[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(c)-1]

[Page 65-66]
 
                       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(c)-1  Included and excluded services.

    (a) If a portion of the services performed by an employee for an 
employer during a pay period constitutes employment, and the remainder 
does not constitute employment, all the services performed by the 
employee for the employer during the period shall for purposes of the 
taxes be treated alike, that is, either all as included or all as 
excluded. The time during which the employee performs services which 
under section 3121(b) constitute employment, and the time during which 
he performs services which under such section do not constitute 
employment, within the pay period, determine whether all the services 
during the pay period shall be deemed to be included or excluded.
    (b) If one-half or more of the employee's time in the employ of a 
particular person in a pay period is spent in performing services which 
constitute employment, then all the services of that employee for that 
person in that pay period shall be deemed to be employment.
    (c) If less than one-half of the employee's time in the employ of a 
particular person in a pay period is spent in performing services which 
constitute employment, then none of the services of that employee for 
that person in that pay period shall be deemed to be employment.
    (d) The application of the provisions of paragraphs (a), (b), and 
(c) of this section may be illustrated by the following example:

    Example. The AB Club, which is a local college club within the 
meaning of section 3121(b)(2), employs D, a student who is enrolled and 
is regularly attending classes at a university, to perform domestic 
service for the club and to keep the club's books. The domestic services 
performed by D for the AB Club do not constitute employment, and his 
services as the club's bookkeeper constitute employment. D receives a 
payment at the end of each month for all services which he performs for 
the club. During a particular month D spends 60 hours in performing 
domestic service for the club and 40 hours as the club's bookkeeper. 
None of D's services during the month are deemed to be employment, since 
less than one-half of his services during the month constitutes 
employment. During another month D spends 35 hours in the performance of 
domestic services and 60 hours in keeping the club's books. All of D's 
services during the month are deemed to be employment, since one-half or 
more of his services during the month constitutes employment.

    (e) For purposes of this section, a ``pay period'' is the period (of 
not more than 31 consecutive calendar days) for which a payment of 
remuneration is ordinarily made to the employee by the employer. Thus, 
if the periods for which payments of remuneration are made to the 
employee by the employer are of uniform duration, each such period 
constitutes a ``pay period''. If, however, the periods occasionally vary 
in duration, the ``pay period'' is the period for which a payment of 
remuneration is ordinarily made to the employee by the employer, even 
though that period does not coincide with the actual period for which a 
particular payment of remuneration is made. For example, if an employer 
ordinarily pays a particular employee for each calendar week at the end 
of the week, but the employee receives a payment in the middle of the 
week for the portion of the week already elapsed and

[[Page 66]]

receives the remainder at the end of the week, the ``pay period'' is 
still the calendar week; or if, instead, that employee is sent on a trip 
by such employer and receives at the end of the third week a single 
remuneration payment for three weeks' services, the ``pay period'' is 
still the calendar week.
    (f) If there is only one period (and such period does not exceed 31 
consecutive calendar days) for which a payment of remuneration is made 
to the employee by the employer, such period is deemed to be a ``pay 
period'' for purposes of this section.
    (g) The rules set forth in this section do not apply (1) with 
respect to any services performed by the employee for the employer if 
the periods for which such employer makes payments of remuneration to 
the employee vary to the extent that there is no period ``for which a 
payment of remuneration is ordinarily made to the employee'', or (2) 
with respect to any services performed by the employee for the employer 
if the period for which a payment of remuneration is ordinarily made to 
the employee by such employer exceeds 31 consecutive calendar days, or 
(3) with respect to any service performed by the employee for the 
employer during a pay period if any of such service is excepted by 
section 3121(b)(9) (see Sec. 31.3121(b)(9)-1).
    (h) If during any period for which a person makes a payment of 
remuneration to an employee only a portion of the employee's services 
constitutes employment, but the rules prescribed in this section are not 
applicable, the taxes attach with respect to such services as constitute 
employment as defined in section 3121(b).

[T.D. 6516, 25 FR 13032, Dec. 20, 1960, as amended by T.D. 6744, 29 FR 
8313, July 2, 1964]