Internal Revenue Service
Revenue Ruling

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 Rev. Rul. 54-99

1954-1 C.B. 211

Caution: Superseded by Rev. Rul. 73-575

IRS Headnote

A manicurist and a barbershop operator entered into an agreement whereby the manicurist committed herself to furnish a manicuring service to the patrons of the barbershop during the hours that the shop is open for business; however, it was stipulated that no such service would be furnished on Wednesdays. The service agreed upon consisted of the availability of a skilled and competent manicurist, either the party to the agreement or some other qualified person acceptable to the barbershop operator. The manicurist is free to refuse manicuring service to any patron of the barbershop, regulates her own working hours, furnishes her own equipment, tools, instruments and supplies required in the conduct of her business, collects and retains the proceeds for herself without using the operator's cash register, and may terminate the arrangement whenever it is no longer satisfactory. Held , the manicurist is not an employee of the operator of the barbershop for Federal employment tax purposes.

Full Text

Rev. Rul. 54-99

Advice is requested whether an individual who, under an agreement with an operator of a barbershop, furnishes a manicuring service to the patrons of the shop is an employee of the operator of the shop for Federal employment tax purposes.

In the instant case, a manicurist and the operator of a barbershop entered into an agreement whereby she committed herself to furnish a manicuring service to the patrons of the barbershop during the hours that the shop is open for business; however, it was stipulated that no such service would be furnished on Wednesdays. The service agreed upon consisted of the availability of a skilled and competent manicurist, either the party to the agreement or some other qualified person acceptable to the barbershop operator. The manicurist is free to refuse manicuring service to any patron of the barbershop if she so chooses. She regulates her own working hours, furnishes her own equipment, tools, instruments, and supplies required in the conduct of her business, and collects an retains the proceeds from her work without using the operator's cash register or otherwise furnishing the operator of the barbershop information concerning her income. She is not required to and does not secure the operator's approval when she takes a vacation; however, in the interest of good business relationship, she does, as a matter of practice, tell him when she plans to be away for an extended period of time. Whenever the arrangement is no longer satisfactory, either party may terminate it.

Section 408.204(c) of Regulations 128 provides that generally the legal 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. 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. An individual who 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 method for accomplishing the result, is an independent contractor. An individual performing services as an independent contractor is not as to such services an employee under the usual common law rules.

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 manicurist obligated herself to furnish a service to the operator of the barbershop. She did not agree that she personally would perform the services required but retained the right to employ someone else for this purpose. The agreement between them does not give the operator the right to direct the manner in which these services are to be performed; in fact, the only right the operator has in the event of unsatisfactory service is to bring about the termination of the arrangement. That, in itself, is not sufficient to establish the relationship of employer and employee between him and the manicurist. Accordingly, it is held that the manicurist in the instant case is not an employee of the operator of the barbershop for Federal employment tax purposes.