CITES BY TOPIC:  wages

26 U.S.C. Sec. 3401(a):

(a) Wages
     For purposes of this chapter, the term ''wages'' means all remuneration (other than
     fees paid to a public official) for services performed by an employee for his employer,
     including the cash value of all remuneration (including benefits) paid in any medium
     other than cash; except that such term shall not include remuneration paid -
  (1) for active service performed in a month for which such employee is entitled to the
      benefits of section 112 (relating to certain combat zone compensation of members of
     the Armed Forces of the United States) to the extent remuneration for such service is
     excludable from gross income under such section; or
(2) for agricultural labor (as defined in section 3121(g)) unless the remuneration paid for
     such labor is wages (as defined in section 3121(a)); or
(3) for domestic service in a private home, local college club, or local chapter of a
     college fraternity or sorority; or
(4) for service not in the course of the employer's trade or business performed in any
     calendar quarter by an employee, unless the cash remuneration paid for such service
     is $50 or more and such service is performed by an individual who is regularly
     employed by such employer to perform such service. For purposes of this paragraph,
     an individual shall be deemed to be regularly employed by an employer during a
     calendar quarter only if -
     (A) on each of some 24 days during such quarter such individual performs for such
          employer for some portion of the day service not in the course of the employer's
         trade  or business; or
     (B) such individual was regularly employed (as determined under subparagraph (A))
          by such employer in the performance of such service during the preceding calendar
         quarter; or
(5) for services by a citizen or resident of the United States for a foreign government or
     an international organization; or
(6) for such services, performed by a nonresident alien individual, as may be designated
      by regulations prescribed by the Secretary; or
(7) Repealed. Pub. L. 89-809, title I, Sec. 103(k), Nov. 13, 1966, 80 Stat. 1554)
(8)
     (A) for services for an employer (other than the United States or any agency thereof) -
         (i) performed by a citizen of the United States if, at the time of the payment of such
             remuneration, it is reasonable to believe that such remuneration will be excluded
             from gross income under section 911; or
        (ii) performed in a foreign country or in a possession of the United States by such a
             citizen if, at the time of the payment of such remuneration, the employer is
            required by the law of any foreign country or possession of the United States to
           withhold income tax upon such remuneration; or
     (B) for services for an employer (other than the United States or any agency thereof)
          performed by a citizen of the United States within a possession of the United States
          (other than Puerto Rico), if it is reasonable to believe that at least 80 percent of the
          remuneration to be paid to the employee by such employer during the calendar
          year will be for such services; or
     (C) for services for an employer (other than the United States or any agency thereof)
          performed by a citizen of the United States within Puerto Rico, if it is reasonable to
          believe that during the entire calendar year the employee will be a bona fide
          resident of Puerto Rico; or
     (D) for services for the United States (or any agency thereof) performed by a citizen of
          the United States within a possession of the United States to the extent the United
          States (or such agency) withholds taxes on such remuneration pursuant to an
          agreement with such possession; or
(9) for services performed 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; or
(10)
  (A) for services performed by an individual under the age of 18 in the delivery or
       distribution of newspapers or shopping news, not including delivery or distribution
      to any point for subsequent delivery or distribution; or
(B) for services performed by an individual in, and at the time of, the sale of newspapers
     or magazines to ultimate consumers, under an arrangement under which the
     newspapers or magazines are to be sold by him at a fixed price, his compensation
     being based on the retention of the excess of such price over the amount at which the
     newspapers or magazines are charged to him, whether or not he is guaranteed a
     minimum amount of compensation for such services, or is entitled to be credited with
     the unsold newspapers or magazines turned back; or
(11) for services not in the course of the employer's trade or business, to the extent paid
     in any medium other than cash; or
(12) to, or on behalf of, an employee or his beneficiary -
   (A) from or to a trust described in section 401(a) which is exempt from tax under
        section  501(a) at the time of such payment unless such payment is made to an
        employee of the  trust as remuneration for services rendered as such employee and
       not as a beneficiary of the trust; or
   (B) under or to an annuity plan which, at the time of such payment, is a plan described
        in section 403(a); or
   (C) for a payment described in section 402(h)(1) and (2) if, at the time of such payment,
        it is reasonable to believe that the employee will be entitled to an exclusion under
       such section for payment; or
    (D) under an arrangement to which section 408(p) applies; or
(13) pursuant to any provision of law other than section 5(c) or 6(1) of the Peace Corps
       Act, for service performed as a volunteer or volunteer leader within the meaning of
      such Act; or
(14) in the form of group-term life insurance on the life of an employee; or
(15) to or on behalf of an employee if (and to the extent that) at the time of the payment of
       such remuneration it is reasonable to believe that a corresponding deduction is
       allowable under section 217 (determined without regard to section 274(n)); or
(16)
   (A) as tips in any medium other than cash;
   (B) as cash tips to an employee in any calendar month in the course of his employment
        by an employer unless the amount of such cash tips is $20 or more; [1]
(17) for service described in section 3121(b)(20); [1]
(18) for any payment made, or benefit furnished, to or for the benefit of an employee if at
       the time of such payment or such furnishing it is reasonable to believe that the
      employee will be able to exclude such payment or benefit from income under section
      127 or 129; [1]
(19) for any benefit provided to or on behalf of an employee if  at the time such benefit is
       provided it is reasonable to believe that the employee will be able to exclude such
      benefit from income under section 74(c), 117, or 132; [1]
(20) for any medical care reimbursement made to or for the benefit of an employee under
       a self-insured medical reimbursement plan (within the meaning of section
       105(h)(6)); or
(21) for any payment made to or for the benefit of an employee if at the time of such
      payment it is reasonable to believe that the employee will be able to exclude such
      payment from income under section 106(b).


