Internal Revenue Service
Revenue Ruling

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 Rev. Rul. 69-26

1969-1 C.B. 251

IRS Headnote

A golf club is not liable for the FICA and FUTA taxes with respect to remuneration paid to caddies either directly by club members or indirectly by the club acting as the agent of the members; S.S.T. 56 superseded.

Full Text

Rev. Rul. 69-26 /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. 56, C.B. XV-2, 393 (1936).

The question presented is whether, under the circumstances stated below, a club is liable for the taxes imposed under the Federal Insurance Contributions Act and the Federal Unemployment Tax Act (chapters 21 and 23, respectively, subtitle C, Internal Revenue Code of 1954), with respect to the remuneration of caddies who serve members of the club.

The caddies receive no remuneration unless they perform services for some member of the club. Remuneration for caddy service is paid to the caddy, either directly by the playing member in cash or by the club for the account of the member. There is no obligation on the part of the club itself to pay the caddies.

Section 3111 of the Federal Insurance Contributions Act provides, in part, as follows:

"* * * there is hereby imposed on every employer an excise tax, * * * equal to the following percentages of the wages * * * paid by him * * *. (Emphasis supplied.)"

Section 3301 of the Federal Unemployment Tax Act contains a similar provision.

In this case, the club does not pay the remuneration of the caddies. The remuneration is received by them either directly from the member players or indirectly by the club acting as the agent of the players in making the payments and charging the amounts thereof to the player's accounts. Although the caddies may be employees of the club, it will not be required to pay the tax imposed by section 3111 or section 3301 of the above-mentioned Acts, respectively, relative to payments made to the caddies for services performed by them for its members where such payments are made directly by the member players, or where the club in making the payments is acting as the agent of the members and is in no way obligated to make the payments. In such cases, the remuneration is not wages paid by the club.

If the caddies perform services for the club for which the club itself pays them, the club will be subject to the tax imposed by section 3111 of the Federal Insurance Contributions Act and section 3301 of the Federal Unemployment Tax Act, provided the other requirements of those sections are met.

S.S.T. 56 is superseded, since the position set forth therein is restated under current law in this Revenue Ruling.

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