CLUB EXERCISED NO RIGHT OF CONTROL OVER GOLF PRO'S SERVICES
U.S. INTERNAL REVENUE SERVICE, REVENUE RULING 68-625
Rev. Rul. 68-625; 1968-2 C.B. 465
July, 1968

This Revenue Ruling considered the federal employment tax status of "a golf professional who sells lessons and equipment on the premises of a club and fixes prices, makes appointments, and carries on his activities without orders or instructions from club members or officials." Specifically, the issue was "whether a golf professional performing services under the circumstances stated below is an employee of a golf club, for purposes of the Federal Insurance Contributions Act, the Federal Unemployment Tax Act, and the Collection of Income Tax at Source on Wages," i.e., social security, unemployment, and federal withholding taxes on wages paid to employees.

The golf professional is given the privilege of selling lessons and golf equipment on the premises of the golf club. He is furnished certain facilities, such as space in the caddy house and locker room, and use of the club's telephone. His activities are confined strictly to golf instruction and the sale of golf equipment. He makes his own appointments for lessons, fixes his own prices and retains all remuneration received, and buys and sells golf equipment in the same manner as would a retail merchant. The golf club has no right to direct and control him in the manner or method of performance of his services and no orders or instructions are given to him by any member or official of the club.

Within the context of federal employment taxes, "[a]n 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." Applying these rules and pertinent regulatory guides for determining employment status (the Employment Tax Regulations: namely, sections 31.3121 (d)-1(c), 31.3306(i)-1, and 31.3401(c)-1) to the these particular facts, the IRS found that "the golf club does not exercise or have the right to exercise over the golf professional in the performance of his services the direction and control necessary to establish an employer-employee relationship under the usual common law rules."

Accordingly, the IRS concluded that "the golf professional is not an employee of the club for purposes of the Federal Insurance Contributions Act, the Federal Unemployment Tax Act, or the Collection of Income Tax at Source on Wages." On the contrary, the IRS found that "[t]he golf professional in the instant case is engaged in carrying on a 'trade or business' within the meaning of the Self-Employment Contributions Act of 1954 and the income he derives therefrom must be considered in computing net earnings from self-employment for purposes of that Act."