rr-00-6.pdf

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Part I
Section 6041.--Information at Source.
(Also §§ 3121, 3401, 6051)
26 CFR 1.6041-2: Return of information as to payments to employees.
(Also § 1.6041-1)
Rev. Rul. 2000-6
ISSUE
How do the information reporting requirements of §§ 6041(a) and 6051(a) of the
Internal Revenue Code apply to election workers?
FACTS
Election workers are individuals who are generally employed to perform services
for state and local governments (governments) at election booths in connection with
national, state, or local elections. Governments typically pay election workers a set fee
for each day of work. Election workers’ wages are includible in gross income as
compensation for services. Section 61(a)(1). An individual employed as an election
worker may also perform services for the government in another capacity.
A state and the Social Security Administration may agree to extend social
security coverage to services of employees of the state or its political subdivisions
under § 218 of the Social Security Act (§ 218 agreement). A § 218 agreement may
cover the services of election workers. If so, the § 218 agreement may specify the level
of fees the election workers must receive to be entitled to coverage. Information about
a state’s § 218 agreement can be obtained from the State Social Security
Administrator.
Situation 1: Government A
pays V $200 in a calendar year for services as an
election worker. A does not employ V in any other capacity. The services of A’s
election workers are not covered by a § 218 agreement. V
is not covered by a
retirement plan maintained by A.

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Situation 2: Government B
pays W $200 in a calendar year for services as an
election worker. B does not employ W in any other capacity. The services of B’s
election workers are covered by a § 218 agreement if their remuneration is $100 or
more in a calendar year. W
is not covered by a retirement plan maintained by B.
Situation 3: Government C pays X $1,100 in calendar year 2000 for services as
an election worker. C does not employ X in any other capacity. The services of C’s
election workers are not covered by a § 218 agreement. X is not covered by a
retirement plan maintained by C
.
Situation 4: Government D
pays Y $200 in a calendar year for services as an
election worker. D
also employed Y in another capacity, in which Y earned wages of
$300 that are subject to income tax withholding. The services of D
’s election workers
are not covered by a § 218 agreement. Y
is not covered by a retirement plan
maintained by D.
Situation 5: Government E pays Z $200 in a calendar year for services as an
election worker. E
also employed Z in another capacity, in which Z earned wages of
$500 that are subject to income tax withholding. The services of E
’s election workers
are not covered by a § 218 agreement. Z
is not covered by a retirement plan
maintained by E.
LAW
Taxes under the Federal Insurance Contribution Act (FICA) apply to “wages” as
defined in § 3121(a). That section provides that the term wages includes only
remuneration for “employment.” Section 3121(b)(7)(F)(iv) provides that the services of
an election worker are not employment for FICA purposes if the worker’s remuneration
is less than $1,000. For calendar years beginning on or after January 1, 2000, the
amount is indexed for inflation. The applicable amount for the year 2000 is $1,100.
Because service performed by an election worker for calendar year 2000 for an amount
less than $1,100 is excluded from employment for FICA purposes, that amount is not
wages for FICA purposes unless covered under a § 218 agreement.
Similarly, section 3121(u)(2)(B)(ii)(V) provides that the services of an election
worker are not employment for purposes of the Medicare tax portion of the FICA if the
worker’s remuneration is less than $1,000 in a calendar year. For calendar years
beginning on or after January 1, 2000, the amount is indexed for inflation. The
applicable amount for the year 2000 is $1,100. For services performed before January
1, 1995, the § 3121(u)(2)(B)(ii)(V) exclusion was for remuneration of less than $100.
Rev. Rul. 88-36, 1988-1 C.B. 343, A2, provides that an election worker is subject to

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Medicare tax unless the remuneration paid to the worker in a calendar year is less than
$100.
Section 3401(a) provides that, for purposes of income tax withholding, the term
“wages” means all remuneration (other than fees paid to a public official) for services
performed by an employee for an employer. Section 31.3401(a)-2(b)(2) of the
Employment Tax Regulations states that amounts paid to precinct workers for services
performed at election booths are “in the nature of fees paid to public officials” and not
subject to income tax withholding.
Sections 6041(a) and 6051(a) both impose a duty to file information reports of
compensation paid to workers.
Section 6041(a) provides:
All persons engaged in a trade or business and making payment in the
course of such trade or business to another person, of rent, salaries,
wages, premiums, annuities, compensations, remunerations, emoluments,
or other fixed or determinable gains, profits, and income ... of $600 or
more in any taxable year ... shall render a true and accurate return to the
Secretary, under such regulations and in such form and manner and to
such extent as may be prescribed by the Secretary, setting forth the
amount of such gains, profits, and income, and the name and address of
the recipient of such payment.
Under § 1.6041-1(b)(1) of the Income Tax Regulations, the term “all persons
engaged in a trade or business,” as used in § 6041(a), includes organizations the
activities of which are not for the purpose of gain or profit.
The general rule stated in § 1.6041-1(a)(2) is that the required return is made on
Forms 1096 and 1099, except that § 1.6041-1(a)(2)(ii) provides that compensation paid
to an employee by an employer shall be reported on Forms W-3 and W-2 under the
provisions of § 1.6041-2 (relating to return of information as to payments to
employees).
Under § 1.6041-2(a)(1), payments of wages not subject to income tax
withholding must be reported on Form W-2 if the total of those payments and the
amount of the employee's wages subject to income tax withholding, if any, is $600 or
more in a calendar year. For example, if a payment of $700 was made to an employee
and $400 thereof represents wages subject to withholding under section 3402 and the
remaining $300 represents compensation not subject to withholding, such wages and

