Ezel / IRS Rulings / 200910045

CCA 200910045: Section 7436 applied to reclassification of household workers

Number
200910045
Outcome
Advice
Document type
Chief Counsel Advice
IRS subject
Worker Classification; Domestic Service
Topics
Procedure, penalties, and administration Employment taxes
Code sections
§ 3121, § 3509, § 7436
Ruling dated
January 14, 2009
Publicly released
March 6, 2009
Source
View Official PDF

Apply this to your situation

This page covers legal advice the IRS Office of Chief Counsel wrote for IRS staff, issued in 2009, which can't be cited as precedent. Ask about your situation and see what the current Code and IRS guidance say, with citations.

Currency note: this determination was released in 2009
Statutory amendments, regulation changes, court decisions, or later IRS guidance may have changed the analysis since then. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, threshold, or position mentioned here.
Not precedent. Under 26 U.S.C. § 6110(k)(3), this written determination may not be used or cited as precedent. It is advice from the IRS Office of Chief Counsel to IRS personnel on the facts they presented, and identifying details were redacted by the IRS before release. The official IRS release (linked on this page as a PDF) is the authoritative source.
About this page: The plain-English summary and ruling snapshot below were written by Ezel based on the official IRS release. The full text is the IRS's own document.
View official IRS release (PDF)

Plain-English summary

The taxpayer filed neither Schedule H nor Forms W-2 and therefore had not treated the household workers as employees for section 7436 purposes. Chief Counsel's initial view was that section 7436 applied and that section 530 also needed consideration. The domestic nature of the employment did not change that conclusion, although no income tax withholding was owed because it was voluntary. Section 3509 could remain available for FICA depending on the facts, and FUTA could apply depending on the threshold.

Ruling snapshot

  • Question: Did section 7436 apply when a taxpayer had not filed Schedule H or Forms W-2 for household workers?
  • Outcome: Advice given: yes, with additional review of section 530 and potential FICA and FUTA consequences.
  • Key authorities: IRC §§ 3121, 3509, and 7436; section 530.

Full text (IRS public release)

ID: CCA_2009011415555341 Number: 200910045
Release Date: 3/6/2009
Office: -----------------------------
UILC: 7436.01-03, 3121.01-10

From: ----------------
Sent: Wednesday, January 14, 2009 3:55:55 PM
To: ----------------------
Cc: ----------------------
Subject: RE: Household employees and reclassification

So since they didn't file Sch H and didn't file W-2, they didn't treat as EE for 7436 purposes, so seems to me 7436 applies (as well as need to look at 530). I don't know of anything that would say otherwise just b/c domestic EE. Of course, no ITW would be owed b/c ITW is voluntary only. I believe 3509 could still be available, depending on the facts, even though only FICA (not ITW) at issue. FUTA, too, possibly depending on threshold.

------------ - you know of anything that would change the application of 7436 here?

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