Rev. Rul. 56-660

Advice has been requested relative to the status, for Federal employment tax purposes, of a writer engaged by an organization to write a book portraying its history.

The writer was engaged on a full-time basis to write a book on the history of the organization. The engagement is for an indefinite period, that is, until the history is completed. The writer's work consists of research into the history of the organization and the writing thereof in the form of a book. He performs the services on the organization's premises during regular working hours and is provided with an office and all the necessary equipment and facilities. He is given considerable latitude in his work, is not given instructions or training with respect thereto, and is not required to meet a minimum quota of work or to follow a routine established by the organization. He is, however, required to submit his writings for review and approval by the organization's staff members and history committee and may be required to rewrite unsatisfactory material. He is paid a stated amount each month whether or not all of his material is acceptable. He is granted sick leave with pay, but he is not eligible for bonuses or a pension. He is required to perform the services personally and devotes his full time to services for the organization, although on one occasion he was granted leave without pay to perform a writing job for another firm. The writer does not hold himself out to the public as being available to do work of a similar or related nature, advertise in newspapers, etc., or maintain an office or shop. His services may be terminated by either party at any time upon proper notice to the other party.

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

It is concluded, upon the basis of the above facts, that the organization has the right to exercise such control and direction over the writer as is necessary to establish the relationship of employer and employee under the usual common law rules. Accordingly, it is held that the writer is an employee of the organization for purposes of the Federal Insurance Contributions Act, with respect to the services performed for it.

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