- 11 -
100 (3d Cir. 2002). Furthermore, an employer cannot by the
expedient of characterizing moneys paid in remuneration for
services as distributions of net income, rather than as wages,
avoid FICA and FUTA liabilities. Id. at 145-146. Thus, as in
Veterinary Surgical Consultants, P.C. v. Commissioner, supra at
145-146, and Joseph M. Grey Pub. Accountant, P.C. v.
Commissioner, 119 T.C. 121, 128 (2002), we reject any suggestion
that petitioner’s passing through of its net income to Graham and
other shareholders precludes the finding of an employer-employee
relationship between petitioner and Graham. We likewise reject
as not germane to the question before us petitioner’s reliance on
section 1372, addressing fringe benefits under subtitle A, and
the reference to that statute in Durando v. United States, supra
at 551. See Veterinary Surgical Consultants, P.C. v.
Commissioner, supra at 147-148, 150.
2. Contentions Regarding Common Law Employment
Petitioner contends that “employee” as used throughout
section 3121(d) must be construed in a manner consistent with its
use in section 3121(d)(2), such that the usual common law rules
for determining existence of an employer-employee relationship
are to be taken into account. In support of this position,
petitioner quotes the following passage from Tex. Carbonate Co.
v. Phinney, 307 F.2d 289, 291-292 (5th Cir. 1962):
The statutory definition of “employees” as
including officers of a corporation will not be so
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