Internal Revenue Code:Sec. 3309. State law coverage of services performed for nonprofit organizations or governmental entities

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Location in Internal Revenue Code

     TITLE 26 - INTERNAL REVENUE CODE
      Subtitle C - Employment Taxes
       CHAPTER 23 - FEDERAL UNEMPLOYMENT TAX ACT
     

Statute

    Sec. 3309. State law coverage of services performed for nonprofit
        organizations or governmental entities
 
    (a) State law requirements
      For purposes of section 3304(a)(6) -
        (1) except as otherwise provided in subsections (b) and (c),
      the services to which this paragraph applies are -
          (A) service excluded from the term ''employment'' solely by
        reason of paragraph (8) of section 3306(c), and
          (B) service excluded from the term ''employment'' solely by
        reason of paragraph (7) of section 3306(c); and
        (2) the State law shall provide that a governmental entity,
      including an Indian tribe, or any other organization (or group of
      governmental entities or other organizations) which, but for the
      requirements of this paragraph, would be liable for contributions
      with respect to service to which paragraph (1) applies may elect,
      for such minimum period and at such time as may be provided by
      State law, to pay (in lieu of such contributions) into the State
      unemployment fund amounts equal to the amounts of compensation
      attributable under the State law to such service.  The State law
      may provide safeguards to ensure that governmental entities or
      other organizations so electing will make the payments required
      under such elections.
    (b) Section not to apply to certain service
      This section shall not apply to service performed -
        (1) in the employ of (A) a church or convention or association
      of churches, (B) an organization which is operated primarily for
      religious purposes and which is operated, supervised, controlled,
      or principally supported by a church or convention or association
      of churches, or (C) an elementary or secondary school which is
      operated primarily for religious purposes, which is described in
      section 501(c)(3), and which is exempt from tax under section
      501(a);
        (2) by a duly ordained, commissioned, or licensed minister of a
      church in the exercise of his ministry or by a member of a
      religious order in the exercise of duties required by such order;
        (3) in the employ of a governmental entity referred to in
      paragraph (7) of section 3306(c), if such service is performed by
      an individual in the exercise of his duties -
          (A) as an elected official;
          (B) as a member of a legislative body, or a member of the
        judiciary, of a State or political subdivision thereof, or of
        an Indian tribe;
          (C) as a member of the State National Guard or Air National
        Guard;
          (D) as an employee serving on a temporary basis in case of
        fire, storm, snow, earthquake, flood, or similar emergency;
          (E) in a position which, under or pursuant to the State or
        tribal law, is designated as (i) a major nontenured
        policymaking or advisory position, or (ii) a policymaking or
        advisory position the performance of the duties of which
        ordinarily does not require more than 8 hours per week; or
          (F) as an election official or election worker if the amount
        of remuneration received by the individual during the calendar
        year for services as an election official or election worker is
        less than $1,000;
        (4) in a facility conducted for the purpose of carrying out a
      program of -
          (A) rehabilitation for individuals whose earning capacity is
        impaired by age or physical or mental deficiency or injury, or
          (B) providing remunerative work for individuals who because
        of their impaired physical or mental capacity cannot be readily
        absorbed in the competitive labor market,
      by an individual receiving such rehabilitation or remunerative
      work;
        (5) as part of an unemployment work-relief or work-training
      program assisted or financed in whole or in part by any Federal
      agency or an agency of a State or political subdivision thereof
      or of an Indian tribe, by an individual receiving such work
      relief or work training; and
        (6) by an inmate of a custodial or penal institution.
    (c) Nonprofit organizations must employ 4 or more
      This section shall not apply to service performed during any
    calendar year in the employ of any organization unless on each of
    some 20 days during such calendar year or the preceding calendar
    year, each day being in a different calendar week, the total number
    of individuals who were employed by such organization in employment
    (determined without regard to section 3306(c)(8) and by excluding
    service to which this section does not apply by reason of
    subsection (b)) for some portion of the day (whether or not at the
    same moment of time) was 4 or more.
    (d) Election by Indian tribe
      The State law shall provide that an Indian tribe may make
    contributions for employment as if the employment is within the
    meaning of section 3306 or make payments in lieu of contributions
    under this section, and shall provide that an Indian tribe may make
    separate elections for itself and each subdivision, subsidiary, or
    business enterprise wholly owned by such Indian tribe.  State law
    may require a tribe to post a payment bond or take other reasonable
    measures to assure the making of payments in lieu of contributions
    under this section.  Notwithstanding the requirements of section
    3306(a)(6), if, within 90 days of having received a notice of
    delinquency, a tribe fails to make contributions, payments in lieu
    of contributions, or payment of penalties or interest (at amounts
    or rates comparable to those applied to all other employers covered
    under the State law) assessed with respect to such failure, or if
    the tribe fails to post a required payment bond, then service for
    the tribe shall not be excepted from employment under section
    3306(c)(7) until any such failure is corrected.  This subsection
    shall apply to an Indian tribe within the meaning of section 4(e)
    of the Indian Self-Determination and Education Assistance Act (25
    U.S.C. 450b(e)).
 

Sources

    (Added Pub. L. 91-373, title I, Sec. 104(b)(1), Aug. 10, 1970, 84
    Stat. 697; amended Pub. L. 94-566, title I, Sec. 115(a), (b),
    (c)(2), (3), title V, Sec. 506(a), Oct. 20, 1976, 90 Stat. 2670,
    2671, 2687; Pub. L. 95-19, title III, Sec. 302(b), Apr. 12, 1977,
    91 Stat. 44; Pub. L. 105-33, title V, Sec. 5405(a), 5407(a), Aug.
    5, 1997, 111 Stat. 604, 605; Pub. L. 106-554, Sec. 1(a)(7) (title
    I, Sec. 166(b), (c)), Dec. 21, 2000, 114 Stat. 2763, 2763A-627.)
 

