Cross References
• Twin Rivers Farm, Inc., T.C. Memo. 2012-184, July 2, 2012

Whether a worker is an employee or an independent contractor depends on the specific facts and circumstances. The courts have used the following relevant factors in making this determination.
1) The degree of control exercised by the employer,
2) Which party invests in the work facilities used by the worker,
3) The opportunity of the worker for profit or loss,
4) Whether the employer can discharge the worker,
5) Whether the work is part of the employer’s regular business,
6) The permanency of the relationship, and
7) The relationship the parties believed they were creating.

The employer’s primary activity was the raising, inventorying, training, marketing, and showing of horses for anticipated sales and/or anticipated prospective use for lessons and/or leasing of horses. The employer engaged two farm workers to work on the employer’s property. The workers lived in a trailer on the property and do not appear to ever have paid rent. The employer purchased workers’ compensation and employer’s liability insurance.

The farm workers’ duties included cleaning stalls, the barn area, the barn offices, the restroom, and the tack room, grooming horses, watering the horses, and moving the horses between pastures. The harnesses, brushes and combs, shovels, pitchforks, wheelbarrow, manure spreader, and brooms used to care for the horses and barn were all owned by the employer. One worker was also primarily responsible for cutting grass in the pastures and otherwise performing grounds-keeping-related activities. The equipment used for these activities was owned by the employer.

The farm workers also maintained and repaired fences on the property, using materials supplied to them by the employer.

The farm workers were paid weekly compensation by check. The workers were sometimes given advances on their weekly compensation, in which the next several compensation checks were reduced to repay the advanced amounts.

The employer never filed Form 943, Employer’s Annual Federal Tax Return for Agricultural Employees, or Form 941, Employer’s Quarterly Federal Tax Return, or issued the workers Form 1099-Misc with respect to the income the workers received. The Court used the seven relevant factors to determine if the employer should have treated the workers as employees rather than as independent contractors.

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