IRS Website, Wages Paid to Aliens and Citizens Abroad

Pay that is not wages

Employment for which the pay is not considered wages (for graduated income tax withholding) includes, but is not limited to, the following items:

  • Agricultural labor if the total cash wages paid to an individual worker during the year is less than $150 and the total paid to all workers during the year is less than $2,500. But even if the total amount paid to all workers is $2,500 or more, wages of less than $150 per year paid to a worker are not subject to income tax withholding if certain conditions are met. For these conditions, see Publication 51 (Circular A), Agricultural Employer's Tax Guide. For further discussion of withholding and reporting taxes on foreign agricultural workers in the United States refer to Foreign Agricultural Workers.
  • Services of a household nature performed in or about the private home of an employer, or in or about the clubrooms or house of a local college club, fraternity, or sorority. A local college club, fraternity, or sorority does not include an alumni club or chapter and may not be operated primarily as a business enterprise. Examples of these services include those performed as a cook, janitor, housekeeper, governess, gardener, or houseparent.
  • Certain services performed outside the course of the employer's trade or business for which cash payment is less than $50 for the calendar quarter.
  • Services performed as an employee of a foreign government, without regard to citizenship, residence, or where services are performed. These include services performed by ambassadors, other diplomatic and consular officers and employees, and nondiplomatic representatives. They do not include services for a U.S. or Puerto Rican corporation owned by a foreign government.
  • Services performed within or outside the United States by an employee or officer (regardless of citizenship or residence) of an international organization designated under the International Organizations Immunities Act.
  • Services performed by a duly ordained, commissioned, or licensed minister of a church, but only if performed in the exercise of the ministry and not as an employee of the United States, a U.S. possession, or a foreign government, or any of their political subdivisions. These also include services performed by a member of a religious order in carrying out duties required by that order.
  • Tips paid to an employee if they are paid in any medium other than cash or, if in cash, they amount to less than $20 in any calendar month in the course of employment

For further discussion about federal income tax withholding and reporting on payments made to employees of foreign governments and international organizations refer to Persons Employed by a Foreign Government or International Organization. For further discussion about Social Security and Medicare taxes on payments made to employees of foreign governments and international organizations refer to Persons Employed by a Foreign Government or International Organization - FICA.

Services performed outside the U.S

Compensation paid to a nonresident alien for services performed outside the United States is not considered wages and is not subject to graduated withholding or 30% withholding.


