T.C. M em o . 2 0 2 0 -8 8

UNITED STATES TAX COURT
LETICIA C. SANTOS, Pet i t io n er v . COM M ISSIONER OF INTERNAL REVENUE, Res po n d en t

Do ck etNo . 2 7 6 93 -1 4
. Fi l edJ u n e 1 7 , 2 0 2 0
.

Ro g er S. Dav i s , fo r p et i ti o n er. M ari e E. Sm al l an dLi n d a P. Azm o n , fo r res po n d en t
.

M EM ORANDUM FINDINGS OF FACT AND OPINION ASHFORD, J u d g e: Th i s cas e i s b efo re th e Co u rto n a p et it i o n fo r red et erm i n at i o n o f em

p l o ym en ts t atu s p urs u an t t o s ect i on 7 4 3 6
. 1 Ina n o t i ce o f

1 Un l es s o th erwi s e i nd i cat ed , al l s ect i o n referen ces are t o th e In t ern al Rev enu e Co de i n effect atal l rel ev an tt i m es , an dal l Ru l e referen ces are t o th e Tax Co u rtRu l es o f Pract i ce an dPro cedu re. So m e m o n et ary am o u n t s are ro u n d edt o

(co n ti n u ed ...)- 2
-

[* 2 ] d et erm i n at i o n o f wo rk er cl as s i fi cat i o n (n ot i ce o f d et erm in at io n ) i s s u edt o p et i t i o n er, res p o nd en t d et erm i n edth at(1 ) fo r p u rp o s es o f Fed eral em p lo ym en t t ax es , 2 th e i n d iv idu al s l i st edi n th e n o t i ce o f d et erm i n at i o n s h o ul d b e l eg al ly cl as s ifi edas p et i t i o ner’ s em p l o y ees fo r al l t ax ab l e p eri o d s o f cal en d ar y ears 2 0 0 8
- 1 0 (p eri o d s ati s s u e), (2 ) p et i t i o n er was n o ten t it l edt o rel i ef u n d er th e Rev en u e Acto f 1 9 7 8, Pub
. L. No . 9 5 -6 0 0 , s ec. 5 3 0 , 9 2 St at
. at2 8 8 5 , an d(3 ) th erefo re p et i t i o n er was l i ab l e fo r Fed eral em p lo ym en tt ax es o f $ 1 2 5,7 9 9 . Th e s o l e i s s u e fo r d eci s i o n i s wh et her t h e i n d i v idu al s l i st edi n th e n o t i ce o f d et erm i n at i o n s ho u l db e l eg al ly cl as s ifi edas em

pl oy ees as res p o n den t m ai n t ai n s o r as i n d ep en d en t
co n tract ors as p et i t io n er m ai nt ai n s . 3 W e res o l v e t hi s i s s u e i n p et i t i o n er’ s fav o r.

1 (...co n t in u ed ) th e n eares td o l l ar.

2 Fo r co n v en i en ce, we u s e t h e t erm “ Fed eral em

p l oym en tt ax es ” t h ro u g h o u t th i s o p i n i o n t o refer t o th e t ax es i m p o s edu n d er th e Fed eral In s u ran ce Co n tri b u t i o n s Act(FICA), s ecs . 3 1 0 1 -3 1 2 8 , an dth e Fed eral Un em pl oym en tTax Act(FUTA), s ecs . 3 3 0 1 -3 3 1 1, an dFed eral i n co m e t ax wi th h ol d in g , s ecs . 3 4 0 1
- 3 4 0 6
. 3 Pet i t i on er fai l ed to as s i g n erro r i n h er p et i t io n t o res p on d en t ’ s d et erm i n at i o n th ats h e was n o t en t i t l edt o rel ief u n d er t h e Rev en u e Acto f 1 9 7 8 , Pub . L. No . 9 5 -6 0 0 , s ec. 5 3 0 , 9 2 St at . at2 8 8 5 . Acco rd i n gl y , th i s i s s u e i s d eem ed co n ced ed . See Ru l e 2 91 (b )(4 ). In an y ev en t, i n th e l i g h to f o u r h ol d i n g we n eed n o tad dres s th i s i s s u e.- 3
-

[* 3 ] FINDINGS OF FACT So m e o f t h e fact s h av e b een s ti p u lat ed an dare s o fo u n d. Th e s t ip u l at i o n o f fact s an dth e at t ach ed ex h i b i ts are i n co rp o rat ed h erei n b y referen ce. Pet i t i o n er
res i dedi n M as s ach us et t s wh en h er p et it i on was t i m el y fi l ed wi th the Co urt
. I. Pet i t i o ner an d Her Cl ean i n g Bu s i n es s Pet i t i o ner was b o rn an drai s edi n Brazi l ; s h e em i g rat edt o th e Un i t edSt at es i n 1 9 9 6. In J u ly

