The opinion of the court was delivered by: MEANEY
This is an action for the recovery of federal insurance contributions taxes and federal unemployment taxes for the taxable period June 30, 1947 through June 30, 1951, in the total amount of $ 3,012.15.
The taxes in question are taxes paid to the United States on the earnings of certain workers called 'insulators' and 'carpenters', under the Federal Insurance Contributions Act, 26 U.S.C.A. § 1400 et seq., and the Federal Unemployment Tax Act, 26 U.S.C.A. § 1600 et seq.
This claim of refund is based upon the contention that these insulators and carpenters were independent contractors and not employees of the plaintiff within the meaning of §§ 1426(d) and 1607(i) of Title 26 of the Code and, therefore, plaintiff was not liable for a tax on their earnings, and that the assessments which form the basis for the collections were erroneously made.
The pertinent portions of these statutory subsections define an employee as one who, under the usual common law rules applicable in determining an employer-employee relationship, has the status of an employee.
Testimony relating to this claim was heard by the court sitting without a jury on March 2, 1955.
1. The plaintiff is a New Jersey corporation engaged in the business of repairing, insulating and modernizing dwelling houses and small buildings, and was so engaged during the taxable years in question. Morris Goodman is its president and active managing head.
2. Contracts for the performance of this work were obtained through solicitation by corporate salesmen, and the actual work was done by insulators and carpenters. When a corporation undertook a contract, it took into consideration in reaching the gross contract price the cost of material, labor, overhead, salesmen's commissions, and the corporation's profits.
3. The corporation undertook home repair and reconstruction work as well as insulation. Repairs and reconstruction were done by carpenters. These carpenters got written work orders. Insulators got written instructions from the corporation on what work was to be done.
4. No foreman was over either type of worker to direct him or tell him what to do.
5. The workers used the company's truck and machinery in repairing and insulating, and utilized a few tools of their own, such as chisels, hammers, plumb bobs, snips and saws.
6. Each job had a separate work sheet and when there was no work sheet at the office upon the worker's arrival, he went home. If there was any misunderstanding about the work sheet, the men would call Goodman for an explanation.
8. Time was kept by punching a time clock, and there was no set time a worker had to be back after he had punched out. The worker would, however, estimate how much time a job would take, including travel to and from work, and also about how much material would be needed. This material was ...