26 C.F.R. §31.3401(a)(11)-1:  Remuneration other than in cash for service not in the course of employer's trade or business

Title 26: Internal Revenue
PART 31—EMPLOYMENT TAXES AND COLLECTION OF INCOME TAX AT SOURCE
Subpart E—Collection of Income Tax at Source

31.3401(a)(11)-1   Remuneration other than in cash for service not in the course of employer's trade or business.

(a) Remuneration paid in any medium other than cash for services not in the course of the employer's trade or business is excepted from wages and hence is not subject to withholding. Cash remuneration includes checks and other monetary media of exchange. Remuneration paid in any medium other than cash, such as lodging, food, or other goods or commodities, for services not in the course of the employer's trade or business does not constitute wages. Remuneration paid in any medium other than cash for other types of services does not come within this exception from wages. For provisions relating to cash remuneration for service not in the course of employer's trade or business, see 31.3401(a)(4)–1.

(b) As used in this section, the term “services not in the course of the employer's trade or business” has the same meaning as when used in 31.3401(a)(4)–1


26 C.F.R. 31.3401(a)-3 Amounts deemed wages under voluntary withholding agreements

(a) In general. Notwithstanding the exceptions to the definition of wages specified in section 3401(a) and the regulations thereunder, the term “wages” includes the amounts described in paragraph (b)(1) of this section with respect to which there is a voluntary withholding agreement in effect under section 3402(p). References in this chapter to the definition of wages contained in section 3401(a) shall be deemed to refer also to this section (31.3401(a)–3).

(b) Remuneration for services. (1) Except as provided in subparagraph (2) of this paragraph, the amounts referred to in paragraph (a) of this section include any remuneration for services performed by an employee for an employer which, without regard to this section, does not constitute wages under section 3401(a). For example, remuneration for services performed by an agricultural worker or a domestic worker in a private home (amounts which are specifically excluded from the definition of wages by section 3401(a) (2) and (3), respectively) are amounts with respect to which a voluntary withholding agreement may be entered into under section 3402(p). See 31.3401(c)–1 and 31.3401(d)–1 for the definitions of “employee” and “employer”.


26 C.F.R. 31.3402(p)-1  Voluntary withholding agreements.

26 C.F.R. 31.3402(p)-1  Voluntary withholding agreements.

(a) In general. An employee and his employer may enter into an agreement under section 3402(b) to provide for the withholding of income tax upon payments of amounts described in paragraph (b)(1) of 31.3401(a)–3, made after December 31, 1970. An agreement may be entered into under this section only with respect to amounts which are includible in the gross income of the employee under section 61, and must be applicable to all such amounts paid by the employer to the employee. The amount to be withheld pursuant to an agreement under section 3402(p) shall be determined under the rules contained in section 3402 and the regulations thereunder. See 31.3405(c)–1, Q&A–3 concerning agreements to have more than 20-percent Federal income tax withheld from eligible rollover distributions within the meaning of section 402.


5 U.S.C. 8501(2) "Federal wages"

TITLE 5 > PART III > Subpart G > CHAPTER 85 > SUBCHAPTER I > 8501
8501. Definitions

For the purpose of this subchapter—

(2) “Federal wages” means all pay and allowances, in cash and in kind, for Federal service;


Social Security Program Operations Manual System (POMS), section RS01401.005: Wages Defined

RS 01401.005 Wages Defined

DEFINITIONS

1. Wages

Wages means all remuneration for employment including the cash value of all remuneration paid in any medium other than cash, unless specifically excluded under section 209 of the Social Security Act (Act). The name given the payment is not controlling in determining whether it constitutes wages.

Payments may be paid on an hourly, daily, weekly, biweekly, monthly, yearly or on a piecework or percentage basis.

2. Wage exclusions

Wage exclusions are payments that are either totally or partially excluded from the definition of wages under section 209 of the Act.

3. Wage Credits

Wage credits are deemed dollar amounts credited to a veteran's earnings record for active duty prior to 1957 and to the earnings records of uniformed service members on active duty after 1956.

REFERENCES:

WARNING!:  The red boldfaced and underlined words above are "words of art" defined in the Classification Act of 1923, 42 Stat. 1488, and they refer ONLY to federal and not private employment.


