Statutory Employees

Wages received as a statutory employee, under IRC Section 3121(d)(3) are exempt from income tax withholding.

Statutory employees include: agent-drivers or commission drivers, full-time life insurance salespersons, home workers, and traveling or city salespersons. For details on statutory employees, see Pub 15-A, Employer's Supplemental Tax Guide (Supplement to Publication 15 (Circular E), Employer's Tax Guide).

If the taxpayer says they are a statutory employee and there are multiple employers, verify which employer(s) is the statutory employer(s). Check IRPTR for the statutory employee indicator(s) for the tax year in question.

If the indicator is present take the following actions:

Issue Letter 2809C to the employer and Letter 2813C to the taxpayer to release the lock-in.

Input TC 972 AC 146 to IDRS with Disposition Code "NSW" .

Document AMS with the employer name and EIN where the taxpayer is not subject to withholding, that appropriate letters were sent, and TC 972 AC 146 (NSW) was input.

Update WHCS.