[Code of Federal Regulations]
[Title 26, Volume 15]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR31.3121(b)(20)-1]

[Page 64-65]
 
                       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 of Contents
 
  Subpart B_Federal Insurance Contributions Act (Chapter 21, Internal 
                          Revenue Code of 1954)
 
Sec. 31.3121(b)(20)-1  Service performed on a boat engaged in catching fish.

    (a) In general. (1) Service performed on or after December 31, 1954, 
by an individual on a boat engaged in catching fish or other forms of 
aquatic animal life (hereinafter ``fish'') are excepted from employment 
if--
    (i) The individual receives a share of the boat's (or boats' for a 
fishing operation involving more than one boat) catch of fish or a share 
of the proceeds from the sale of the catch,
    (ii) The amount of the individual's share depends solely on the 
amount of the boat's (or boats' for a fishing operation involving more 
than one boat) catch of fish.
    (iii) The individual does not receive and is not entitled to 
receive, any cash remuneration, other than remuneration that is 
described in sub-division (1) of this subparagraph, and
    (iv) The crew of the boat (or of each boat from which the individual 
receives a share of the catch) normally is made up of fewer than 10 
individuals.
    (2) The requirement of paragraph (a)(1)(ii) is not satisfied if 
there exists an agreement with the boat's (or boats') owner or operator 
by which the individual's remuneration is determined partially or fully 
by a factor not dependent on the size of the catch. For example, if a 
boat is operated under a remuneration arrangement, e.g., a collective 
agreement which specifies that crew members, in addition to receiving a 
share of the catch, are entitled to an hourly wage for repairing nets, 
regardless of whether this wage is actually paid, then all the crew 
members covered by the arrangement are entitled to receive cash 
remuneration other than a share of the catch and their services are not 
excepted from employment by section 3121(b)(20).
    (3) The operating crew of a boat includes all persons on the boat 
(including the captain) who receive any form of remuneration in exchange 
for services rendered while on a boat engaged in catching fish. See 
Sec. 1.6050A-1 for reporting requirements for the operator of a boat 
engaged in catching fish with respect to individuals performing services 
described in this section.
    (4) During the same return period, service performed by a crew 
member may be excepted from employment by section 3121(b)(20) and this 
section for one voyage and not so excepted on a subsequent voyage on the 
same or on a different boat.
    (5) During the same voyage, service performed by one crew member may 
be excepted from employment by section 3121(b)(20) and this section but 
service performed by another crew member may not be so excepted.
    (b) Special rule. Services performed after December 31, 1954, and 
before October 4, 1976, on a boat by an individual engaged in catching 
fish are not excepted from employment for any voyage (for purposes of 
section 3121(b) and the corresponding regulations), even though the 
individual satisfies the requirements of paragraphs (a)(1)(i) through 
(iv) of this section, if the owner or operator of the boat engaged in 
catching fish treated the individual as an employee. For purposes of 
this subparagraph, the individual was treated as an employee if--
    (1) Form 941 was voluntarily filed by the boat operator or owner, 
regardless of whether the tax imposed by chapter 21 was withheld. For 
purposes of this subdivision, the filing of Form 941 is

[[Page 65]]

not voluntary if the filing was the result of action taken by the 
Service pursuant to section 6651(a) (relating to addition to the tax for 
failure to file tax return or to pay tax);
    (2) The boat owner or operator withheld from the individual's share 
the tax imposed by chapter 21, regardless of whether the tax was paid 
over to the Service; or
    (3) The boat owner or operator made full or partial payment of the 
tax imposed by chapter 21, unless the payment was made pursuant to 
section 7422(a) (relating to no civil actions for refund prior to filing 
claim for refund). However, for purposes of this paragraph crew members 
whose services, but for paragraphs (a)(1)(i) through (iii), would have 
been excepted from employment by section 3121(b)(20) are not required to 
pay self-employment tax on income earned in performing those services. 
See Sec. 1.1402(c)-3(g). Moreover, in such cases the employer is not 
entitled to a refund of the employer's share of any tax imposed by 
chapter 21 that was paid.

[T.D. 7716, 45 FR 57123, Aug. 27, 1980]