1 9 9 8 s h e m arri edAg u i n al do San t o s . So m et i m e al s o i n 1 9 9 8 (o r 1 9 9 9 ) s h e b eg an cl ean i n g res id en ti al h o m es . In 2 0 0 0 s h e b eg an cl ean i n g ap art m en tb u il d i n g s an dth e ap art m en t s wi thi n th os e b u i l d i n g s , an ddu ri n g atl eas t th e p eri o d s ati s s u e u n ti l s o m et i m e i n 2 0 1 1 s he o wn edan do perat edCam p o s Cl ean i n g Co . (Cam

p o s Cl ean i ng ), an u n in co rp orat edb u s in es s , t o p ro v i d e s u ch cl ean i n g s erv i ces . 4 M r. San t os al s o h adh i s o wncl ean i n g b u s i n es s . Du ri n g atl eas t th e p eri o d s at i s s u e Cam p o s Cl ean i ng h adco n tract s wi th
s ev eral ap art m en tco m

p l ex es t o d o “ Un i tTu rn o v er Cl ean i n g”, i .e., cl ean i ng

4 Pet i t i on er rep o rt edi tem s o f i n co m e an dex p en se fro m Cam p o s Cl ean i n g o n Sch edu l es C, Pro fi t o r Lo ss Fro m Bu s i n es s , at t ach ed t o h er Fed eral i n co m e t ax retu rn s fo r 2 0 08 -1 0
. At a t i m e n o tes t ab l i s h edb y th e reco rdth e In t ern al Rev en u e Serv i ce (IRS) ex am i n edp et i t i o n er’ s return s fo r 2 0 0 8 an d 2 0 0 9
. Th e ex am i n at i o n res u l ted i n p et i t i o n er’ s ag reei n g t o cert ai n i n co m e ad ju s tm en t s, i ncl u d in g i n creas edSch edu le C g ro s s recei p t s at tri b u t ab l e t o Cam p os Cl ean i n g b u tal s o i n creas edco nt ractl ab o r ex p en ses at tri b u tab l e t o Cam p o s Cl ean i n g . Pet it i on er s o l dCam p o s Cl ean i n g i n 2 0 1 1.- 4
-

[* 4 ] recen t l y

v acat ed ap art m en t s fo r fu tu re t en an t o ccup at i o n , an dco n tract s t o cl ean th e ap art m en tco m

p l ex es ’ co m

m o n areas , i .e., th e h al l way s an d s t ai rwel l s , l au n dry ro o m , co m

p act o r area, fi tn es s cen t er, m an ag em en to ffi ces , cl ub h ou s e, an d
m o del ap art m en t . W i th res pect t o cl ean i n g th e co m m o n areas , th e co n tract s
s p eci fi edth e d ay s an dh ou rs wh en s u ch wo rk was t o b e p erfo rm ed . Th atwas n o t th e cas e wi th res p ectt o cl ean i n g a recen t l y v acat edap art m en t ; wh en a recen t l y
v acat edap art m en tn eed edcl ean i n g , th e ap art m en tco m p l ex ’ s p ro p ert y

m an ag er
wo u l dco n t actp et i t i o n er t o s ch edu l e t he cl ean i n g . Al th ou g h p et i t i o n er an dM r. San to s s ep arat edi n 2 0 0 2 an dl at er d i v o rcedi n 2 0 1 0, h e (an dh i s b u s i n es s ) b y an d l arg e wo ul dh an d l e cl ean i n g th e co m m o n areas o n b eh al f o f Cam po s Cl ean i n g . Pet i t io n er o ccas i o nal l y

cl ean edth e recen tl y v acat ed ap art m en ts h ers el f, b utb y an d l arg e s h e h iredo th ers t o cl ean th es e ap art m en t s . By s om et i m e i n 2 0 09 s h e ceas ed p erfo rm i n g an y

cl ean i ng s erv i ces h ers el f b ecau s e o f h eal th p ro b l em s . Fo r cl ean i n g th e co m

m o n areas th e ap art m en tco m p l ex es ag reedt o p ay Cam p o s Cl ean i n g a week ly

fi x edam o u ntran g i n g fro m $ 5 1 0 t o $ 78 0
. Fo r cl ean i n g an y

recen t l y v acat ed ap art m en t , th ey

ag reedt o p ay

Cam p o s Cl ean i n g
m o nt h l y at a fi x edrat e o f $ 9 0-$ 1 2 0 , d ep en d i n g o n th e s i ze o f t h e ap art m en t
. Pet i t i o ner recru i t edi n d i v i du al s t o wo rkfo r Cam p o s Cl ean i n g th ro u g h ad v ert i s em en t s s h e p os t edi n Brazi l i an h ai r s al on s an do th er b u s i n es s es i n Al l s t o n ,- 5
-

[* 5 ] M as s ach u s et ts . Sh e h i redo n l y i n d i v i du al s wi th p rev io u s cl ean in g ex p eri en ce
an d th us n ev er p ro v i dedan y trai n i n g t o th em . Pet i t i o ner’ s wo rk ers d i dn o th av e wri t ten em pl o ym en tco n tract s wi th Cam p o s Cl ean i n g . To th aten d , p et i t i o n er d i dn o tg u aran tee t h em a m i n i m u m
am ou n to r freq u en cy

o f wo rkan dth ey

co u l d d ecl in e t o d o a cl ean i n g jo b o n b eh al f
o f Cam p o s Cl ean i n g fo r wh at ev er reas o n . M an y o f p et i ti o n er’ s wo rk ers cl ean ed fo r o th er i n d i v i du al s o r b us i nes s es as wel l
. Pet i t i o ner p ai d h er wo rk ers week l y , an dth ei r p ay was b as edo n a fi x edrat e
o f $ 5 0-$ 7 0 p er ap art m en t cl ean ed , d ep en d i n g o n th e s ize o f th e ap art m en t
. Pet i t io n er d i dn o tp ro v i d e p ai dl eav e fo r s i ckn es s o r v acat i o n an dd i d n o t o ffer h eal th i n s u ran ce, ret i rem en tb en efi t s , o r an y o th er em p l o y ee b en efi ts (al th o u g h the
co n tract s b et ween Cam

p o s Cl ean i n g an dth e ap art m en t co m p l ex es o b l i g at ed Cam p o s Cl ean i n g t o m ai n t ai n co m m erci al g en eral l i ab i l i ty

