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OPINION
I. Employees v. Independent Contractors
Petitioner contends that for employment tax purposes during
the periods at issue the drivers of its trucks were independent
contractors, not employees.
The taxpayer has the burden of proving the existence of an
independent contractor relationship.18 See Rule 142(a); Ellison
v. Commissioner, 55 T.C. 142, 152 (1970). For the purposes of
employment taxes, the term “employee” includes “any individual
who, under the usual common law rules applicable in determining
the employer-employee relationship, has the status of an
employee”. Sec. 3121(d)(2); secs. 31.3121(d)-1(c), 31.3306(i)-1,
Employment Tax Regs.
Whether an individual is a common law employee is a question
of fact, Ellison v. Commissioner, 55 T.C. 142, 152 (1970); sec.
31.3121(d)-1(c)(3), Employment Tax Regs., to be determined
applying the following factors: (1) The degree of control
exercised by the principal; (2) which party invests in work
facilities used by the individual; (3) the opportunity of the
individual to realize profit or loss; (4) whether the principal
can discharge the individual; (5) whether the work is part of the
18 Petitioner did not contend that the burden of proof was
placed upon respondent pursuant to act sec. 530(e)(4) as added by
the Small Business Job Protection Act of 1996, Pub. L. 104-188,
sec. 1122(b)(3), 110 Stat. 1767.
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Last modified: November 10, 2007