Rev. Rul. 54-459 - 1954-2 C.B. 337
Caution: Superseded by
Rev. Rul. 74-220
IRS Headnote:
Individuals who distribute telephone directories as spare-time work for a
delivery-service corporation pursuant to certain instructions which relate to
the result to be achieved rather than the manner and means by which such result
is accomplished, are not employees of the corporation for Federal employment tax
purposes.
Full Text - Rev. Rul. 54-459
Advice is requested whether individuals performing services during 3 or 4
days in a calendar year in the distribution of telephone directories for a
delivery-service corporation are employees of the corporation for purposes of
the Federal Insurance Contributions Act (subchapter A, chapter 9, Internal
Revenue Code of 1939).
In the instant case the delivery-service corporation enters into contracts
with various telephone companies for the distribution of new telephone
directories to their subscribers. Generally, the directories are distributed
only once each year and distribution is completed within 3 or 4 days. The names
and addresses of the subscribers are furnished by the telephone companies on
individual delivery tickets. The number of directories furnished corresponds to
the number of delivery tickets. The corporation separates the tickets by areas
and, where possible, by streets. It also separates the entire group of tickets
into quantities which can conveniently be handled by an individual using an
automobile or small truck. The corporation sends a representative to a given
area to rent space to be used as an operating center, to receive the new
directories from the printers, and to engage individuals to distribute the
directories. The distributors are usually obtained through advertisements in the
local newspapers.
The distributors agree to deliver the new directories to subscribers at the
locations shown on the delivery record, attempt to pick up an old directory for
each new directory delivered, return all delivery records and undelivered new
directories, notify the corporation at once if delivery of the directories
cannot be completed within the time specified, and tie old directories in
bundles and return them to the delivery office or operating center. Each
distributor furnishes his own motor vehicle and pays all expenses in connection
therewith. The distributors determine the means, manner and method of making the
deliveries and may hire and supervise assistants. The assistants are paid by the
distributors.
The corporation furnishes form letters to the distributors suggesting means
for performing the work efficiently. As a rule, the corporation has no contact
with the distributors from the time they leave the operating center to begin
delivery until the job is completed.
When the deliveries are completed, the corporation makes a spot check by
telephone for the purpose of determining whether the deliveries reported have
actually been made. A check or draft in payment for the service is mailed to
each distributor after the spot check has been completed. The remuneration for
the services is on a piecework basis, i.e., a certain amount for each new
directory delivered and each old directory returned.
The distributors perform no other services for the corporation.
Section 408.204(c) of Regulations 128 relating to the definition of the term
`employee' for Federal Insurance Contributions Act purposes provides that
generally the relationship of employer and employee exists when the person for
whom services are performed has the right to control and direct the individual
who performs the services, not only as to the result to be accomplished by the
work but also as to the details and means by which that result is accomplished.
Whether a person is an independent contractor or an employee is largely a
question of fact to be determined upon the particular facts of each case. In the
instant case it is clearly shown that the corporation neither exercises nor has
the right to exercise such control over the distributors in the performance of
their delivery services as is necessary under the usual common law rules to
establish an employer-employee relationship for Federal employment tax purposes.
In fact, the corporation is interested only in the result to be accomplished by
the work of the distributors and not in the means by which that result is
accomplished. Accordingly, it is held that the distributors are not employees of
the corporation for Federal employment tax purposes.