The Antelope, 23 U.S. 66; 10 Wheat 66; 6 L.Ed. 268 (1825):

"Every man has a natural right to the fruits of his own labor, is generally admitted; and no other person can rightfully deprive him of those fruits, and appropriate them against his will..."

[The Antelope, 23 U.S. 66; 10 Wheat 66; 6 L.Ed. 268 (1825)]


Commercial League Association of America v. People ex. rel. Needles, Auditor, 90 Ill. 166 (1878):

"The object of the statute, no doubt, was to prevent the corporation from making dividends of profits among the members, as do corporations organized for pecuniary profit; and while the statute might subserve a useful purpose if construed in this manner, we fail to perceive any benefit which would result if a member of the association, who happened to fill an office, should be deprived of receiving compensation for his labor as an officer.  Compensation for labor can not be regarded as profit, within the meaning of the law.  The word "profit," as ordinarily used, means the gain made upon any business or investment--a different thing altogether form mere compensation for labor."


Edwards v. Keith, 231 Fed 1:

"One does not derive income by rendering services and charging for them."

[Edwards v. Keith, 231 Fed 1]


Conner v. US, 303 F.Supp 1187 (1969) on page 1191:

"If there is no gain there is no income... Congress has taxed income not compensation."

[Conner v. US, 303 F.Supp 1187 (1969) on page 1191]


Wilby v. Mississippi, 47 S 465:

"It certainly was not the intention of the legislature to levy a tax upon honest toil and labor."

[Wilby v. Mississippi, 47 S 465]


Stapler v. US, 21 F.Supp 737, 739(1937):

"Income is not a wage or compensation for any type of labor."

[Stapler v. US, 21 F.Supp 737, 739(1937)]


U.S. v. Ballard 400 F2d 404 (1976):

"The general term 'income' is not defined in the Internal Revenue Code."

[U.S. v. Ballard 400 F2d 404 (1976)]


Spring Valley Water Works v. Barber 33 P 735:

"A right common in every citizen such as the right to own property or to engage in business of a character not requiring regulation CANNOT, however, be taxed as a special franchise by first prohibiting its exercise and then permitting its enjoyment upon the payment of a certain sum of money."

[Spring Valley Water Works v. Barber 33 P 735]


Tennessee Supreme Court in Jack Cole v. Commissioner MacFarland 337 SW2d 453 (1960):

"The right to receive income or earnings is a right belonging to every person, and realization and receipt of income is therefore not a "privilege that can be taxed." [from:Taxation West Key 933]

[Jack Cole v. Commissioner MacFarland 337 SW2d 453 (1960):]


In this 1960 case, the Tennessee Supreme Court also quoted prior decisions that defined the term `privilege' in contradistinction to right:

"Legislature ... cannot name something to be a taxable privilege unless it is first a privilege." "Privileges are special rights, belonging to the individual or class, and not to the mass; properly, an exemption from some general burden, obligation or duty; a right peculiar to some individual or body"


McCulloch v. Maryland, 4 Wheat 316:

"If it could be said that the state had the power to tax a right, this would enable the state to destroy rights guaranteed by the constitutions through the use of oppressive taxation. ... The power to tax involves the power to destroy."

[McCulloch v. Maryland, 4 Wheat 316]


Butcher's Union v. Crescent City 111 U.S. 746 (1884):

"The property which every man has in his own labor, as it is the original foundation of all other property, so it is the most sacred and inviolable. ... to hinder his employing this strength and dexterity in what manner he thinks proper without injury to his neighbor, is a plain violation of this most sacred property."

[Butcher's Union v. Crescent City 111 U.S. 746 (1884)]


Oliver v. Halstead 86 SE 2d 859 (1955):

"There is a clear distinction between 'profit' and 'wages' or compensation for labor. Compensation for labor cannot be regarded as profit within the meaning of the law."

[Oliver v. Halstead 86 SE 2d 859 (1955)]


Stratton's Independence v. Howbert, 231 U.S. 309, 45 (1913):

"income ... may be defined as the gain derived from capital or from labor or from both combined."

