Harold E. Nicholas - Page 10




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               Whether an employer-employee relationship2 exists is a                 
          question of fact.  See Air Terminal Cab, Inc. v. United States,             
          478 F.2d 575, 578 (8th Cir. 1973); Profl. & Executive Leasing,              
          Inc., v. Commissioner, 89 T.C. 225, 232 (1987), affd. 862 F.2d              
          751 (9th Cir. 1988).  If an employer-employee relationship                  
          exists, its characterization by the parties as some other                   
          relationship is of no consequence.  See sec. 31.3121(d)-1(a)(3),            
          Employment Tax Regs.                                                        
               This Court looks to seven factors to determine the existence           
          of an employer-employee relationship versus an independent                  



          2  Sec. 31.3401(c)-1(b), Employment Tax Regs., defines an                   
          employer-employee relationship as follows:                                  
                    (b) Generally the relationship of employer and                    
               employee exists when the person for whom services are                  
               performed has the right to control and direct the                      
               individual who performs the services, not only as to                   
               the result to be accomplished by the work but also as                  
               to the details and means by which that result is                       
               accomplished.  That is, an employee is subject to the                  
               will and control of the employer not only as to what                   
               shall be done but how it shall be done.  In this                       
               connection, it is not necessary that the employer                      
               actually direct or control the manner in which the                     
               services are performed; it is sufficient if he has the                 
               right to do so.  The right to discharge is also an                     
               important factor indicating that the person possessing                 
               that right is an employer.  Other factors                              
               characteristic of an employer, but not necessarily                     
               present in every case, are the furnishing of tools and                 
               the furnishing of a place to work to the individual who                
               performs the services.  In general, if an individual is                
               subject to the control or direction of another merely                  
               as to the result to be accomplished by the work and not                
               as to the means and methods for accomplishing the                      
               result, he is not an employee.                                         





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