- 20 -
employee each pays a like amount of tax. See secs. 3101, 3111.
The employer withholds the employee's half of the FICA tax and
remits it, along with the employer's half, to the Treasury
Department. See sec. 3102. Allstate withheld FICA taxes from
petitioners and paid both halves over to the Treasury Department
for the years in issue.
Independent contractors are not subject to the FICA tax;
however, they are subject to a Self-Employment Contributions Act
of 1954, secs. 1401-1403, 68A Stat. 353, tax (SECA tax). See
secs. 1401, 1402. The SECA tax is a different tax from the FICA
tax, though the SECA tax rate is equal to the sum of the employer
and employee tax rates under FICA. The parties agree that if
petitioners are held to be independent contractors, then they are
liable for SECA tax on their net earnings.
Petitioners argue that they owe no SECA tax because Allstate
and petitioners paid the full amount of the FICA tax due for the
years in issue and that amount equals the SECA tax due.
Petitioners also argue that their "wages" (compensation paid by
Allstate that was reported as wages) should be subtracted from
net earnings from self-employment to arrive at self-employment
income under section 1402(b), again resulting in no SECA tax due.
Petitioners finally cite the mitigation provisions of section
6521 for the proposition that they should be credited with
Allstate's share of the FICA taxes paid on petitioners' "wages".
Page: Previous 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 NextLast modified: May 25, 2011