i n s uran ce an dwo rk ers ’
co m p en s at i o n i n s uran ce, an o b l i g at i o n wi th wh i ch Cam p o s Cl ean i n g co m

p l i ed ). Wh en a recen t ly

v acat edap art m en t n eed ed cl ean i n g , th e ap art m en t
co m p l ex ’ s p ro p erty

m an ag er wo u l d co n t actp et i ti o n er, wh o wo u l ds en do n e o f h er
wo rk ers t o d o th e cl ean i n g b y th e d ead li n e t he p ro p ert y m an ag er h ades t ab li s h ed wi th h er. By

an d l arg e t h e wo rk ers th atp et i t i o n er s en tt o d o a cl ean i n g jo b u s ed th ei r o wn o r p ub l i c t ran s p ort at i o n t o g ett o t h e p ro p ert y , an dth ey b ro u g h twi th- 6
-

[* 6 ] th em an d u s edthei r o wncl ean in g s up p l i es . Th ey were al s o free t o h i re t h ei r
o wnas s i s t an t s ; an di f th ey di ds o th ey (n o t p et i t io n er) were res p o ns i b l e fo r p ay i n g th es e as s i s t an t s. Si n ce m o s to f h er wo rk ers s p o k e o n l y Po rtu g u es e o r Sp an i s h (l an g u ag es th atp et it i o n er s p o ke), p et it i o n er wo u l drel ay t o them an y s p eci al i n s tru ct i o n s fro m

th e p ro pert y

m an ag er. Up o n arri vi n g ata p ro pert y , th e wo rk er wo u ldb e g i v en a k ey t o t h e ap art m en tth atn eed edt o b e cl ean edan dd i rect edt o t h atap art m en tb y th e p ro p ert y
m an ag er. Pet i t i o n er wo ul drarel y g o t o a p ro pert y

an ds up erv i s e t he cl ean i n g , an d
o n ce t h e cl ean i n g was d o n e, s h e wo ul d n otg o t o th e p ro p ert y an dd o a p o s t cl ean i n g i n s p ect io n. If t h e cl ean i n g was d efi ci en t i n s o m e res p ectan dth e
wo rk er h adal read y

l eft th e p ro p ert y , th e p ro p ert y m an ag er wo u l dco n t act p et i t i o n er, an dp et i t i on er wo u l dth en d i rect th e wo rk er t o retu rn t o th e p ro p ert y t o
rem ed y th e p ro b l em s. Atn o p o i n td i d p et i t i o n er fo rm al l y d i s ch arg e o r t erm i n at e
an y o f h er wo rk ers . II. Pet i t i o ner’ s Tax Rep ort in g o f t he W o rk ers an dth e No t i ce o f Det erm i n at io n Pet i t i o ner d i dn o tp rep are (o r h av e p rep ared ) Fo rm s W -2 , W ag e an d Tax St at em en t , fo r an y

o f h er wo rk ers fo r 2 0 0 8 -1 0, Fo rm s 9 4 1, Em pl o y er’ s Qu art erl y Fed eral Tax Retu rn , fo r t h e p eri o d s ati s s u e; o r Fo rm s 9 4 0 , Em p lo y er’ s An n u al- 7
-

[* 7 ] Fed eral Un em

p l o ym en t(FUTA) Tax Retu rn , fo r 2 0 0 8 -1 0 . Ho wev er, p et i t i o n er’ s acco u n t an t(t h e s am e i n d i vi du al wh o p rep aredan dfi l edh er Fed eral i n co m e t ax retu rn s fo r 2 0 0 8 an d2 0 0 9 ) p rep aredFo rm s 1 0 9 9-M ISC, M i s cel lan eo u s In co m e, fo r 2 6 wo rk ers fo r 2 0 0 8, 1 7 wo rk ers fo r 2 0 0 9 (fo r 1 0 o f wh o m 20 0 8 Fo rm s 1 09 9 -M ISC were p rep ared ), an d5 wo rk ers fo r 2 0 1 0 (fo r 1 o f wh o m a 2 0 0 9 Fo rm

1 0 99 -M ISC was p rep aredan d4 o f wh o m 2 0 0 8 an d2 0 0 9 Fo rm s 1 0 9 9 -M ISC were p rep ared ). Th es e fo rm s were i s su edt o th o s e wo rk ers , b u t i t is u n cl ear wh et h er co p i es o f t h e fo rm s were ev er fi l edwi th th e IRS. Ata t i m e n o tes t ab l i s h edb y th e reco rdth e IRS n o t ifi edp et it i on er t h ats h e (an dCam p o s Cl ean i ng ) h adb een s el ect edfo r em p l o ym en t t ax ex am in at io n . On Oct o b er 3 , 2 0 1 4 , fo l l o wi n g th i s ex am i n at i o n , th e IRS i s s u edt o p et i t i o n er t h e
n o t i ce o f d et erm i n at i on . 5

5 Th e n o ti ce o f d et erm i n at i o n l i s t ed1 1 i n d i v i du al s wh o s h o u l d b e l eg al l y cl as s ifi edas p et i t i o ner’ s em p l o y ees fo r 2 0 0 8 (n o tco u nt i n g an i n d iv i du al wh o ap p ears t o h av e b een erro n eo u s l y l i s t edtwi ce), 1 2 i n d iv i du al s wh o s h o u l d b e l eg al ly cl as s ifi edas p et i ti o n er’ s em pl o y ees fo r 2 0 0 9 , an d 5 i n d i v i du al s wh o s h o u l d b e l eg al l y cl as si fi edas p et i t i on er’ s em p l o y ees fo r 2 0 1 0 . Th ere was s om e o v erl ap o f t h e i n d i vi du al s l i s t edfo r 2 0 0 8 -1 0 ; i n t ot al , 1 4 d ifferen t i nd i v i du al s were l i s t ed i n the n o t i ce o f d et erm i n at i o n . Th ere were 1 9 i n d i v i du al s fo r wh i ch Fo rm s 1 0 9 9
- M ISC were p rep aredwh o were n o tl i s t edi n th e n o t i ce o f d et erm i n at i o n .- 8
-

