COURT OF APPEALS OF VIRGINIA 

Present: Judges Bray, Bumgardner and Senior Judge Hodges 

Argued by teleconference 

CENTRAL DELIVERY SERVICE 

 OF WASHINGTON, INC. 

 MEMORANDUM OPINION* BY 

v. Record No. 2046-00-2 JUDGE WILLIAM H. HODGES 

 NOVEMBER 6, 2001 

VIRGINIA EMPLOYMENT COMMISSION 

FROM THE CIRCUIT COURT OF THE CITY OF RICHMOND 

Theodore J. Markow, Judge 

 E. Duncan Getchell, Jr. (William H. 

Baxter II; McGuireWoods LLP, on briefs), for 

appellant. 

 William A. Diamond, Assistant Attorney 

General (Mark L. Earley, Attorney General; 

Richard B. Zorn, Senior Assistant Attorney 

General, on brief), for appellee. 

 

* Pursuant to Code § 17.1-413, this opinion is not 

designated for publication.

 Central Delivery Service of Washington, Inc. (Central 

Delivery) appeals a July 27, 2000 circuit court order affirming a 

decision of the Virginia Employment Commission (the VEC). The VEC 

held that services performed by contract carrier courier drivers 

for Central Delivery constituted "employment" for which Central 

Delivery is liable for unemployment insurance taxes pursuant to 

Code § 60.2-212 and that their services were not exempt under Code 

§ 60.2-219(22). Central Delivery argues that the VEC and the 

circuit court erred in denying their exemption from state 
unemployment taxation. For the reasons that follow, we agree and 

reverse. 

BACKGROUND

 For unemployment compensation purposes, the term "employment" 

is defined in Code § 60.2-212. Generally, that term means any 

service performed for remuneration or under any contract of hire. 

The VEC, in its commission decision, determined that the services 

performed by Central Delivery's drivers constitute "employment" 

under Code § 60.2-212, and that issue is not before us on appeal. 

However, Code § 60.2-619 contains a list of services that are 

statutorily exempt from the "employment" definition. Code 

§ 60.2-619(22) provides that the term "employment" shall not 

include: "Service performed . . . as a driver of an executive 

sedan . . . provided the Commission is furnished evidence that 

such individual is excluded from taxation by the Federal 

Unemployment Tax Act" (FUTA). The VEC and the circuit court 

determined that Central Delivery had not provided the VEC with 

sufficient evidence to prove that its drivers are excluded from 

FUTA taxation. Central Delivery appeals from that determination. 

 In its findings of fact, the VEC found that Central Delivery 

is engaged in, among other things, delivery and messenger 

service. Central Delivery engages the services of contract 

courier drivers to perform the actual deliveries according to 

customer specifications. It is the status of these drivers that 

is at issue in this case. The VEC noted that the Internal 

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Revenue Service (IRS) has audited Central Delivery on several 

occasions. In 1996, representatives of Central Delivery 

responded to the IRS "20 questions" with respect to whether the 

contract operators are independent contractors or employees. By 

a form letter dated in February 1996, the district director of 

the IRS advised Central Delivery that it had completed the 

review and had taken action indicated by the check below. The 

box that read, "We have accepted the report" was checked. 

ANALYSIS

 The findings of the VEC as to the facts, "if supported by 

the evidence and in the absence of fraud, shall be conclusive, 

and the jurisdiction of the court shall be confined to questions 

of law." Code § 60.2-500(B)(1). "On appeal, we consider the 

evidence in the light most favorable to the finding by the VEC." 

V.E.C v. Thomas Regional Directory, Inc., 13 Va. App. 610, 613, 

414 S.E.2d 412, 415 (1992). Thus, unless we can say as a matter 

of law that the evidence established the exceptions, the VEC's 

decision must be upheld. In this case the evidence provided by 

Central Delivery was sufficient to establish that its drivers 

are excluded from taxation by FUTA. Code § 60.2-219(22). 

 In Revenue Ruling 87-41, 1987-1 C.B. 286, the IRS provided 

a list of factors used to determine whether contractors are 

"employees . . . for the purposes of . . . the Federal 

Unemployment Tax Act." The list of factors is the IRS's "20 

questions" that Central Delivery answered in its audit and which 

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the IRS accepted. Code § 60.2-219(22) required Central Delivery 

to furnish "evidence" of its drivers' exemption from FUTA 

taxation. Although the VEC asked Central Delivery to provide an 

IRS Form SS-8 specific to the individuals in question, the 

statute allows, as the VEC acknowledged, other evidence which 

would demonstrate the drivers' exemption. The IRS letter 

accepting Central Delivery's "20 questions" answers sufficiently 

demonstrated that the IRS considered Central Delivery's drivers 

exempt from FUTA taxation. See Rev. Rul. 87-41, 1987-1 C.B. 

286. Thus, as a matter of law, the evidence supported a finding 

that Central Delivery is exempt from state unemployment taxes 

under Code § 60.2-219(22). 

 Accordingly, the decision of the circuit court is reversed. 

 Reversed. 

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