CCA 200851059: A farm corporation officer belongs on the annual agricultural return, which closes the year

Plain-English summary

A small classification question with a large consequence, and the exchange makes the consequence explicit before the answer arrives.

Employers report employment taxes on different returns depending on the kind of work. Wages for agricultural labor go on Form 943, filed once a year. Other employment goes on Form 941, filed quarterly. Section 3121(g) defines agricultural labor, and section 3121(g)(2) reaches services performed in connection with the operation, management, conservation, improvement or maintenance of a farm and its tools and equipment. The question was which side of that line a corporate officer of a farming entity falls on, where a minimal amount of W-2 wages was reported on a Form 943 and the examining agent thought the officer's wages fell outside section 3121(g) and should have gone on a Form 941.

The reason it matters is stated plainly in the second paragraph of the lower message: the issue is a statute of limitations. No Form 941 was ever filed, and the three year period has already run on the Form 943 that was filed. A limitations period on assessment generally runs from the filing of the return, so a return never filed leaves the period open indefinitely while a return duly filed three years ago has closed the year. If the agent is right and these wages belonged on a Form 941, the Service can still assess. If the Form 943 was the correct return, it is too late. The classification decides whether the year is open or shut.

The answer comes back the same afternoon and is careful about its own basis. The writer looked at the forms, Publication 51, the statute and the regulations, and found nothing addressing corporate officer wages of a farm specifically, which is an honest report of an absence rather than a finding. Having found no direct guidance, they read section 3121(g)(2) itself and agreed with the asker's interpretation that Form 943 is the appropriate return. The asker had rested on the word "management" in that provision, on the view that an officer managing a farming corporation is performing services in connection with the management of a farm.

So the conclusion favors the taxpayer and against the agent, and by the logic the asker had already laid out, the year is closed. The release does not say that last step, does not cite the limitations provision, and offers no analysis of the officer's actual duties, which would be where a contrary argument would start.

One discrepancy to note. The document header prints "Release Date: 7/21/2009", but its own "Number: 200851059" places it in the batch released 19 December 2008, which is what the IRS index gives. The same mismatch appears on 0851062 in this batch while neighbouring releases print 12/19/2008, so it looks like a stamping error on the IRS side affecting some documents and not others. The frontmatter follows the number and the index; the header is reproduced unaltered below.

This is a clean digital release rather than a scan, so no OCR correction was needed. Kept as released: "an minimal amount"; "the agent believe"; "the corporate officer's wages is not within"; "3121(g)(2) covers corporate officer" without the plural; the Form 941 run together with a dash as "941-"; "W-\n2" broken across the line as the release breaks it; and "Pub 51" and "the regs" in their working shorthand.

Ruling snapshot

• Question: Are the wages of a corporate officer of a farming entity agricultural labor under section 3121(g), so that Form 943 rather than Form 941 is the correct return?
• Outcome: Advice given. The writer found nothing in the forms, Publication 51, the statute or the regulations addressing corporate officer wages of a farm, but after reading section 3121(g)(2) agreed with the asker's interpretation that Form 943 is the appropriate return. The asker relied on the term "management" in that provision. The limitations consequence, that no Form 941 was filed and the three year period has run on the Form 943, is stated by the asker and not addressed in the reply.
• Key authorities: IRC section 3121(g) and 3121(g)(2); Publication 51; Forms 941 and 943.

Full text (IRS public release)

ID: CCA_2008100917130730 Number: 200851059
Office: ----------------------------- Release Date: 7/21/2009

UILC: 3121.06-00

From: -------------------
Sent: Thursday, October 09, 2008 5:13:08 PM
To: -------------------------------------
Cc:
Subject: RE: 3121(g)

------
I looked at the forms, Pub 51, the statute and the regs, and didn't see anything referring to corporate officer wages of a farm. But after reading 3121(g)(2), I would agree with your interpretation that the Form 943 is the appropriate return.

From: --------------------
Sent: Thursday, October 09, 2008 12:48 PM
To: ---------------
Subject: RE: 3121(g)

I think I know the answer but I have a corporate officer of an -------------------- and an minimal amount of W- 2 was reflected on a Form 943 and the agent believe that the corporate officer's wages is not within the definition of 3121(g) and therefore should have been on a 941- I think that 3121(g)(2) covers corporate officer especially the term "management" and therefore Form 943 was appropriate.

Issue is a statute of limitations- no Form 941 filed and the three year statute has run on the Form 943.