[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: 26CFR31.3306(c)(3)-1]

[Page 169-170]
 
                       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 D_Federal Unemployment Tax Act (Chapter 23, Internal Revenue 
                              Code of 1954)
 
Sec. 31.3306(c)(3)-1  Services not in the course of employer's trade 
or business.

    (a) Services not in the course of the employer's trade or business 
performed by an employe for an employer in a calendar quarter are 
excepted from employment unless--
    (1) The cash remuneration paid for such services performed by the 
employee for the employer in the calendar quarter is $50 or more; and
    (2) Such employee is regularly employed in the calendar quarter by 
such employer to perform such services.

Unless the tests set forth in both paragraphs (a)(1) and (2) of this 
section are met, the services are excepted from employment.
    (b) The term ``services not in the course of the employer's trade or 
business'' includes services that do not promote or advance the trade or 
business of the employer. Services performed for a corporation do not 
come within the exception.
    (c) The test relating to cash remuneration of $50 or more is based 
on the remuneration earned during a calendar quarter rather than on the 
remuneration paid in a calendar quarter. However, for purposes of 
determining whether the test is met, it is also required that the 
remuneration be paid, although it is immaterial when the remuneration is 
paid. Furthermore, in determining whether $50 or more has been paid for 
services not in the course of the employer's trade or business, only 
cash remuneration for such services shall be taken into account. The 
term ``cash remuneration'' includes checks and other monetary media of 
exchange. Remuneration paid in any other medium, such as lodging, food, 
or other goods or commodities, is disregarded in determining whether the 
cash-remuneration test is met.
    (d) For purposes of this exception, an individual is deemed to be 
regularly employed by an employer during a calendar quarter only if--
    (1) Such individual performs services not in the course of the 
employer's trade or business for such employer for some portion of the 
day on at least 24 days (whether or not consecutive) during such 
calendar quarter; or
    (2) Such individual was regularly employed (as determined under 
paragraph (d)(1) of this section) by such employer in the performance of 
services not in the course of the employer's trade or business during 
the preceding calender quarter (including the last calendar quarter of 
1954).
    (e) In determining whether an employee has performed services not in 
the course of the employer's trade or business on at least 24 days 
during a calendar quarter, there shall be counted as one day--
    (1) Any day or portion thereof on which the employee actually 
performs such services; and
    (2) Any day or portion thereof on which the employee does not 
perform services of the prescribed character but with respect to which 
cash remuneration is paid or payable to the employee for such services, 
such as a day on which the employee is sick or on vacation.

An employee who on a particular day reports for work and, at the 
direction of his employer, holds himself in readiness to perform 
services not in the course of the employer's trade or business shall be 
considered to be engaged in the actual performance of such services on 
that day. For purposes of this exception, a day is a period of 24 hours 
commencing at midnight and ending at midnight.
    (f) For provisions relating to the exclusion from wages of 
remuneration paid in any medium other than cash for

[[Page 170]]

services not in the course of the employer's trade or business, see 
Sec. 31.3306(b) (7)-1.