Rev. Rul. 56-694

The Internal Revenue Service has been requested to determine the status, for Federal employment tax purposes, of photographers engaged by a corporation operating a portrait studio.

The corporation is engaged in the home portraiture business. The photographers in question were engaged as the result of a newspaper advertisement placed by the corporation for experienced home photographers. The corporation's canvassers go from house to house selling coupons for photographs, principally of children, to be taken in the homes. The canvassers mail copies of the coupons to the studio office and lists of the purchasers are given to the various photographers to whom the appointments are assigned. Usually, the time of the appointments for taking photographs is specified on each list the corporation furnishes the photographers; however, appointments may also be made by either the canvassers or the studio office. The photographers, when first engaged, are given instructions by the corporation as to its methods of operation and are required to follow a set pattern of poses for each age group. From time to time, a representative of the corporation accompanies the photographers on their appointments and checks their operating methods for the purpose of improvement as to the handling of children and actual photographing. The photographers report in person to the studio office once a week to turn in the exposed film and to receive their pay. The photographs taken must meet the standards of a professional photographer. If they do not meet such standards, they are retaken by the photographers without additional remuneration. All complaints and adjustments are handled by the corporation.

The corporation furnishes the necessary film and envelopes for exposed film and the photographers furnish their own transportation facilities and photographic equipment, such as cameras and lights. The photographers personally perform the services in question and operate under the corporation's name; are engaged on a full-time basis by the corporation; are required to fulfill all appointments given to them; are covered by workmen's compensation carried by the corporation; and are paid on a piece-work basis for each picture taken. They do not maintain studios of their own and do not perform photographic services for any other persons. Their services may be terminated by either party at any time upon proper notice.

Under section 3121(d)(2) of the Federal Insurance Contributions Act (chapter 21, subtitle C, Internal Revenue Code of 1954), 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 for determining, under such rules, whether an employer-employee relationship exists are found in section 31.3121(d)-1(c) of the Employment Tax Regulations.

Whether an employer-employee relationship exists depends upon the particular facts in each case. It appears from the facts present in the instant case that the photographers perform personal services on a continuing basis in the ordinary course of and as an integral and principal part of the corporation's business activities; that their personal services were contracted for; and that, while detailed direction and supervision over them in the performance of their services is neither necessary nor warranted, the corporation is vested with the ultimate right to direct and control them to the extent necessary under the usual common law rules to establish an employer-employee relationship. Accordingly, it is held that the photographers are employees of the corporation for purposes of the Federal Insurance Contributions Act.

This conclusion is also applicable for purposes of the Federal Unemployment Tax Act and the Collection of Income Tax at Source on Wages (chapters 23 and 24, respectively, subtitle C, Internal Revenue Code of 1954).