[Stratton's Independence v. Howbert, 231 U.S. 309, 45 (1913)]


Eisner v. Macomber, 252 U.S. 189 (1920):

[subsequently reaffirmed in Goodrich v. Edwards, 255 US 527 (1921):]

  • "... it becomes essential to distinguish between what is, and what is not 'income'...
  • "Congress may not, by any definition it may adopt, conclude the matter, since it cannot by legislation alter the Constitution, from which alone it derives its power to legislate, and within whose limitations alone, that power can be lawfully exercised...."
  • "Income may be defined as gain derived from capital, from labor or from both combined, provided it be understood to include profits gained through sale or conversion of capital assets."

In the 1959 Tax Court case Penn Mutual Indemnity Co. v. Commissioner (32 Tax Court page 681):

"The rule of Eisner v. Macomber has been reaffirmed on so many occasions that citation of the cases to this effect would be unnecessarily burdensome. To depart from the rule at this late date would ignore the sound principles upon which that case was decided and would throw into confusion the fundamental income tax structure and law as it has developed in the almost half century which has elapsed since adoption of the 16th amendment. That there cannot be 'income' without a 'gain' accords with the common understanding of the term, a test of construction which is particularly appropriate in our system of self-assessed Federal income tax... Moreover, that which is not income in fact manifestly cannot be made such by the legislative expedient of calling it income...."


So. Pacific v. Lowe 238 F. Supp 736, 247 U.S. 330 (1918):

"'income' as used in the statute should be given a meaning so as not to include everything that comes in. The true function of the words 'gains' and 'profits' is to limit the meaning of the word 'income'.

[So. Pacific v. Lowe 238 F. Supp 736, 247 U.S. 330 (1918)]


Laureldale Cemetery Assoc. v. Matthews, 345 A 239, and 47 A.2d 277 (1946):

"Reasonable compensation for labor or services rendered is not profit."

[Laureldale Cemetery Assoc. v. Matthews, 345 A 239, and 47 A.2d 277 (1946)]


Murdock v. Pennsylvania, 319 US 105, at 113 (1943):

"A state may not... impose a charge for the enjoyment of a right granted by the Federal constitution."

[Murdock v. Pennsylvania, 319 US 105, at 113 (1943)]


Magnano Co. v. Hamilton 292 U.S. 40 (1934):

"The power to tax the exercise of a [right] ... is the power to control or suppress its enjoyment."

[Magnano Co. v. Hamilton 292 U.S. 40 (1934):]


President Jefferson, concluding his first inaugural address, March 4, 1801:

"... a wise and frugal government, which shall restrain men from injuring one another, which shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned. This is the sum of good government… "


Spreckels Sugar Ref. Co. v. Mclain, 192 U.S. 397; 24 SCt 382 (1904):

"the citizen is exempt from taxation unless the same is imposed by clear and unequivocal language".

[Spreckels Sugar Ref. Co. v. Mclain, 192 U.S. 397; 24 SCt 382 (1904)]


Redfield v. Fisher, 292 P 813, pg 819 (1930):

"The individual, unlike the corporation, cannot be taxed for the mere privilege of existing. The corporation is an artificial entity which owes its existence and charter powers to the state: but the individuals' right to live and own property are natural rights for the enjoyment of which an excise cannot be imposed."

[Redfield v. Fisher, 292 P 813, pg 819 (1930)]


Long v. Ramussen, 281 F 236, 238 (1922):

"The revenue laws are a code or system in regulation of tax assessment and collection. They relate to taxpayers, and not to non-taxpayers. The later are without their scope. No procedure is prescribed for non-taxpayers, and no attempt is made to annul any of their rights and remedies in due course of law. With them Congress does not assume to deal, and they are neither of the subject nor of the object of the revenue law."

[Long v. Ramussen, 281 F 236, 238 (1922), Reaffirmed in Gerth v. US, 132 F Supp 894 (1955) and in Economy Heating Co. v. US, 470 F2d 585 (1972)]


Regal Drug Co v. Wardell, 260 US 386 (1922):

"Congress may not, under the taxing power, assert a power not delegated to it by the Constitution."

