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One category of statutory employee is defined as “any
officer of a corporation”. Sec. 3121(d)(1). Regulations clarify
the scope of section 3121(d) in determining the employee status
of corporate officers as follows:
Generally, an officer of a corporation is an employee
of the corporation. However, an officer of a
corporation who as such does not perform any services
or performs only minor services and who neither
receives nor is entitled to receive, directly or
indirectly, any remuneration is considered not to be an
employee of the corporation. * * * [Sec. 31.3121(d)-
1(b), Employment Tax Regs.]
Consequently, if an officer performs substantial services for a
corporation, and receives remuneration for those services, that
officer is an employee. See Veterinary Surgical Consultants,
P.C. v. Commissioner, 117 T.C. 141 (2001), affd. sub nom. Yeagle
Drywall Co. v. Commissioner, 54 Fed. Appx. 100 (3d Cir. 2002).
In this case, petitioner falls within the definition of an
employee because he was an officer of NHIL who provided
substantial services. Petitioner worked about 20 to 30 hours a
week for NHIL throughout the year; he ran the company; he was the
only individual who provided management services; and he received
compensation for those services.
Petitioners argue that respondent has disregarded the
employer and employee relationship under common law in
determining petitioner’s status. Petitioners focus on the
argument that respondent disregards the “question of fact as to
whether the corporation exercises any control over its officer.”
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Last modified: May 25, 2011