[* 8 ] OPINION I. Bu rd en o f Pro o f In g en eral , th e Co m

m i s s i o n er’ s d et erm i n at i o ns s etfo rt h i n a n o ti ce o f d efi ci en cy

are p res u m edco rrect , an dth e t ax p ay er b ears th e b u rd en o f p ro v i n g
o th erwi s e. See Ru l e 1 4 2 (a); W el ch v . Hel v eri n g , 2 9 0 U.S. 1 11 , 1 15 (1 9 33 ). Th i s p ri n ci p l e ap pl i es t o th e Co m m i s s i o n er’ s d et erm i n at i o n s t h at a t ax p ay er’ s wo rk ers
are em p lo y ees . 6 Ewen s & M il l er, In c. v . Co m m i ss i o ner, 1 17 T.C. 2 6 3, 2 6 8 (2 0 0 1 ) (ci t i n g Bo l es Tru ck i n g , In c. v . Un i t ed St at es , 7 7 F.3 d2 3 6 , 2 39 -2 4 0 (8 th Ci r. 1 9 9 6 )). II. Th e W o rk ers ’ Leg al Cl as s i fi cat i o n A. Ap p li cab l e Law Em p l o y ers an dem

p l o y ees are s ub

jectt o FICA wh il e o n l y

em pl o y ers are
s ub jectt o FUTA. FICA p ro v i d es fo r t ax es d en o m i nat ed“ [o ] l d -ag e, s u rv i v o rs , an d d i s ab i l i ty i n su ran ce” an d“ [h ] o s p i t al i n s u ran ce” p ay ab l e b y b o th em p l o y ers an d

6 Un d er s ec. 7 4 91 (a)(1 ) an d(2 ), i f t h e t ax p ay er p ro du ces cred i b l e ev i d en ce wi th res p ect t o an y rel ev an t fact u al i s su e an dm eet s cert ai n o th er req u i rem en t s , th e b u rd eno f p ro of s h i ft s fro m th e t ax p ay er t o th e Co m m i s s i o n er as t o t h atfact u al i s su e. Ho wev er, s ec. 7 4 9 1 (a) d o es n o tap p l y t o em p l oym en tt ax d is p u tes (an d p et i t i o n er d o es n o t arg u e o th erwi s e). Ch arl o t t e’ s Offi ce Bo u t i qu e, In c. v . Co m m i s s i o n er, 1 2 1 T.C. 8 9 , 1 0 2 (2 0 0 3 ) (ci ti n g s ec. 7 4 9 1 (a) an dJ o s ep h M . Grey Pub . Acco u n t an t , P.C. v . Co m m i s s i o n er, 1 1 9 T.C. 1 21 , 1 23 n .2 (2 0 0 2), aff’ d , 9 3 F. Ap p ’ x 4 7 3 (3 d Ci r. 2 0 0 4 )), s up p l em en t edb y T.C. M em o. 2 0 0 4 -4 3 , aff’ d, 4 2 5 F.3 d1 2 0 3 (9 th Ci r. 2 0 05 ).- 9
-

[* 9 ] em pl o y ees . See s ecs . 3 1 0 1, 3 1 1 1
. FUTA p ro v id es fo r u n em p l o ym en tt ax es p ay ab l e b y em

p l o y ers . 7 See s ecs . 3 3 0 1 -3 3 1 1 . Em p l o y ers are req u i redt o wi th h o l d th e em p lo y ee’ s p o rt i o n o f FICA t ax es as wel l as Fed eral i n co m e t ax o n wag e p aym en t s t hey

m ak e t o each em

p l o y ee. 8 See s ecs . 3 1 0 2, 3 4 02 . Th es e Fed eral
em pl o y m en tt ax es d o n o tap p l y

t o p aym en t s t o i n d ep en den tco n tract o rs . Wh et h er an i n di v i du al i s an em p l o y ee o r an i n d ep en d en tco n tract o r i s a fact ual qu es ti o n t o wh i ch co m m o n l aw p ri nci p l es ap p l y . W eb er v . Co m m i s s i o n er, 1 0 3 T.C. 3 7 8 , 3 8 6 (1 9 9 4 ), aff’ dp er cu ri am , 6 0 F.3 d1 1 0 4 (4 th Ci r. 1 9 9 5); s ee al s o
s ec. 3 1 21 (d )(2 ) (d efi ni n g an em p l o y ee as “ an y

i n d iv i du al wh o, u n d er t he u s u al
co m m o n l aw ru les ap p l i cab l e i n d et erm i n in g th e em p l oy er-em

p l o y ee rel at i o n s h i p , h as th e s t atu s o f an em

pl o y ee”); s ec. 3 3 0 6 (i ). Th e reg u l at i on s p ro v id e g u i d an ce wi th res p ect t o cl as s i fy i n g a wo rk er as a co m m o n l aw em

p lo y ee. Sp eci fi cal l y , s ect i on 3 1 .3 1 2 1 (d )-1 (c)(2 ), Em p l o ym en tTax Reg s ., p ro v i d es fo r FICA t ax p u rp os es th e fo l l o wi n g :

