[Code of Federal Regulations]
[Title 26, Volume 15]
[Revised as of January 1, 2007]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR31.3121(b)(4)-1]

[Page 41-42]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 31_EMPLOYMENT TAXES AND COLLECTION OF INCOME TAX AT SOURCE--Table 
 
  Subpart B_Federal Insurance Contributions Act (Chapter 21, Internal 
                          Revenue Code of 1954)
 
Sec.  31.3121(b)(4)-1  Services performed on or in connection with a

non-American vessel or aircraft.

    (a) Services performed within the United States by an employee for 
an employer ``on or in connection with'' a vessel not an American 
vessel, or ``on or in connection with'' an aircraft not an American 
aircraft, are excepted from employment if--
    (1) The employee is employed by such employer ``on and in connection 
with'' such vessel or aircraft when outside the United States, and
    (2) (i) The employee is not a citizen of the United States, or (ii) 
the employer is not an American employer.
    (b) An employee performs services on and in connection with the 
vessel or aircraft if he performs services on the vessel or aircraft 
when outside the United States which are also in connection with the 
vessel or aircraft. Services performed on the vessel outside the United 
States by employees as officers or members of the crew, or by employees 
of concessionaires, of the vessel, for example, are performed under such 
circumstances, since such services are also connected with the vessel. 
Similarly, services performed on the aircraft outside the United States 
by employees as officers or members of the crew of the aircraft are 
performed on and in connection with such aircraft. Services may be 
performed on the vessel or aircraft, however, which have no connection 
with it, as in the case of services performed by an employee while on 
the vessel or aircraft merely as a passenger in the general sense. For 
example, the services of a buyer in the employ of a department store 
while he is a passenger on a vessel are not in connection with the 
vessel.
    (c) The expression ``on or in connection with'' refers not only to 
services performed on the vessel or aircraft but also to services 
connected with the vessel or aircraft which are not actually performed 
on it (for example, shore

[[Page 42]]

services performed as officers or members of the crew, or as employees 
of concessionaires, of the vessel).
    (d) Services performed within the United States on or in connection 
with a non-American vessel or aircraft for an employer by an employee 
who is not a citizen of the United States are excepted from employment, 
irrespective of whether the employer is or is not an American employer, 
provided the employee also is employed by such employer on and in 
connection with the vessel or aircraft when outside the United States. 
Services performed within the United States on or in connection with a 
non-American vessel or aircraft by an employee for an employer who is 
not an American employer also are excepted from employment, irrespective 
of whether the employee is or is not a citizen of the United States, 
provided the employee also is employed by such employer on and in 
connection with the vessel or aircraft when outside the United States. 
Services performed within the United States on or in connection with a 
non-American vessel or aircraft for an American employer by an employee 
who is a citizen of the United States are not excepted from employment 
under section 3121(b)(4), irrespective of whether the employee is 
employed by such employer on and in connection with the vessel or 
aircraft when outside the United States. Further, section 3121(b)(4) 
does not except from employment services performed within the United 
States for an employer, whether or not an American employer, on or in 
connection with a non-American vessel or aircraft by an employee, 
whether or not a citizen of the United States, who is not also employed 
by such employer on and in connection with the vessel or aircraft when 
outside the United States.
    (e) Services performed outside the United States on or in connection 
with a vessel not an American vessel, or on or in connection with an 
aircraft not an American aircraft, by a citizen of the United States as 
an employee for an American employer are not excepted from employment 
under section 3121(b)(4), irrespective of whether the employee is 
employed on and in connection with such vessel or aircraft when outside 
the United States. Services performed outside the United States on or in 
connection with a vessel not an American vessel or on or in connection 
with an aircraft not an American aircraft, either by an employee who is 
not a citizen of the United States or for an employer who is not an 
American employer, do not, in any event, constitute employment. See 
paragraph (c) of Sec.  31.3121(b)-3, relating to services performed 
outside the United States which constitute employment.
    (f) See paragraph (c)(2)(v) of Sec.  31.3121(b)-3 for definitions of 
``vessel'' and ``aircraft'', Sec.  31.3121(f)-1, for definitions of 
``American vessel'' and ``American aircraft'', Sec.  31.3121(e)-1, for 
definition of ``citizen of the United States'', and Sec.  31.3121(h)-1, 
for definition of ``American employer''.