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compensation must both be reported on Form W-2. If the employee has no wages
subject to income tax withholding, the employer is required to file Form W-2 for that
employee if payments to that employee equal $600 or more in a calendar year.
Section 1.6041-2(a)(1) provides that, at the election of the employer,
components of amounts required to be reported on Form W-2 pursuant to this
subparagraph may be reported on more than one Form W-2. Thus the amounts paid to
an individual for services as an election worker may be reported on a separate W-2
from amounts paid to the individual for service in another capacity, even though the
amounts are aggregated to determine whether reporting applies.
Section 6051(a) imposes a reporting requirement on the following two categories
of payors of remuneration:
Every person required to deduct and withhold from an employee a tax
under section 3101 [employee FICA tax] or 3402 [income tax withholding],
... or every employer engaged in a trade or business who pays
remuneration for services performed by an employee ... .
Section 6051(a) does not require reporting of compensation that is not subject to
withholding of FICA tax or income tax.
Section 6051(c) provides that the Secretary may prescribe by regulations the
reporting of additional items. No regulations requiring employers to furnish additional
information have been published.
ANALYSIS
Compensation of an election worker is not subject to income tax withholding.
Sections 3401(a) and 31.3401(a)-2(b)(2). If an election worker’s compensation is less
than $1,100 for calendar year 2000, it is generally not subject to FICA tax. Sections
3121(b)(7)(F)(iv) and 3121(u)(2)(B)(ii)(V). However, under a state’s § 218 agreement,
an election worker’s compensation may be subject to both the old-age, survivors and
disability insurance (OASDI) and the Medicare portions of the FICA tax at a level below
$1,100 for calendar year 2000.
Section 6041(a) applies to payments of compensation that are not subject to
withholding of FICA or income tax. If an election worker’s compensation is not subject
to withholding of FICA tax, the § 6041(a) reporting requirement applies to payments
that aggregate $600 or more in any taxable year. Under § 1.6041-2(a)(1),

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compensation subject to income tax withholding is taken into account in determining
whether the $600 reporting requirement applies.
Section 6051(a) requires reporting of compensation subject to either FICA tax or
income tax withholding. No reporting is required by §§ 6051(a) and 31.6051-1(a) and
(b) for items of income that are not subject to withholding of FICA tax or income tax. If
an election worker’s compensation is subject to withholding of FICA tax, reporting is
required by § 6051(a), regardless of the amount of compensation.
HOLDINGS
The reporting requirements applicable to governments that employ election
workers are as follows:
Situation 1: Neither FICA tax nor income tax withholding applies to the $200
paid to V
. The reporting requirements of § 6041(a) apply. Because V earns fees that
are less than $600, Government A is not required to issue Form W-2 to V.
Situation 2: FICA tax, but not income tax withholding, applies to the $200 paid to
W
because the fees exceed the $100 threshold in the § 218 agreement. Government B
must follow the reporting requirements of § 6051(a), reporting on Form W-2 the fees of
$200 and the FICA tax withheld.
Situation 3: FICA tax, but not income tax withholding, applies to the $1,100 paid
to X
for calendar year 2000. Government C must follow the reporting requirements of
§6051(a), reporting on Form W-2 the fees of $1,100 and the FICA tax withheld.
Situation 4: Neither FICA tax nor income tax withholding applies to the $200
paid to Y
for services as an election worker, but the $300 payment is subject to income
tax withholding. Government D must follow the reporting requirements of § 6051(a),
reporting on Form W-2 the $300 payment and the income tax withheld. Section
6041(a) does not require reporting of the $200 payment because the total of the two
payments is less than $600 for the calendar year.
Situation 5: Neither FICA tax nor income tax withholding applies to the $200
paid to Z for services as an election worker, but the $500 payment is subject to income
tax withholding. Government E must follow the reporting requirements of §§ 6041(a)
and 6051(a), reporting on Form W-2 both the $200 and the $500 payments and the
amount of income tax withheld.

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EFFECT ON OTHER REVENUE RULING(S)
This ruling modifies Rev. Rul. 88-36, A2, to reflect the increase in the amount of
remuneration applicable for purposes of the Medicare tax exclusion under
§ 3121(u)(2)(B)(ii)(V), currently $1,100 for calendar year 2000.
DRAFTING INFORMATION
The principal author of this revenue ruling is Elizabeth Edwards of the Office of
Chief Counsel (Employee Benefits & Exempt Organizations). For further information
regarding this revenue ruling, contact Elizabeth Edwards at (202) 622-6040 (not a toll-
free call).