7 Em p l o y ers rep o rt(o n Fo rm

9 4 0 ) an dp ay

FUTA t ax o n a cal en d ar y ear b as i s . See s ec. 3 3 0 1 ; s ec. 3 1
. 6 0 1 1 (a)-3 (a), Em p l o ym en tTax Reg s . 8 Em p l o y ers rep o rt(o n Fo rm

9 4 1 ) an dp ay

al l FICA t ax (i .e., th e “ em p l o y ee” FICA t ax an dth e “ em

p lo y er” FICA t ax ) as wel l as Fed eral i n co m e t ax o n wag e p aym en t s o n a qu art erl y

b as i s. See s ec. 3 4 02 (a); s ecs . 3 1 .6 0 1 1 (a)-1 (a)(1 ), 3 1 .6 0 1 1 (a)-4 (a)(1 ), Em

p l o ym en tTax Reg s.; s ecs . 3 1.6 0 1 1 (a)-1 T (a)(1 ), 3 1 .6 0 1 1 (a)-4 T(a)(1 ), Tem p oraryEm

p l oym en tTax Reg s ., 7 3 Fed
. Reg . 7 9 3 5 7 , 7 9 3 5 8 (Dec. 2 9 , 2 0 08 ).- 1 0 -

[* 1 0 ] Gen eral ly

* * * [an em

p lo y er-em

pl o y ee] rel at i o n s h i p ex i s t s wh en th e p ers on fo r wh om

s erv i ces are p erfo rm edh as th e ri g h tt o co n tro l an d d i rect th e i n d i v i du al wh o p erfo rm s the s erv i ces , n o t o n l y as t o the res u ltt o b e acco m

p li s hedb y

th e wo rkb u tal s o as t o th e d et ai l s an d m ean s b y wh ich thatres u l ti s acco m p l i s h ed . Th ati s, an em

p l oy ee i s s ub jectt o th e wi l l an dco n tro l o f t h e em p l o y er n o t o n l y

as t o wh at s h al l b e d on e b u th ow i ts h al l b e d o ne. In th i s co n n ect i o n , i ti s n o t n eces s ary th atth e em

p l o y er act u al l y d i rect o r co n tro l the m an n er i n wh i ch th e s erv i ces are p erfo rm ed ; i ti s s uffi ci en t i f h e h as th e ri g h t t o d o s o . Th e ri g h tt o d i sch arg e i s al s o an i m p o rt an t fact o r i n d i cat i n g th atth e p ers o n p o ss es s i ng th atri g h t i s an em p l o y er. Oth er fact o rs ch aract eri s ti c o f an em

p l o y er, b u t n o tn eces s ari l y p res en ti n ev ery cas e, are t he fu rn i s h i n g of t o o l s an dth e fu rn i sh i n g o f a p l ace t o wo rk , t o th e i n d i v i du al wh o p erfo rm s th e s erv ices . Ing en eral , i f an i n d i vi du al i s s ub

jectt o th e co n tro l o r d i rect io n o f an o th er m erel y as t o th e res u ltt o b e acco m

p l is h edb y

the wo rkan dn o tas t o th e m ean s an d m et h o d s fo r acco m

pl i s h in g th e res u l t , h e [o r s h e] i s an i n d ep en d en t co n tract o r. Ani n di v i du al p erfo rm i n g s erv i ces as an i n d ep en d en t co n tract o r i s n o t as t o s u ch s erv i ces an em p l oy ee u n d er t h e u s u al co m m o n l aw ru les . * * * Sect i o n s 3 1 .3 4 0 1 (c)-1 (b ) an d3 1 .3 3 0 6 (i )-1 (b ), Em p l oym en tTax Reg s ., u s e
v i rtu al l y i d en t i cal t ex t t o d efi n e an em pl o y er-em

p lo y ee rel at i on s h i p fo r Fed eral i n co m e t ax wi th h ol d i n g an d FUTA t ax p u rp o s es , res p ect i v el y . Co u rt s co n s i d er v ari o u s fact o rs i n d et erm i n i n g wh et h er a wo rk er i s a
co m m o n l aw em

p l o y ee o r an i n d ep en den tco n tract o r. W eb er v . Co m m i s s i o n er, 1 0 3 T.C. at3 87 . Rel ev an tfact o rs th i s Co u rtco n s i d ers i n cl u d e: (1 ) t h e d eg ree o f
co n tro l ex erci s ed b y th e p ri n ci p al o v er t h e wo rk er; (2 ) wh ich p art y i n v es t s i n th e
wo rkfaci l i t i es u s edb y

the wo rk er; (3 ) t h e wo rk er’ s o pp o rtu n i ty fo r p ro fi t o r l o s s ;- 1 1 -

[* 1 1 ] (4 ) wh et her t h e p ri n ci p al can d i s ch arg e t h e wo rk er; (5 ) wh et h er t h e wo rki s p arto f t he p ri n ci p al ’ s reg ul ar b u s i n es s ; (6 ) th e p erm an en cy o f t h e rel at i o n sh i p ; an d (7 ) t h e rel at i o ns h i p th e p art i es b el i ev edth ey were creat i n g . Ewen s & M i l ler, In c.
v . Co m m i s s i o n er, 1 1 7 T.C. at2 7 0 (ci t i n g W eb er v . Co m m i s s i o n er, 1 0 3 T.C. at 3 8 7 ). No s i n g l e fact o r i s d i s p o s i t i v e, an dal l fact s an dci rcu m s t an ces m u stb e
co n si d ered
. 9 Id
.

