Internal Revenue Service
Revenue Ruling

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 Rev. Rul. 67-44

1967-1 C.B. 287

Full Text

Rev. Rul. 67-44

Section 3301 of the Federal Unemployment Tax Act (chapter 23, subtitle C, Internal Revenue Code of 1954) imposes on every `employer' an excise tax, with respect to having individuals in his employ, equal to a certain percentage of the total `wages' paid by him during the calendar year with respect to `employment,' as these terms are defined in the Act.

Section 3306(c)(14) of the Act excepts from `employment,' for purposes of the tax imposed by this Act, services performed by an insurance agent or insurance solicitor, if all of his services for his employer are performed for remuneration solely by way of commission. Section 31.3306(c)(14)-1(b) of the Employment Tax Regulations provides that if all or any part of the remuneration of an employee for services performed as an insurance agent or insurance solicitor for a person is a salary, none of his services performed in that capacity are excepted from employment and his total remuneration (for example, salary, or salary and commissions) for such services is included for purposes of computing the tax.

Inasmuch as the tax imposed by the Federal Unemployment Tax Act is specifically levied on a calendar year basis and in view of the express provisions of the law and regulations, a determination as to whether an individual is remunerated solely by way of commission and whether a company is liable for the tax imposed by section 3301 of the Act must be made on a calendar year basis rather than on a quarterly basis.

Held , if a company pays an insurance agent or an insurance solicitor a guaranteed salary or other compensation which is the equivalent of a guaranteed salary during part of the calendar year and commissions during the reminder of the year, the company is liable for the tax imposed by the Federal Unemployment Tax Act for that calendar year on all of the remuneration paid to the insurance agent or the insurance solicitor subject, of course, to the limitation on wages provided in section 3306(b) of the Act.