Instrumentality

Let’s say that, one morning, we wake up to find that Congress has passed a new law: from here on out, on May 4th, every American shall have the right to watch every single Star Wars movie in order and free of charge at a local theater. Now this is the kind of legislation we can get behind, right? Anyway, the federal government spends a bunch of time and money building new government theaters all over the country so that no Jedis-in-training will be left behind when the new law takes effect, and we’re so excited we’ve already started sewing new cloaks for the whole family so that we’ll be prepared when the time comes.

Those theaters are what we call “instrumentalities:” they exist to perform a government function, but are not necessarily The Government, per se. They don’t tax the public or enforce the laws of the land, but they exist to make it possible for the government to carry out its responsibilities.

In the real world, instrumentalities are things like libraries, schools, and the DMV. The IRS has semi-complicated rules about what constitutes an instrumentality and what doesn’t, and those rules largely have to do with who owns the entity in question, who controls it, who pays the health and retirement bennies for its employees, and how autonomous it is as a whole.