9 Th e U.S. Co u rto f Ap p eal s fo r th e Fi rs tCi rcu i t , th e co u rtt o wh i ch an ap p eal o f thi s cas e wo u l dl i e ab s en ts t i pu l at i o n b y th e p art i es o th erwi s e, s ee s ec. 7 4 8 2 (b )(1 )(A), en d o rs es l o o k i ng ats i m il ar n on ex hau s t iv e fact o rs wei g hedi n th ei r t o t al i ty as i n d icat i o n s o f an em

p l o y er-em

p l o y ee rel at i o n s h ip (i n the co n tex to f d i s p u t es u n d er Ti t l e VII o f t he Ci v i l Ri g h t s Acto f 1 9 6 4 ). Th atco u rt co n s i d ers : (1 ) wh et h er t h e em

p l o y er h as th e ri g h tt o co n tro l wh en , wh ere, an d h o w th e wo rk er p erfo rm s th e jo b ; (2 ) t h e l ev el o f s k i l l o r ex pert i s e th atth e wo rkreq u i res ; (3 ) wh et h er t h e wo rk

i s p erfo rm edo n th e em

p l o y er’ s p rem i s es ; (4 ) wh et h er t h ere i s a co n t i n ui n g rel at i o n s h i p b et ween th e wo rk er an dth e em p l o y er; (5 ) wh et h er t h e em pl o y er h as th e ri g ht t o as s i g n ad d i t i o nal p ro ject s t o th e wo rk er; (6 ) wh et h er t h e em pl o y er s et s th e h o u rs o f wo rk an dthe du rat i o n o f t h e jo b ; (7 ) wh et h er t h e wo rk er i s p ai db y

th e h o u r, week , o r m o n th rat her t h an th e ag reedco s to f p erfo rm i n g a p art i cu lar jo b; (8 ) wh et h er t h e wo rk er h i res an d p ay s as s i s t an t s ; (9 ) wh et h er t h e wo rk

p erfo rm edb y

th e wo rk er i s p arto f t h e reg u l ar b u s i n es s o f t h e em pl o y er; (1 0 ) wh et h er t h e em p l o y er i s i n b us i n es s ; (1 1 ) wh et h er t h e wo rk er i s en g ag edi n h is o r h er o wnd i s t i n cto ccup at io n o r b us i n es s ; (1 2) wh et h er t h e em pl o y er p ro v i d es th e wo rk er wi th b en efi t s, s uch as i n s uran ce, l eav e, o r wo rk er’ s co m p en s at i o n ; (1 3 ) wh et h er t h e wo rk er i s co n s id eredan em p l o y ee o f t h e em

p l o y er fo r t ax p u rp o s es ; (1 4 ) wh et h er th e em p l o y er can d i sch arg e t h e wo rk er; an d (1 5 ) wh et h er t h e wo rk er an dth e em pl o y er b el i ev e t h atth ey

are creat i n g an em pl o y er-em

p l o y ee rel at i on s h ip . Cas ey v . Dep ’ to f Heal th & Hu m anServ s ., 8 0 7 F.3 d3 9 5 , 4 0 4 -4 05 (1 s tCi r. 2 0 1 5 ) (ci t i ng Lo p ez v . M as s ach u s et t s , 5 88 F.3 d 6 9 , 8 5 (1 s tCi r. 2 0 0 9 )); s ee al s o Un i t edSt at es v . Po w ers , 7 0 2 F.3 d1 , 1 1 (1 s t Ci r. 2 0 1 2 ) (d i s cu s s i ng s o m e o f th e co m m o n -l aw fact ors i n d icat i n g an em p l oy er-em

p l o y ee (co n ti n u ed ...)- 1 2 -

[* 1 2 ] B. An al y s i s Th e ex t en tt o wh i ch th e p ri n ci p al h as the ri gh tt o ex erci s e co n tro l o v er t h e
wo rk er i s the “ cru ci al t es t ” i n d et erm i n i n g th e n atu re o f a wo rk i n g rel at i o n s h i p . W eb er v . Co m

m i s s i o n er, 1 0 3 T.C. at3 8 7 ; s ee al so Cas ey v . Dep ’ to f Heal th & Hu m an Serv s ., 8 0 7 F.3 d3 9 5 , 4 0 5 (1 s tCi r. 2 0 1 5 ). To th aten d , “ [a] n em p l o y erem pl o y ee rel at i o n s h i p ex i s t s wh en th e p ri n ci p al ret ai n s t h e ri g htt o d i rect the
m an n er i n wh i ch th e wo rki s t o b e d o n e, co n tro l s th e m et h od s t o b e u s edi n d o i n g th e wo rk , an dco n tro l s th e d et ai l s an dm ean s b y wh i ch th e d es i redres u l t i s t o b e
acco m pl i s h ed .” At l. Co as tM as o n ry , In c. v . Co m m i s s io n er, T.C. M em o . 2 0 1 2
- 2 3 3 , at * 1 5 (ci t i n g El l i s o n v . Co m m i s s i o ner, 5 5 T.C. 1 4 2, 1 5 2 -1 53 (1 9 7 0 )). Res p o n d en tco n t en d s th atp et i t i o n er h adthe req ui s i t e co n tro l o v er h er
wo rk ers t o es t ab l i s h an em p l o y er-em

pl o y ee rel at io n s hi p b ecau se s he m an ag edth e d ay -t o -d ay

o p erat i o n s o f Cam

p o s Cl ean i n g . In s up p o rto f t h i s co n t en t i o n
res p o n d en t p o in t s t o th e co nt ract s b et w een Cam p o s Cl ean i n g an dth e ap art m en t
co m p l ex es ; m ore s peci fi cal l y , th e req u i rem en t s i n th e co n tract s t h atCam p o s Cl ean i n g was res po n s i bl e fo r al l n eces saryl ab o r, s up erv i s i o n , equ i p m en t , an d
m at eri al s n eed edt o p erfo rm th e d el i n eat ed cl ean in g s erv i ces , was n o tp erm i t t ed t o

