(c) The term “employment” means any service, of whatever nature, performed within the United States by an employee for his employer, except * * *
Art. 203. Persons liable for the tax.—Every person who is an "employer", as defined by the Act, is liable for the tax.
Generally, a person is an "employer" if he employs 8 or more individuals on each of some 20 days during a calendar year, each such day being a different calendar week. (See article 204.)
Certain services, however, are specifically excepted by the Act to the extent that a person employs individuals who render such services, he is not an "employer." (See articles 206 and 206 (7), inclusive.)
Even if an "employer" is not subject to any State unemployment insurance law, he is nevertheless subject to the tax. However, if he is subject to such a State law, he is entitles to credit against the law any contributions with respect to employment paid by him thereunder to the extent permitted by section 902. (See article 211.)
Art. 204. Who are employers.—Commencing with the calendar year 1936, any person who employs 8 or more individuals (in an employment as defined in section 907 (c) of the Act) on a total of 20 or more calendar days during the a calendar year, each such day being in a different calendar week, is an employer subject to the tax imposed with respect to such year.
The several weeks in each of which occurs a day on which eight of more individuals are employed need not be consecutive weeks. It is not necessary that the individuals so employed be the same individuals; they may be different individuals on each such calendar day. Neither is it necessary that the eight or more individuals be employed at the same moment of time or for any particular length of time or on any particular basis of compensation. It is sufficient if the total number of individuals employed during the 24 hours of the calendar day is eight or more, regardless of period of service during that day or the basis of compensation.
In determining whether a person employs a sufficient number of individuals to be an employer subject to the tax, no individual is counted unless he is engaged in the performance within the United States of services not excepted by section 907 (c). (See articles 206 and 206 (7), inclusive.)
Art. 205. Employed individuals.—An individual is in the employ of another within the meaning of the Act if he performs services in an employment as defined in section 907 (c). However, the relationship between the individual who performs such services and the person for whom such services are rendered must, as to those services, be the legal relationship of employer and employee. The Act makes no distinction between classes or grades of employees. Thus, superintendents, managers, and other superior employees are employees within the meaning of the Act.
The words "employ", "employer", and "employee", as used in this article, are to be taken in their ordinary meaning. An employer, however, may be an individual, a corporation, a partnership, a trust or estate, a joint-stock company, an association, or a syndicate, group, pool, joint venture, or other unincorporated organization, group, or entity. An employer may be a person acting in fiduciary capacity or on behalf of another, such as a guardian, committee, trustee, executor or administrator, trustee in bankruptcy, receiver, assignee for the benefit of creditors, or conservator.
Whether the relationship of employer and employee exists, will in doubtful cases be determined upon an examination of the particular facts of each case.
Generally the relationship 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. That is, an employee is subject to the will and control of the employer not only as to what shall be done but how it shall be done. In this connection, it is not necessary that the employer actually direct or control the manner in which the services are performed; it is sufficient if he has the right to do so. The right to discharge is also an important factor indicating that the person possessing that right is an employer. Other factors characteristic of an employer are the furnishing of tools and the furnishing of a place to work, to the individual who performs the services. In general, if an individual is subject to the control or direction of another merely as to the result to be accomplished by the work and not as to the means and methods for accomplishing the result, he is an independent contract, not an employee.
If the relationship of employer and employee exists, the designation or description of the relationship by the parties as anything other than that of employer and employee is immaterial. Thus, if two individuals in fact stand in the relation of employer and employee to each other, it is of no consequence that the employee is designated as a partner, coadventurer, agent, or independent contractor.
The measurement, method, or designation of compensation is also immaterial, if the relationship of employer and employee in fact exists.
Individuals performing services as independent contractors are not employees. Generally, physicians, lawyers, dentists, veterinarians, contractors, subcontractors, public stenographers, auctioneers, and others who follow an independent trade, business, or profession, in which they offer their services to the public, are independent contractors and not employees.
An officer of a corporation is an employee of the corporation, but a director, as such, is not. A director may be an employee of the corporation, however, if he performs services for the corporation other than those required by attendance at and participation in meetings of the board of directors.
Section 907 (c) of the act
The term "employment" means any service, of whatever nature, performed within the United States by an employer for his employer, except * * *
Art. 206. Excepted services generally.—(a) To constitute an "employment" within the meaning of the Act the services performed by the employee must be performed within the United States, that is, within any of the several States, the District of Columbia, or the territories of Alaska and Hawaii.
To the extent that an employee performs services outside of the United States for the person who employs him, he is not in an "employment" within the meaning of the Act, and to that extent will not be counted for the purpose of determining whether the person who employs him is an "employer", within the meaning of the Act. Furthermore, remuneration payable to the employee for services which he performs outside of the United States is excluded from the computation of wages upon which his employer’s tax is based. However, if any services are performed by the employee within the United States, such services, unless specifically excepted by the Act (see articles 206 (1) to 206 (7), inclusive), constitute "employment." In such case the employee is counted for the purpose of determining whether the person who employs him is an "employer", within the meaning of the Act, and the wages payable to the employee on account of such services are included in the computation of wages for the purpose of determining the amount of the employer’s tax.
The place where the contract for services is entered into and the citizenship or residence of the employee or of the person who employs him are immaterial. Thus, the employee and the person who employs him may be citizens and residents of a foreign country and the contract for the services may be entered into a foreign country, and yet, if the employee under such contract actually performs services within the United States, there is to that extent an "employment" within the meaning of the Act, and the person who employed such an individual may be an "employer" within the meaning of the Act.
(b) Even though the services of the employee are performed within the United States, if they are in a class which is excepted by the Act they are excluded for the purpose (1) of determining whether a person employs a sufficient
