Grants / National Council on Disability / National Council on Disability

NCD-22-03: To Assess a Long-Standing Administrative Exclusion under Federal Employment Tax Law for People with Disabilities in Congregate Work Settings for Federal Employment Tax Purposes

Closed Closed November 24, 2021 Opportunity NCD-22-03 ☆ Save

This grant is closed. Who won this program's grants before is below, and similar open grants are at the end of the page. It is in our archive of National Council on Disability notices from 2021.

• Award ceiling$100,000
• Total funding$100,000
• Expected awards1
• Cost sharingNot required
• Funding typeCooperative Agreement

Key dates

Who can apply

This opportunity was open to any type of organization.

• Unrestricted (i.e., open to any type of entity above), subject to any clarification in text field entitled "Additional Information on Eligibility"

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Is this a realistic fit?

• No cost sharing or match is required.

What the grant funds

An in-depth assessment of a long-standing tax policy exclusion for employees with disabilities in congregate work settings (“sheltered workshops”) that results in “dueling classifications” that conflicts with other federal employment statutes and results in a question whether people with disabilities should be classified as “clients” or “employees.” It will examine potential conflicts of federal employment and tax laws defining an "employee" – for purposes of eligibility for benefits under the Federal Insurance Contribution Act (“FICA”) and other federal employment benefits. In most circumstances, the Federal Insurance Contributions Act (FICA) generally requires employees and employers to pay taxes on all “wages” employees receive, 26 U.S.C. §§ 3101(a), 3111(a), and defines “wages” to include “all remuneration for employment,” § 3121(a). FICA defines “employment” as “any service . . . performed . . . by an employee for the person employing him,” § 3121(b). Unlike other federal employment laws like the Fair Labor Standards Act’s definition of employee however, FICA’s definition of “employee” applies an independent analysis under common law rules in determining the employer-employee relationship and the status of an employee. § 3121(d)(2). Likewise, the Social Security Act, which governs workers' eligibility under the OASDI program, contains a materially identical employee analysis to I.R.C. § 3121(d)(2). 42 U.S.C.S. § 410(j)(2), also citing to common law rules to determine whether an employer-employee relationship exists. Since a 1965 Revenue Ruling, the Treasury Department has consistently determined that people with disabilities in congregate work settings are not “employees” for federal employment tax purposes. In 1969, the Commissioner of the Social Security Administration issued a ruling that adopted a materially identical exclusion to the one used by the IRS and determined that workers with disabilities in congregate work settings could not be considered employees of the facility until after completing its rehabilitation program and meeting common law employment rules. SSR 69-60. Since these 1960s rulings, both SSA and the Internal Revenue Service (IRS) have maintained that an individual participating in a congregate work setting’s training or rehabilitation program could not be considered an employee of the workshop.

Category: Other.

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