TN 15 (06-97)

A. BACKGROUND

Prior to 1976, members of fishing boat crews were generally treated as employees.

The Tax Reform Act of 1976 and the Revenue Act of 1978 changed the status of many of these persons retroactively from employees to self-employed individuals. See RS 01901.280.

B. POLICY

1. Services After 1954 and Before 1995

Services after 1954 constitute a trade or business if:

• No remuneration other than a share of the catch, or its proceeds is paid; and

• The amount of the share depends on the amount of the catch; and

• The operating crew is normally less than 10.

2. Services After 1994

Services after 1994 constitute a trade or business if the individual continues to meet all the above requirements and receives certain cash remuneration which:

1. does not exceed $100 per trip;

2. is contingent on a minimum catch; and

3. is paid solely for additional duties (such as mate, engineer, or cook) for which additional cash remuneration is traditional in the industry.

NOTE: The operating crew of a boat is treated as made up of fewer than 10 individuals if the average size of the operating crew on trips made during the preceding 4 calendar quarters consisted of fewer than 10 individuals.

3. Effective Date

The new provision provided in RS 01802.225B.2.a.-RS 01802.225B.2.c. is effective for remuneration paid after December 31, 1994. In addition, the provision applies to remuneration paid after December 31, 1984 and all years before January 1, 1995, unless the payor treated the remuneration when paid as subject to FICA tax; i.e., as wages.

C. PROCEDURE

If all the conditions in RS 01802.225B.1. and RS 01802.225B.2. respectively are not met, apply common-law rules (RS 02101.005 ff.).