Paul E. Hathaway and Brenda J. Hathaway - Page 24

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          right to discharge an independent contractor.  Thus, this element           
          appears to be of little significance in the instant case.                   
          F.  Integral Part of Business                                               
               TAG is in the business of wholesale distribution of domestic           
          and imported men's clothing.  TAG's sales representatives are               
          TAG's key connection with its customers.  This factor would                 
          support a finding that Hathaway was an employee of TAG.                     
          G.  Relationship TAG and Hathaway Believed They Had Created                 
               Hathaway and Arthur Penn, who had been a TAG sales                     
          representative for 29 years and TAG's national sales manager and            
          senior vice president for 3 years, testified that as sales                  
          representatives for TAG, they considered themselves independent             
          contractors, not employees of TAG.  Hathaway’s testimony,                   
          however, is contradicted by the fact that petitioners initially             
          reported most of Hathaway’s business expenses on Schedule A.                
               A letter dated March 1, 1990, written by TAG's controller,             
          Theresa Hinton, indicates that she was told by Rita Shumate, head           
          of TAG's auditing department, that Hathaway was an employee.                
          However, a letter dated March 21, 1990, also written by Theresa             
          Hinton, indicates that for the first quarter of 1987, TAG                   
          considered Hathaway an "independent agent".  TAG issued to                  
          Hathaway Forms W-2 and withheld Federal income taxes and F.I.C.A.           
          taxes from his commissions.  The withholding of subtitle C taxes            
          by TAG on behalf of Hathaway is consistent with a finding that              

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