T.C. Memo. 2003-179
UNITED STATES TAX COURT
DAMON C. CICCIARI, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 9897-01. Filed June 18, 2003.
Damon C. Cicciari, pro se.
Lorianne Masano, for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
FOLEY, Judge: By notice of deficiency dated May 11, 2001,
respondent determined an $891 deficiency relating to petitioner’s
1998 Federal income taxes. The sole issue for decision is
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whether petitioner is liable, pursuant to section 1401,1 for
self-employment tax.
FINDINGS OF FACT
In 1998, petitioner was a full-time police officer for the
Tallahassee Police Department (TPD). During off-duty hours,
petitioner provided security services to Sprint United Management
Company, Moon Management, Inc., Tallahassee Mall Partners, Ltd.,
and Florida Institute of CPAs (off-duty employers). Each off-
duty employer decided when to hire petitioner, paid him to patrol
its premises to prevent disturbances and criminal activity, and
set his work schedule.
TPD required petitioner to obtain its permission prior to
accepting off-duty assignments. In addition, TPD determined
petitioner’s off-duty minimum pay rate, required him to wear his
uniform when working off-duty security assignments, prohibited
him from performing activities that were outside the scope of his
law enforcement functions, and required him to monitor his police
radio. TPD required petitioner to respond to criminal activity
at his off-duty site as if he were on-duty. When responding to
such incidents, petitioner was required to take direction from
police supervisors. On occasion, TPD required petitioner to
leave his off-duty assignment to respond to certain high priority
1
Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the year in issue.
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calls. If petitioner returned within a short time, the off-duty
employer would pay petitioner for his entire scheduled shift. In
the event that he could not return, he would immediately notify
the off-duty employer. Each such employer paid petitioner
directly and issued a Form 1099-MISC, Miscellaneous Income. TPD
did not consider petitioner on-duty while working off-duty
assignments and did not pay him overtime. On his timely filed
1998 Federal income tax return, petitioner reported $39,487 in
wages (i.e., $32,089 from TPD and $7,398 from off-duty
assignments). On May 11, 2001, respondent reclassified the
$7,398 as self-employment income and determined an $891
deficiency.
On August 8, 2001, petitioner, while residing in Tampa,
Florida, filed his petition with the Court.
OPINION
Petitioner’s only contention is that he was an employee of
TPD while working off-duty assignments. Section 1401 imposes a
tax upon a taxpayer’s self-employment income. Self-employment
income consists of gross income derived by an individual from any
trade or business carried on by such individual. Sec. 1402(a).
The self-employment tax, however, does not apply to compensation
paid to an employee. Sec. 1402(c)(2).
Section 3121(d)(2) defines an employee as “any individual
who, under the usual common law rules applicable in determining
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the employer-employee relationship, has the status of an
employee”. That definition is made applicable for self-
employment tax purposes by section 1402(d). Whether an
individual is an employee or an independent contractor is a
question of fact determined by application of common law
principles. Hosp. Res. Pers., Inc. v. United States, 68 F.3d
421, 424 (11th Cir. 1995) (stating that common law rules serve as
the basis for classifying workers as employees or independent
contractors); Weber v. Commissioner, 103 T.C. 378 (1994), affd.
60 F.3d 1104 (4th Cir. 1995); sec. 31.3401(c)-1(b), (d),
Employment Tax Regs. The Court may consider various factors in
determining the relationship between the parties. See Clackamas
Gastroenterology Associates, P.C. v. Wells, 536 U.S. __, 123 S.
Ct. 1673 (April 22, 2003); Weber v. Commissioner, supra at 387.
No one factor, however, is controlling. Weber v. Commissioner,
supra. After considering these factors, we conclude that
petitioner was not an employee of TPD but performed his off-duty
security services as an independent contractor.
First, petitioner was not an employee of TPD while working
off-duty assignments because TPD did not control petitioner’s
off-duty employment activities. TPD’s control over petitioner’s
conduct relating to off-duty security services (e.g., requiring
officers to obtain approval prior to accepting off-duty jobs,
imposing a minimum pay rate, and requiring officers to respond to
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certain high priority calls) is incidental and related only to
the on-duty, rather than the off-duty, employment relationship.
Milian v. Commissioner, T.C. Memo. 1999-366; Kaiser v.
Commissioner, T.C. Memo. 1996-526, affd. without published
opinion 132 F.3d 1457 (5th Cir. 1997); March v. Commissioner,
T.C. Memo. 1981-339. Moreover, we reject petitioner’s contention
that the off-duty employers indirectly paid him on behalf of TPD
when he responded to certain high priority calls. We recognize
that petitioner was on-call during off-duty hours. There is no
evidence, however, that TPD had any agreement with the off-duty
employers or required them to continue paying petitioner on
behalf of TPD.
Second, the off-duty employers operated separately from TPD.
See March v. Commissioner, supra (stating that the source and
method of payment are also factors in establishing whether an
employee-employer relationship existed). Petitioner was paid
directly by each off-duty employer, and his earnings were not
reported to TPD. Each off-duty employer treated petitioner as an
independent contractor and issued Forms 1099-MISC, Miscellaneous
Income.
Third, petitioner’s off-duty services were performed for,
and were directly beneficial to, the off-duty employer. Milian
v. Commissioner, supra (stating that performance of services by
the employee for the employer is implicit in an employment
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relationship); March v. Commissioner, supra. Any benefit TPD
received by an increased police presence at petitioner’s off-duty
assignments was incidental and similar in nature to the benefit
to a police department when officers increase the police presence
in a community by driving their police cruisers home. Milian v.
Commissioner, supra; March v. Commissioner, supra.
Finally, the off-duty employers had the ability to select
and the power to discharge at will. Milian v. Commissioner,
supra; March v. Commissioner, supra.
Although there may be some facts that point to an employee-
employer relationship (e.g., minimum pay rates and the
requirement that officers respond to certain high priority calls)
between petitioner and TPD, when taken as a whole the facts
establish that petitioner was self-employed. Accordingly, we
hold that the earnings in dispute are earnings from
self-employment, subject to the tax imposed by section 1401.
Contentions we have not addressed are irrelevant, moot, or
meritless.
To reflect the foregoing,
Decision will be entered
for respondent.