Miscellaneous

                              PRIOR PROVISIONS
      A prior section 3309 was renumbered section 3311 of this title.
                                 AMENDMENTS
      2000 - Subsec. (a)(2). Pub. L. 106-554, Sec. 1(a)(7) (title I,
    Sec. 166(b)(1)), inserted '', including an Indian tribe,'' after
    ''the State law shall provide that a governmental entity''.
      Subsec. (b)(3)(B). Pub. L. 106-554, Sec. 1(a)(7) (title I, Sec.
    166(b)(2)), inserted '', or of an Indian tribe'' before semicolon
    at end.
      Subsec. (b)(3)(E). Pub. L. 106-554, Sec. 1(a)(7) (title I, Sec.
    166(b)(3)), inserted ''or tribal'' after ''the State''.
      Subsec. (b)(5). Pub. L. 106-554, Sec. 1(a)(7) (title I, Sec.
    166(b)(4)), inserted ''or of an Indian tribe'' after ''an agency of
    a State or political subdivision thereof''.
      Subsec. (d). Pub. L. 106-554, Sec. 1(a)(7) (title I, Sec.
    166(c)), added subsec. (d).
      1997 - Subsec. (b)(1)(C). Pub. L. 105-33, Sec. 5407(a), added
    subpar. (C).
      Subsec. (b)(3)(F). Pub. L. 105-33, Sec. 5405(a), added subpar.
    (F).
      1977 - Subsec. (a)(2). Pub. L. 95-19 substituted ''(or group of
    governmental entities or other organizations)'' for ''(or group of
    organizations)''.
      1976 - Pub. L. 94-566, Sec. 115(c)(3), substituted ''services
    performed for nonprofit organizations or governmental entities''
    for ''certain services performed for nonprofit organizations and
    for State hospitals and institutions of higher education'' in
    section catchline.
      Subsec. (a)(1)(B). Pub. L. 94-566, Sec. 115(a), struck out
    ''performed in the employ of the State, or any instrumentality of
    the State or of the State and one or more other States, for a
    hospital or institution of higher education located in the State,
    if such service is'' after ''service''.
      Subsec. (a)(2). Pub. L. 94-566, Sec. 506(a), substituted ''a
    governmental entity or any other organization'' for ''an
    organization'', ''paragraph (1)'' for ''paragraph (1)(A)'', and
    ''that governmental entities or other organizations'' for ''that
    organizations''.
      Subsec. (b)(3). Pub. L. 94-566, Sec. 115(b)(1), substituted
    reference to services performed in the employ of a governmental
    entity referred to in paragraph (7) of section 3306(c), if such
    services are performed by an individual in the exercise of his
    duties as an elected official, as a member of a legislative body,
    or a member of the judiciary, of a State or political subdivision
    thereof, as a member of the State National Guard or Air National
    Guard, as an employee serving on a temporary basis in case of fire,
    storm, snow, earthquake, flood, or similar emergency, or in a
    position which, under or pursuant to the State law, is designated
    as a major nontenured policymaker or advisory position or a
    policymaking or advisory position the performance of the duties of
    which ordinarily does not require more than 8 hours per week, for
    reference to services performed in the employ of a school which is
    not an institution of higher education.
      Subsec. (b)(6). Pub. L. 94-566, Sec. 115(b)(2), substituted ''by
    an inmate of a custodial or penal institution'' for ''for a
    hospital in a State prison or other State correctional institution
    by an inmate of the prison or correctional institution''.
      Subsec. (d). Pub. L. 94-566, Sec. 115(c)(2), struck out subsec.
    (d) which defined ''institution of higher education''.  See section
    3304(f) of this title.
                      EFFECTIVE DATE OF 2000 AMENDMENT
      Amendment by Pub. L. 106-554 applicable to service performed on
    or after Dec. 21, 2000, with transition rule for service performed
    in the employ of an Indian tribe, see section 166(e) of Pub. L.
    106-554, set out as a note under section 3306 of this title.
                      EFFECTIVE DATE OF 1997 AMENDMENT
      Section 5405(b) of Pub. L. 105-33 provided that: ''The amendments
    made by this section (amending this section) shall apply with
    respect to service performed after the date of the enactment of
    this Act (Aug. 5, 1997).''
      Section 5407(b) of Pub. L. 105-33 provided that: ''The amendments
    made by this section (amending this section) shall apply with
    respect to service performed after the date of the enactment of
    this Act (Aug. 5, 1997).''
                      EFFECTIVE DATE OF 1977 AMENDMENT
      Section 302(d)(2) of Pub. L. 95-19 provided that: ''The amendment
    made by subsection (b) (amending this section) shall take effect as
    if included in the amendments made by section 506 of the
    Unemployment Compensation Amendments of 1976 (which amended this
    section in 1976, see Effective Date of 1976 Amendment note
    below).''
                      EFFECTIVE DATE OF 1976 AMENDMENT
      For effective date of amendment by section 115(a), (b), (c)(2),
    (3) of Pub. L. 94-566, see section 115(d) of Pub. L. 94-566, set
    out as a note under section 3304 of this title.
      For effective date of amendment by section 506(a) of Pub. L.
    94-566, see section 506(c) of Pub. L. 94-566, set out as a note
    under section 3304 of this title.
                               EFFECTIVE DATE
      Section applicable with respect to certifications of State laws
    for 1972 and subsequent years, but only with respect to service
    performed after Dec. 31, 1971, see section 104(d)(1) of Pub. L.
    91-373, set out as a note under section 3304 of this title.
 

References

                   SECTION REFERRED TO IN OTHER SECTIONS
      This section is referred to in sections 3303, 3304 of this title.