Washington Administrative Code
Title 458 - Revenue, Department of
Chapter 458-20 - Excise tax rules
Section 458-20-105 - Employees distinguished from persons engaging in and operating a business
Current through Register Vol. 24-06, March 15, 2024
(1)Introduction. The Revenue Act imposes taxes on persons engaged in taxable business activity, which does not include persons acting solely in the capacity of employees. This rule states the conditions that serve to indicate whether a person is engaging in and operating a business or is an employee.
(2)Right to control. While no one factor definitely determines employee status, the most important consideration is the employer's right to control the employee. The right to control is not limited to controlling the result of the work to be accomplished, but includes controlling the details and means by which the work is accomplished. In cases of doubt about employee status the pertinent facts may be submitted to the department of revenue for a specific ruling.
(3)Persons engaging in and operating a business. A person operating a business is a business entity that is engaging in business. The term "engaging in business" includes commencing, conducting, or continuing in business and also the exercise of corporate or franchise powers as well as liquidating a business when the liquidators thereof hold themselves out to the public as conducting such business. RCW 82.04.150. Engaging in business also includes the act of transferring, selling or otherwise dealing in real or personal property, or the rendition of services, for consideration except as an employee. The following conditions will serve to indicate that a person is engaging in and operating a business.
If a person is:
(4)Employees. The following conditions indicate that a person is an employee.
If the person:
(5)Full-time life insurance salespersons. RCW 82.04.360 provides that individuals performing services as full-time life insurance salespersons, as provided in section 3121(d)(3) (ii) of the Internal Revenue Code, will be considered employees. Treatment as an employee under this subsection (5) applies only to persons engaged in the full-time sale of life insurance. The status of other persons, including others listed in section 3121(d) of the Internal Revenue Code, will be determined according to the provisions of subsections (1) through (4) of this rule. For information on the taxability of insurance producers, adjusters, title insurance agents, and surplus line brokers refer to WAC 458-20-164.
(6)Operators of rented or owned equipment. Persons who furnish equipment on a rental or other basis for a charge and who also furnish the equipment operators, are engaging in and operating a business and are not employees of their customers. Likewise, persons who furnish materials and the labor necessary to install or apply the materials, or produce something from the materials, are presumed to be engaging in and operating a business and not to be employees of their customers.
(7)Casual laborers. Persons regularly performing odd job carpentry, painting or paperhanging, plumbing, bricklaying, electrical work, cleaning, yard work, etc., for the public generally are presumed to be engaging in and operating a business. The burden of proof is on such persons to show otherwise. For tax registration and tax reporting requirements refer to WAC 458-20-101. Readers may also want to contact the Washington state employment security department or the Internal Revenue Service for additional information.
(8)Corporations, joint ventures, or individuals acting as a unit. A corporation, joint venture, partnership, limited liability corporation, or any other group of individuals acting as a unit, is not an employee.
(9)Booth renters. For purposes of the business and occupation tax a "booth renter," as defined in RCW 82.04.360, is considered to be engaging in and operating a business and not an employee.
(10)Personal chefs. Personal chefs are engaging in and operating a business as independent contractors. They prepare meals for consumption at their clients' homes. Personal chefs typically serve multiple clients, working with the clients to create personalized meal plans based on the client's specific dietary requirements or requests. The meals may be prepared in the client's home or in a commercial kitchen and delivered to the client's home. Personal chefs may also prepare meals for social events, such as dinner parties, cocktail parties, engagement parties, weddings, or receptions.
Statutory Authority: RCW 82.32.300. 92-06-082, § 458-20-105, filed 3/4/92, effective 4/4/92; 89-16-080 (Order 89-10), § 458-20-105, filed 8/1/89, effective 9/1/89; Order ET 70-3, § 458-20-105 (Rule 105), filed 5/29/70, effective 7/1/70.