[Code of Federal Regulations]
[Title 26, Volume 15]
[Revised as of January 1, 2007]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR31.3401(c)-1]

[Page 220-221]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 31_EMPLOYMENT TAXES AND COLLECTION OF INCOME TAX AT SOURCE--Table 
 
              Subpart E_Collection of Income Tax at Source
 
Sec.  31.3401(c)-1  Employee.

    (a) The term employee includes every individual performing services 
if the relationship between him and the person for whom he performs such 
services is the legal relationship of employer and employee. The term 
includes officers and employees, whether elected or appointed, of the 
United States, a State, Territory, Puerto Rico, or any political 
subdivision thereof, or the District of Columbia, or any agency or 
instrumentality of any one or more of the foregoing.
    (b) 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. 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, but not necessarily present in every 
case, 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 not an employee.
    (c) 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 not employees.
    (d) Whether the relationship of employer and employee exists will in 
doubtful cases be determined upon an examination of the particular facts 
of each case.
    (e) 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 such relationship exists, it is of no consequence that the employee 
is designated as a partner, coadventurer, agent, independent contractor, 
or the like.
    (f) All classes or grades of employees are included within the 
relationship of employer and employee. Thus, superintendents, managers 
and other supervisory personnel are employees. Generally, an officer of 
a corporation is an employee of the corporation. However, an officer of 
a corporation who as such

[[Page 221]]

does not perform any services or performs only minor services and who 
neither receives nor is entitled to receive, directly or indirectly, any 
remuneration is not considered to be an employee of the corporation. A 
director of a corporation in his capacity as such is not an employee of 
the corporation.
    (g) The term employee includes every individual who receives a 
supplemental unemployment compensation benefit which is treated under 
paragraph (b)(14) of Sec.  31.3401(a)-1 as if it were wages.
    (h) Although an individual may be an employee under this section, 
his services may be of such a nature, or performed under such 
circumstances, that the remuneration paid for such services does not 
constitute wages within the meaning of section 3401(a).

[T.D. 6516, 25 FR 13096, Dec. 20, 1960, as amended by T.D. 7068, 35 FR 
17329, Nov. 11, 1970]