[Regal Drug Co v. Wardell, 260 US 386 (1922)]


Hurtado v. California, 110 U.S. 516 (1884):

"The state cannot diminish the rights of the people."

[Hurtado v. California, 110 U.S. 516 (1884)]


Sherar v. Cullen, 481 F.2d 946 (1973)

"... there can be no sanction or penalty imposed upon one because of his exercise of constitutional rights"

[Sherar v. Cullen, 481 F.2d 946 (1973)]


Miller v. US, 230 F.2d 486 (1956)

"The claim and exercise of a Constitutional right cannot thus be converted into a crime."

[Miller v. US, 230 F.2d 486 (1956)]


Wilcox v. C.I.R., 848 F.2d 1007 (C.A.9,1988)

"First, wages are income. Carter v. Commissioner, 784 F.2d 1006, 1009 (9th Cir.1986). Second, paying taxes is not voluntary. Id. Third, placing the burden of proof on the taxpayer does not violate due process. Rockwell v. Commissioner, 512 F.2d 882, 885 (9th Cir.), cert. denied, 423 U.S. 1015, 96 S.Ct. 448, 46 L.Ed.2d 386 (1975). Finally, failing to provide a taxpayer with an administrative fact finding hearing does not violate due process. See Nunley v. Commissioner, 758 F.2d 372, 373 (9th Cir.1985) ( citing Cafeteria & Restaurant Workers, Local 473 v. McElroy, 367 U.S. 886, 894-95, 81 S.Ct. 1743, 1748-49, 6 L.Ed.2d 1230 (1961)); see generally Rockwell, 512 F.2d at 887. Thus, the tax court appropriately dismissed Wilcox's petition."
[Wilcox v. C.I.R., 848 F.2d 1007 (C.A.9,1988)]


Jer. 22:13:

"Woe to him who builds his house by unrighteousness
And his chambers by injustice,
Who uses his neighbor's service without wages
And gives him nothing for his work,"
[Jer. 22:13, Bible,NKJV]


Haggai 1:6:

"You have sown much, and bring in little;
You eat, but do not have enough;
You drink, but you are not filled with drink;
You clothe yourselves, but no one is warm;
And he who earns wages,
Earns wages to put into a bag with holes."

[Haggai 1:6, Bible, NKJV; MORAL: Don't earn "wages"!]


Romans 4:4:

"Now to him who works, the wages are not counted as grace but as debt. "[Romans 4:4, Bible, NKJV]


Romans 6:23:

"For the wages of sin is death, but the gift of God is eternal life in Christ Jesus our Lord." [Romans 6:23, Bible, NKJV]


1 Tim. 5:18:

For the Scripture says, "You shall not muzzle an ox while it treads out the grain," [ Deuteronomy 25:4] and, "The laborer is worthy of his wages."  [1 Tim. 5:18, Bible, NKJV]


James 5:1-6:

Rich Oppressors Will Be Judged

Danger of Riches; Patience and Prayer

"Come now, you rich, weep and howl for your miseries that are coming upon you! 2Your riches are corrupted, and your garments are moth-eaten. 3Your gold and silver are corroded, and their corrosion will be a witness against you and will eat your flesh like fire. You have heaped up treasure in the last days. 4Indeed the wages of the laborers who mowed your fields, which you kept back by fraud, cry out; and the cries of the reapers have reached the ears of the Lord of Sabaoth.[a] 5You have lived on the earth in pleasure and luxury; you have fattened your hearts as[b] in a day of slaughter. 6You have condemned, you have murdered the just; he does not resist you. "  [James 5:1-6, Bible, NKJV]


Deut. 24:14-15:

"You shall not oppress a hired servant who is poor and needy, whether one of your brethren or one of the aliens who is in your land within your gates. 15Each day you shall give him his wages, and not let the sun go down on it, for he is poor and has set his heart on it; lest he cry out against you to the LORD, and it be sin to you. " [Deut. 24:14-15, Bible, NKJV]


Lev. 19:13:

"You shall not cheat your neighbor, nor rob him. The wages of him who is hired shall not remain with you all night until morning. " [Lev. 19:13, Bible, NKJV]