Agricultural labor generally is subject to FICA and FUTA
- FICA exempt agricultural labor is limited to service performed by foreign agricultural workers lawfully admitted to the United States to perform agricultural labor on a temporary basis from:
- the Bahamas;
- Jamaica;
- the British West Indies, or
- any other foreign country or possession.
- FUTA exempt agricultural labor is limited to service performed by aliens temporarily admitted to the United States because unemployed persons capable of performing such service cannot be found within the United States.
- Special Agricultural Workers admitted under the "H-2A" program are not exempt from FICA and FUTA because lawfully admitted for permanent residence and without any limitation as to type of employment.
- Illegal aliens performing agricultural labor are eligible for FICA exemption under § 3121(b)(1) while working under interim work authorizations after filing applications for adjustment of status under Special Agricultural Workers program, and § 3306(c)(1)(B), as amended by P.L. 104-188, § 1203, extending permanently the FUTA exemption for alien agricultural workers.
- "Agricultural labor" is defined in § § 3121(g) and 3306(k) (through incorporation by reference to § 3121(g)) as service performed on a farm in the employ of any person in connection with cultivating the soil or raising or harvesting any agricultural or horticultural commodity.
- "Farm" includes any:
- stock;
- dairy;
- poultry;
- fruit;
- fur-bearing animal;
- truck farm;
- plantation;
- ranch;
- nursery;
- greenhouse or similar structure primarily used for raising agricultural or horticultural commodities. Although not specifically defined by statute or regulations, the IRS appears to distinguish agricultural and horticultural commodities from other commodities based on whether the commodity belongs to a species or class generally considered to be wild, or whether the commodity, in and of itself, aids in the production or raising of an agricultural or horticultural commodity.
- "Agricultural labor" includes:
- services performed in connection with the operation, management, conservation, improvement or maintenance of a farm and tools or equipment used on the farm;
- services performed by carpenters, painters, mechanics, farm supervisors, irrigation engineers, bookkeepers and other skilled or semi-skilled labor which contributes in any manner to the farm.
- handling, planting, drying, packing, packaging, processing, freezing, grading, storing or delivering agricultural commodities also qualify as agricultural labor if performed with respect to a commodity in its unmanufactured state,
- in the employ of the farm operator or a group of operators (other than a cooperative organization for purposes of FICA), provided that the operator produced more than one-half of the commodity with respect to which such services are performed or the group of operators produced all (one-half for purposes of FUTA) of the commodity with respect to which such services are performed. For these purposes, any unincorporated group of operators is deemed a cooperative organization if the number of operators is more than 20 at any time
- Domestic service and casual labor if the farm is operated for a profit;
- Agricultural services performed under a crop-sharing arrangement are excluded from service that is subject to FICA. Such an arrangement normally results in self-employment income subject to SECA.
- Agricultural products/commodities: albino rats qualify as an agricultural commodity regardless of the element they inhabit;
- The following are NOT agricultural products/commodities:
- breeding, raising and caring for dogs;
- racing and exhibiting horses;
- mushroom compost; or
- peat.
