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OPINION
I. Employment Status
Under subtitle C of the Internal Revenue Code, an employer
is obligated both to pay certain employment taxes imposed on
employers and also to withhold from employees’ wages certain
taxes imposed on employees. Sections 3111 and 3301 impose the
employer-level taxes under FICA (pertaining to Social Security)
and FUTA (pertaining to unemployment), respectively, based on
wages paid to employees (employment taxes). Section 3101 imposes
a FICA tax at the employee level as well, which section 3102
requires the employer to collect from the employee’s wages.
Section 3402 requires an employer to withhold from his employee’s
wages the employee’s share of Federal income tax, and section
3501 requires the employer to deposit amounts withheld with the
Treasury of the United States. If the employer fails to withhold
as required, he is liable for the amounts owed by the employee,
but required to be withheld by the employer. Sec. 3403.
With regard to 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); accord sec.
3306(i). Sections 31.3121(d)-1(c)(2) and 31.3306(i)-1(b),
Employment Tax Regs., define an “employer-employee relationship”
as follows:
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Last modified: March 27, 2008