This is the second post in the Independent Contractor/Employee series. This series is dedicated to presenting individuals, sole proprietorships, and small to large businesses with a basic understanding of independent contractor issues.
Internal Revenue Code Section 3121 states that a director of a corporation in his/her capacity as director is not an employee of the corporation.
Pursuant to Section Section 3508(a) of the Internal Revenue Code, there are two types of occupations that will not be treated as employees for FICA, FUTA, and income tax withholding for services performed provided they meet certain qualifications. The occupations are:
- Qualified real estate agent. The individual must be a licensed real estate agent. Substantially all of such individual’s remuneration for services is directly related to sales or other output rather than the number of hours worked. A written contract must exist between the individual and the person for whom services are being performed which provides that the individual will not be treated as an employee for Federal tax purposes.
- Direct seller. The individual must be engaged in the sale of consumer products in other than a permanent retail establishment. Substantially all remuneration for services is directly related to sales or other output rather than the number of hours worked. A written contract must exist between the individual and the person for whom services are being performed which provides that the individual will not be treated as an employee for Federal tax purposes. A direct seller includes a person engaged in the trade or business of the delivery or distribution of newspapers or shopping news, including any services directly related to that trade or business. I.R.C. § 3508(b)(2)(A)(III).