COURT OF APPEALS OF VIRGINIA
Present: Judges Bray, Bumgardner and Senior Judge Hodges
Argued by teleconference
CENTRAL DELIVERY SERVICE
OF WASHINGTON, INC.
MEMORANDUM OPINION * BY
v. Record No. 2046-00-2 JUDGE WILLIAM H. HODGES
NOVEMBER 6, 2001
VIRGINIA EMPLOYMENT COMMISSION
FROM THE CIRCUIT COURT OF THE CITY OF RICHMOND
Theodore J. Markow, Judge
E. Duncan Getchell, Jr. (William H.
Baxter II; McGuireWoods LLP, on briefs), for
appellant.
William A. Diamond, Assistant Attorney
General (Mark L. Earley, Attorney General;
Richard B. Zorn, Senior Assistant Attorney
General, on brief), for appellee.
Central Delivery Service of Washington, Inc. (Central
Delivery) appeals a July 27, 2000 circuit court order affirming a
decision of the Virginia Employment Commission (the VEC). The VEC
held that services performed by contract carrier courier drivers
for Central Delivery constituted "employment" for which Central
Delivery is liable for unemployment insurance taxes pursuant to
Code § 60.2-212 and that their services were not exempt under Code
§ 60.2-219(22). Central Delivery argues that the VEC and the
circuit court erred in denying their exemption from state
* Pursuant to Code § 17.1-413, this opinion is not
designated for publication.
unemployment taxation. For the reasons that follow, we agree and
reverse.
BACKGROUND
For unemployment compensation purposes, the term "employment"
is defined in Code § 60.2-212. Generally, that term means any
service performed for remuneration or under any contract of hire.
The VEC, in its commission decision, determined that the services
performed by Central Delivery's drivers constitute "employment"
under Code § 60.2-212, and that issue is not before us on appeal.
However, Code § 60.2-619 contains a list of services that are
statutorily exempt from the "employment" definition. Code
§ 60.2-619(22) provides that the term "employment" shall not
include: "Service performed . . . as a driver of an executive
sedan . . . provided the Commission is furnished evidence that
such individual is excluded from taxation by the Federal
Unemployment Tax Act" (FUTA). The VEC and the circuit court
determined that Central Delivery had not provided the VEC with
sufficient evidence to prove that its drivers are excluded from
FUTA taxation. Central Delivery appeals from that determination.
In its findings of fact, the VEC found that Central Delivery
is engaged in, among other things, delivery and messenger
service. Central Delivery engages the services of contract
courier drivers to perform the actual deliveries according to
customer specifications. It is the status of these drivers that
is at issue in this case. The VEC noted that the Internal
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Revenue Service (IRS) has audited Central Delivery on several
occasions. In 1996, representatives of Central Delivery
responded to the IRS "20 questions" with respect to whether the
contract operators are independent contractors or employees. By
a form letter dated in February 1996, the district director of
the IRS advised Central Delivery that it had completed the
review and had taken action indicated by the check below. The
box that read, "We have accepted the report" was checked.
ANALYSIS
The findings of the VEC as to the facts, "if supported by
the evidence and in the absence of fraud, shall be conclusive,
and the jurisdiction of the court shall be confined to questions
of law." Code § 60.2-500(B)(1). "On appeal, we consider the
evidence in the light most favorable to the finding by the VEC."
V.E.C v. Thomas Regional Directory, Inc., 13 Va. App. 610, 613,
414 S.E.2d 412, 415 (1992). Thus, unless we can say as a matter
of law that the evidence established the exceptions, the VEC's
decision must be upheld. In this case the evidence provided by
Central Delivery was sufficient to establish that its drivers
are excluded from taxation by FUTA. Code § 60.2-219(22).
In Revenue Ruling 87-41, 1987-1 C.B. 286, the IRS provided
a list of factors used to determine whether contractors are
"employees . . . for the purposes of . . . the Federal
Unemployment Tax Act." The list of factors is the IRS's "20
questions" that Central Delivery answered in its audit and which
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the IRS accepted. Code § 60.2-219(22) required Central Delivery
to furnish "evidence" of its drivers' exemption from FUTA
taxation. Although the VEC asked Central Delivery to provide an
IRS Form SS-8 specific to the individuals in question, the
statute allows, as the VEC acknowledged, other evidence which
would demonstrate the drivers' exemption. The IRS letter
accepting Central Delivery's "20 questions" answers sufficiently
demonstrated that the IRS considered Central Delivery's drivers
exempt from FUTA taxation. See Rev. Rul. 87-41, 1987-1 C.B.
286. Thus, as a matter of law, the evidence supported a finding
that Central Delivery is exempt from state unemployment taxes
under Code § 60.2-219(22).
Accordingly, the decision of the circuit court is reversed.
Reversed.
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