9 (...co n t in u ed ) rel at i o n s h i p i n th e co n t ex t o f adm i s s i b i l i ty o f IRS rev en ue ag en tt es t i m o n y reg ard i n g Fed eral em

p l o ym en tt ax es o st en s i b ly o wi n g i n a cri m i n al t ax cas e).- 1 3 -

[* 1 3 ] as s i g n th e co n tract s wi th o u tth e ap art m en tco m p l ex es ’ p ri o r wri t t en co n s en t , an d was res p o n s i b l e fo r m ai n t ai n i n g cert ai n m i n i m u m am ou n ts o f g en eral l i ab i l i t y i n s u ran ce an dwo rk er’ s co m p en s at i o n i n s u ran ce. Res p o n d en t al s o n o t es h o w p et i t i o n er was th e “ po i n to f co n t act ” fo r t h e p ro p ert y m an ag ers wi th res p ectt o an y cl ean i n g jo b , i ncl u d i ng p aym en tb y th e ap art m en t co m

pl ex es fo r an y

cl ean i n g jo b
. Pet i t io n er co n ten d s th ats h e d i d n o tco n tro l h er wo rk ers i n a m an n er t h atwo u l d
es t ab l i s h an em

p l o y er-em

p l o y ee rel at i o n s h i p b ecau s e s h e d i dn oth av e t h e ri g h tt o
co n tro l th e m an n er an dm ean s b y wh i ch th e cl ean i n g wo rks h o u l d b e
acco m pl i s h ed . W e ag ree wi th p et i t i o n er. Pet i t i o ner’ s ro le was m o re t h ato f a d i sp at ch er, act in g as a fi n an ci al an d l i ng u i s t i c b ri d ge o r i nt erm ed i ary b et ween h er wo rk ers an dth e ap art m en t
co m p l ex es (an d th e p ro p ert y

m an ag ers atth o s e co m

p l ex es ). Pet i t i o n er d i rect ed h er wo rk ers as t o t h e res u lt t o be acco m pl is h ed an dex p ect edth e res ul tt o b e d o n e i n acco rd an ce wi th t h e co n tract s ’ s p eci fi cat i o n s an di n tu rn t o th e s at i sfact i o n o f th e p ro p ert y

m an ag ers , b u ts h e o t h erwi se al l o wedh er wo rk ers t o u s e t h ei r d i s cret i o n as t o th e m ean s an d m et h o d s o f acco m p l i s h in g th i s res u lt . Pet i t i o n er cred i b l y t es t ifi edth ath er wo rk ers (al l o f wh o m were ex p eri en cedcl ean ers i n th ei r
o wnri g h tan dthu s n eed edn o trai n i n g ) d i d n o th av e t o t ak e an y cl ean in g jo b s h e
o ffered them ; an d wh en th ey d i dt ak e s u ch a jo b , th ey b y an dl arg e t rav el edt o th e- 1 4 -

[* 1 4 ] ap art m en tco m

p l ex es u s i n g th ei r o wno r p ubl i c t ran sp o rt at i o n an d p erfo rm ed th e jo b atth ei r o wnp ace u s i n g th ei r o wn cl ean i ng s upp l ies th at they b ro u g h twi t h th em . 1 0 Ad d i t i o n al ly , p et i t io ner cred i b l y t es t i fi edthath er wo rk ers were free t o h i re t hei r o wn as s i st an t s an dth atth ey (n o t s h e) were res p o ns i b l e fo r p ay i n g th es e
as s i s tan ts . Pet it i o n er al s o cred i b l y t es t ifi edth at s he wo u ldrel ay t o h er wo rk ers
an y s p eci al i n s tru ct i on s wi th res p ectt o a cl ean i n g jo b fro m an ap art m en t
co m p l ex ’ s p ro p erty

m an ag er b ecau s e th ey

b y an dl arg e s p o k e o n l y

Po rtu g u es e o r Sp an i s h , l an g u ag es thats h e al s o s p o k e, an ds h e wo u l drarel y g o t o a p ro p ert y an d
s up erv i s e t h e cl ean i n g o r d o a p o s t cl ean i n g i ns p ect i o n; th e o n ly “ qu al i ty co n tro l ” th ats h e ex erci s edwas d i rect in g a wo rk er aft er a cl ean i n g jo b was fi n i s h ed an dth e
wo rk er h adal read y

l eft th e p ro p ert y

t o retu rn t o the p ro p ert y

i f t h e p ro p ert y
m an ag er co n tact ed h er i n di cat i n g th at the cl ean in g was d efi ci en t i n s om e res p ect
. Al th ou g h the co nt ract s o b l i g at edCam po s Cl ean in g t o m ai nt ai n co m m erci al g en eral l i ab i l i ty

i n s uran ce an dwo rk er’ s co m p en s at i o n i n s u ran ce (wh i ch i td i d ), we d o n o t fi n dth i s t o b e d efi n i t iv e ev i d en ce th atp et i t i o ner h adth e requ is i t e d eg ree o f
co n tro l o v er h er wo rk ers . Th es e co n tract s g o v ern edo n ly th e rel at i o n s h i p b et ween

