[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)(7)-1]

[Page 45-46]
 
                       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)(7)-1  Services in employ of States or their political

subdivisions or instrumentalities.

    (a) In general. Except as provided in other paragraphs of this 
section, services performed in the employ of any State, any political 
subdivision of a State, or any instrumentality of one or more States or 
political subdivisions thereof which is wholly owned by one or more 
States or political subdivisions are excepted from employment. For the 
definition of the term ``State'', as used in this section, see Sec.  
31.3121(e)-1.
    (b) Covered transportation service. The exception from employment 
under section 3121(b)(7) does not apply to covered transportation 
service as defined in section 3121(j). See that section and 31.3121(j)-
1.
    (c) Government of American Samoa. The exception from employment 
under section 3121(b)(7) does not apply to services performed after 1960 
in the employ of the Government of American Samoa, any political 
subdivision thereof, or any instrumentality of such Government or 
political subdivision, or combination thereof, which is wholly owned 
thereby, performed by an officer or employee thereof (including a member 
of the legislature of such Government or political subdivision).
    (d) District of Columbia. The exception from employment under 
section 3121(b)(7) does not apply to services performed after September 
30, 1965, in the employ of the District of Columbia or any 
instrumentality which is wholly owned thereby, if such service is not 
covered by a retirement system established by a law of the United 
States. Notwithstanding the preceding sentence the following classes of 
services performed either in the employ of the District of Columbia or 
in the employ of any instrumentality which is wholly owned thereby are 
excepted from employment:
    (1) Services performed in a hospital or penal institution by a 
patient or inmate thereof.
    (2) Services performed by student nurses, student dietitians, 
student physical therapists, or student occupational therapists assigned 
or attached to a hospital, clinic, or medical or dental laboratory 
operated by the District of Columbia or by any wholly owned 
instrumentality thereof, or by certain other student employees described 
in section 5351(2) of title 5, United States Code. This subparagraph 
does not apply to services performed by medical or dental interns or by 
medical or dental residents in training described in such section 
5351(2).
    (3) Services performed by an individual as an employee serving on a 
temporary basis in case of fire, storm, snow, earthquake, flood, or 
other similar emergency.
    (4) Services performed by a member of a board, committee, or council 
of the District of Columbia, paid on a per diem, meeting, or other fee 
basis.
    (e) Government of Guam. The exception from employment under section 
3121(b)(7) does not apply to services performed after 1972 in the employ 
of

[[Page 46]]

the Government of Guam or any instrumentality which is wholly owned 
thereby, by an employee properly classified as a temporary or 
intermittent employee, if such service is not covered by a retirement 
system established by a law of Guam. The preceding sentence shall not 
apply to the services performed by an elected official or a member of 
the legislature or in a hospital or penal institution by a patient or 
inmate thereof. For purposes of this paragraph--
    (1) Any person whose services as an officer or employee of such 
Government or instrumentality is not covered by a retirement system 
established by a law of the United States shall not, with respect to 
such service, be regarded as an employee of the United States or any 
agency or instrumentality thereof, and
    (2) The remuneration for service described in subparagraph (1) 
(including fees paid to a public official) shall be deemed to have been 
paid by such Government or instrumentality.

[T.D. 6744, 29 FR 8312, July 2, 1964, as amended by T.D. 6983, 33 FR 
18016, Dec. 4, 1968; T.D. 7373, 40 FR 30958, July 24, 1975]