- 7 - Financial employees. He backs up his argument by pointing to Lykins Inc.’s allocation of payroll costs to Lykins Financial, and Lykins Financial’s reimbursement of those costs as proof that those employees who were performing investment services were employees of Lykins Financial. An unstated assumption of the Commissioner’s position is that someone is the employee only of the firm he’s producing income for. There is no caselaw interpreting the regulation’s phrase “employees of the corporation, serving in their capacity as such,” sec. 1.448-1T(e)(4)(i), Temporary Income Tax Regs., and the Commissioner’s argument is at least plausible. But “employer” and “employee” are legal terms with a rich history of construction in the many other places that they are found in Federal law. The Supreme Court has, moreover, laid down as a general rule that “when Congress has used the term ‘employee’ without defining it, we have concluded that Congress intended to describe the conventional master-servant relationship as understood by common-law agency doctrine;” see also Nationwide Mut. Ins. Co. v. Darden, 503 U.S. 318, 322-323 (1992). The Commissioner has likewise adopted common law rules to distinguish employees from independent contractors. See Rev. Rul. 87-41, 1987-1 C.B. 296; Darden, 503 U.S. at 324 (citing that revenue ruling with approval); Clackamas Gastroenterology Associates, P.C. v. Wells, 538 U.S. 440, 448 (2003)(calling the common lawPage: Previous 1 2 3 4 5 6 7 8 9 10 Next
Last modified: May 25, 2011