the amount of any payment (including any amount paid by an employer for insurance or annuities, or into a fund, to provide for any such payment) made to, or on behalf of, an employee or any of his dependents under a plan or system established by an employer which makes provision for his employees generally (or for his employees generally and their dependents) or for a class or classes of his employees (or for a class or classes of his employees and their dependents):

(i) On account of an employee's retirement: sickness or accident disability of an employee or any of his dependents; medical or hospitalization expenses in connection with sickness or accident disability of an employee or any of his dependents; or death of an employee or any of his dependents; or