1 0 W e d eci d e wh eth er a wi t n es s ’ t es t i m o n y i s cred i b l e o n th e b as i s o f o b ject i ve fact s , th e reas on ab l en es s o f t h e t es t i m o ny , th e co n s is t en cy o f t he wi tn es s ’ s t at em en t s , an dth e wi tn es s ’ d em ean o r. Keel s v . Co m m i s s io n er, T.C. M em o. 2 0 2 0 -2 5 , at* 1 5 -* 1 6 (an dcas es ci t edth ereat ).- 1 5 -

[* 1 5 ] Cam

po s Cl ean i n g an dth e ap art m en tco m p l ex es ; th ey

h adn o l eg al b eari n g
o n p et it i o n er’ s rel at i o n s h ip wi th h er wo rk ers . Cf. Pro f’ l & Ex ec. Leas i n g , In c. v . Co m m i s s i o n er, 8 9 T.C. 2 25 , 2 3 3 (1 9 8 7 ) (“ A co n tract p u rp o rt i n g t o creat e an
em pl o y er-em

p l o y ee rel at i on s h ip wi l l n o t co n tro l wh ere t h e co m m o n l aw fact o rs (as ap p l i edt o th e fact s an d ci rcu m s t an ces ) es tab l is h th atth e rel at i on s h i p d o es n o t
ex i s t
. ”), aff’ d , 8 6 2 F.2 d7 5 1 (9 th Ci r. 1 9 8 8 ). Fu rt herm o re, al th o u g h p et i t i o n er m ai n t ai n edco n s i s t en t rel at i o n s h i p s wi t h
s o m e o f h er wo rk ers s pan n i n g th e p eri o d s ati ss u e, m o s t ap pear t o h av e b een l i m i ted --s o m e wo rk i ng fo r Cam p o s Cl ean i n g fo r o n l y

o n e y ear (2 00 8 o r 2 0 0 9 ). On l y 3 o f t h e 1 4 wo rk ers l i s t edi n the n o t i ce o f d et erm i n at i o n wo rk edfo r Cam p os Cl ean i n g du ri n g 2 0 0 8 -1 0 , an d 8 o f t h e 1 4 wo rk ers l is t edi n th e n o ti ce o f d et erm i n at i o n wo rk edfo r Cam p o s Cl ean in g fo r ei ther 2 0 0 8 an d 2 00 9 o r 2 0 0 9 an d 2 0 1 0 . In d eed , p et i t i o n er d i dn otg u aran t ee h er wo rk ers a m i n i m u m am ou n t o r freq uen cy o f wo rk an dm an y

o f t h em cl ean edfo r o th er i n d i vi du al s o r b u s in es s es as wel l , m ak i n g i tu n n eces saryfo r h er t o ev er fo rm al l y d i sch arg e o r t erm i n at e an y o f th em . W e t h u s v i ew h er rel at i on s h i p wi th h er wo rk ers as m o re o f a t ran s it ory o n e. See Ku rekv . Co m

m is s i o n er, T.C. M em o . 2 0 1 3 -6 4 , at* 1 3 (ci t in g Ewen s & M i l l er
v . Co m m i s s i o n er, 1 1 7 T.C. at2 7 3 , J o h n Kel l er, Act i on Au to Bo dy v .- 1 6 -

[* 1 6 ] Co m

m i s si o n er, T.C. M em o . 2 01 2 -6 2, s l i p o p . at1 3 , an dAt l . Co as t M as o n ry , In c. v . Co m

m is s io n er, at* 1 9 ). Fi n al l y , g i v en th atFo rm s 1 0 9 9 -M ISC were p rep aredfo r a t ot al o f 3 3
wo rk ers fo r 2 0 0 8 -1 0 (an dn o Fo rm s W -2 an d Fo rm s 9 40 were p rep aredfo r t h o s e y ears as wel l as n o Fo rm s 9 4 1 fo r t h e p eri o d s s p an n in g th os e y ears ) an do n th e b as i s o f h er cred i b le t es t i m o n y an d t h e cred i b l e t es t i m o n y o f o n e o f t h e t h ree
wo rk ers wh o wo rk ed fo r Cam p o s Cl ean i ng du ri n g each o f t h es e y ears , p et i t i o n er cert ai n ly th o u g h ts h e was creat i n g i nd ep en d en t co n tract o r rel at io n sh i p s wi th h er
wo rk ers . See Ku rekv . Co m m i s s i o n er, at* 1 4 ; J o h n Kel l er, Act i o n Au t o Bo dy v . Co m m i s s i o n er, s l ip o p . at 1 3 -1 4
. Onth e b as is o f th e reco rdb efo re u s an dl o ok i n g atth e t o t al i ty o f t h e ci rcu m s t an ces we co ncl u d e t h atn o em pl o y er-em

p l o y ee rel at i o ns h ip ex i s t ed b et ween p et i t i o n er an dh er wo rk ers . Acco rd i n gl y , we h o l d th atth e i n d i v idu al s l i st edi n th e n o t i ce o f d et erm i n at i o n were i nd ep en d en tco n tract o rs an dp et i ti o n er i s
n o tl i ab l e fo r t h e Fed eral em pl o ym en tt ax es as d et erm i n edb y th e IRS fo r t h e p eri o d s ati s s ue. W e h av e co n s id eredal l o f t h e arg um en t s m ad e b y th e p art i es an d , t o th e
ex t en tth ey

are n o tad dres s edh erei n , we fi n dth em t o b e m o o t , i rrel ev an t, o r wi th o u tm eri t
.- 1 7 -

[* 1 7 ] To refl ectthe fo reg o i n g , Deci s i o n wi ll b e en t eredfo r p et i t i o ner.