When Corporate Officers Are Treated as Employees

Usually, corporate officers, and the remuneration they receive, are treated as independent contractors. The payments are taxable to them and subject to self-employment tax. But when an officer of a corporation performs more than minor services and receives remuneration for such services, the officer is a “statutory” employee for employment tax purposes. This means the corporation owes FICA and FUTA taxes on the payments to the officer. That’s what officers of a daycare center found out in a recent Tax Court decision. They had daily responsibilities for running the business. #IdeaoftheDay