Statutory Employees
- Payroll taxes and other issues
- Verifying employee SSNs
- What constitutes wages ?
- Who are employees ?
- 20 factors in determining employee or independent contractor status
- misclassified employees
- Updated views of the IRS 20 factors
- IRS web – Withholding for foreign athletes and entertainers
- Statutory employees
- Government employees
- Agricultural employees
- Ministers and religious organizations
- Leased employees and PEO organizations
- Family members
- Federal Insurance Contributions Act (FICA)
- Federal Unemployment Tax Act (FUTA)
- Self-Employment Tax (SECA)
- Deposit deadlines
- Penalties
- Trust fund recovery penalty, IRC § 6672
Statutory employees are classed as employees irrespective of their treatment under common law:
- categories of service included, IF the following exist:
- a "contract of service" exists with the expectation that the individual will performs substantially all of the services
- the individual has no substantial investment in the facilities used in performing the services (other than transportation facilities)
- the services are performed in a continuing relationship and not as a single transaction
- § 3121(d)(3) imposes 3 additional requirements before any of the following 4 occupational categories are classified as employees for purposes of FICA and/or FUTA:
- the "contract of service," whether formal or informal, must have an expectation that the individual perform substantially all of the services;
- the individual must have no substantial investment in the facilities used in performing the services (other than facilities used for transportation); and
- the services must be performed in a continuing relationship with the person for whom they are performed and not as a single transaction.
- Agent and Commission Drivers, IF service is performed for the driver's principal and not as part of the driver's own business:
- including individuals using their own vehicles as well as those who use vehicles supplied by the person for whom the services are performed.
- it is irrelevant if customers are designated by the principal or solicited by the agent.
- it is irrelevant that compensation is determined by the difference in the price the agent charges the agent's customers and the price the agent pays the agent's principal for the product or service.
- Insurance Salesmen. The regulations adopted under § 3121(d)(3) contemplate full-time activity on the agent's part, normally, indicated if the company provides the agent with office space, stenographic assistance, telephone facilities and advertising materials without cost.
- Individuals who work less than full-time or for more than 1 insurance company are normally treated as independent contractors.
- § 3121(d)(3)(B). For purposes of FUTA, an insurance agent is exempt from unemployment tax if compensated solely by commissions. Otherwise, the common law rules apply. § 3306(c)(14).
- Home Workers. Workers who perform services:
- according to the specifications provided by the person for whom the services are performed
- with materials furnished by such person and
- which materials are later returned
- even though not performed on the premises of the person for whom the services are performed
- not including domestic service. § 3121(d)(3)(C).
- For purposes of FUTA, the common law rules apply in determining whether such individuals are subject to tax.
- Traveling Salesmen engaged full-time to solicit orders from wholesalers, retailers, contractors or operators of hotels, restaurants or other similar establishments for merchandise for resale or use if their principal business activity is soliciting orders on behalf of a single principal.