Rev. Rul. 55-144

An opinion has been requested whether an individual employed by a used car dealer to drive automobiles to an auction company located in a city distant from the dealer's place of business and to `protect the price' at which the car is to be sold is an employee of the dealer for purposes of the Federal Insurance Contributions Act (subchapter A, chapter 9, Internal Revenue Code of 1939).

In the instant case, a dealer in used automobiles employed an individual under the terms of an oral agreement to drive automobiles to an auction company located in a city distant from the dealer's place of business. The dealer places a price on the car to be sold at auction and requires the individual to `protect the price.' The auction company generally mails the check in payment for the car direct to the dealer. The dealer pays all expenses incurred by the individual in connection with the trip and remunerates him on the basis of a stated amount for each car sold. The individual also drives automobiles to the dealer's place of business from locations out of the City, for which he receives a stated sum. All services are performed in the name of the dealer. The individual's services may be terminated by the dealer for any or no reason. The individual also performs similar services for another used car dealer.

Section 1426(d) of the Act provides, in part, that the term `employee' means any individual who, under the usual common law rules applicable in determining the employer-employee relationship, has the status of an employee. The guides to be used in determining the employer-employee relationship under the usual common law rules are found in section 408.204(c) of Regulations 128.

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 the individual performs personal services for the dealer and the dealer exercise, or has the right to exercise, such control over the individual in the performance of his services as is necessary to establish an employer-employee relationship. The fact that the individual performs services for another principal does not negative the existence of an employer-employee relationship. See S.S.T. 24, C.B. XV-2, 406 (1936). Accordingly, it is held that the individual is an employee of the dealer for Federal employment tax purposes