Internal Revenue Service
Revenue Ruling

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 Rev. Rul. 69-10

1969-1 C.B. 255

IRS Headnote

A concessionaire operating a concession leased from a carnival that issues no instructions, rules, or regulations with respect to its operation is not an employee of the carnival; individuals hired by the concessionaire are his employees; S.S.T. 237 superseded.

Full Text

Rev. Rul. 69-10 /1/

The purpose of this Revenue Ruling is to update and restate, under the current statute and regulations, the position set forth in S.S.T. 237, C.B. 1937-2, 400.

The question presented is whether a concessionaire, the lessee of a concession at a carnival, is an employee of the carnival for purposes of the Federal Insurance Contributions Act, the Federal Unemployment Tax Act, and the Collection of Income Tax at Source on Wages (chapters 21, 23, and 24, respectively, subtitle C, Internal Revenue Code of 1954).

The concessionaire engages his own help, pays their salaries and all other expenses, furnishes all necessary equipment, and is not under the direction or control of the carnival. The number of performances given and the number of hours that the concession will remain open are entirely within the discretion of the concessionaire. The carnival does not issue any instructions, rules, or regulations with respect to the operation of the concession and is interested only in the leasing of space to, and the collection of rent from, the concessionaire.

An individual is an employee for Federal employment tax purposes if he has the status of employee under the usual common law rules applicable in determining the employer-employee relationship. Guides for determining that status are found in three substantially similar sections of the Employment Tax Regulations: namely, sections 31.3121(d)-1(c), 31.3306(i)-1, and 31.3401(c)-1.

The facts in this case show that the carnival does not exercise or have the right to exercise over the concessionaire in the operation of the concession the direction and control necessary to establish an employer-employee relationship under the usual common law rules. Accordingly, the concessionaire is not an employee of the carnival for purposes of the Federal Insurance Contributions Act, the Federal Unemployment Tax Act, or the Collection of Income Tax at Source on Wages. However, the individuals engaged by the concessionaire in the operation of the concession are his employees for such purposes.

S.S.T. 237 is superseded, since the position set forth therein is restated under the current law in this Revenue Ruling.

/1/ Prepared pursuant to Rev. Proc. 67-6, C.B. 1967-1, 576.