obtaining a 1099 form

But does an officer/employee have to draw this very nominal $300/month salary or can this officer/employee work for free?

And draw a Director's Fee? A subtle difference?

So they are statutory employees.

The term "statutory employee" is a purely descriptive term. It has become a term of art in one small area of law, though the term is not used in any statute or regulation. It is not limited to nor used only in that situation.

I've seen situations where a person worked for an employer in different capacities, and (I believe) could be paid separately in each capacity if they were sufficiently separate and defined.

I am an officer of a nonprofit. By law, I am also considered an employee of the corporation. None of the officer's of this corporation are paid. They all volunteer their time. The bylaws of the corporation allow for the Bd of Directors to authorize compensation. The bylaws also allow the Bd of Directors to reimburse any director for an incurred business expense. The bylaws also allow the Bd of Directors to pay nonemployee directors a fee for their services. At the current time, only business expenses are reimbursed under an accountable plan.

Nonemployee directors who receive a fee report the amount as self-employment income. Employees of a corporation can not receive a director's fee as self-employment income. As an employee, any payment for services rendered to the corporation is wages.

The W-2 form has a check-the-box labeled Statutory Employee.

The instructions for this form and Pub 15 (or perhaps 15a) make it clear the term means life insurance sales folks, certain delivery drivers, piecework work-at-home types, and others who fit the "term of art" listed previously in this thread.

Do not check the Statutory Employee box on the W_2 form for salary paid to a corporate officer, because even though he or she is an employee by force of law - statute - the income is not reported on a schedule C like the term of art statutory employee.

Exactly. If the term "statutory employee" mean only that, as Seth implies, there would be no need for the instructions to specify which types of work it applies to.

Here is a link that I found which includes some IRS ruling citations on this topic:

The wording in the pubs and articles can be misleading. An individual can only fit into one category: IC, employee, statutory employee or nonstatutory employee. Directors of an exempt organization are statutory nonemployees just as the IRS article says but with an exception. If the individual is an employee of the corporation, that individual can not also be a nonstatutory employee. A director who is not an employee is a nonstatutory employee and any director fee is self-employment income. A director who is an employee is not a nonstatutory employee and all compensation for services performed for the corporation is wages.

It is possible that you may have an officer of the corporation who performs no services to the corporation (name only) AND does not receive any compensation. This individual is not an employee. If this individual is also a director, then the individual is a nonstatutory employee and any fee received is self-employment income.

I personally do not use the term "nonstatutory employee" but I prefer "statutory non-employee" which is a contractor, such as a corporate director or most real estate agents.

Technically your statutory non-employee is a common law contractor. And the non-statutory employee is a a common law employee.

But I like the term "non-statutory employee" because it contrasts so well against the term "statutory employee" in this situation. __ Stu

So he would be a "non-statutory employee by statute". I like the terminology too, but I don't have to deal with the resulting confusion.

Seth

On the other hand, a real estate salesperson or a corporate director is, by statute, a non-employee. A statutory non-emplopyee, if you will.

No W-2 for such folks. (modulo our dual status discussion.)

There is no statute defining what a non-statutory employee is, only one defining what a statutory employee is, so the additional "by statute" is not only redundant but it is misleading nonsense.

It's like saying that an orange is a non-cake by baking. It's not an orange so it's a non-orange. And you bake a cake but not an orange, so it's by baking. There's no reason to say that.

___ Stu

Au contraire. See IRC Section 3508. This is where certain real estate agents and direct sellers are by statute defined as not being employees. There is also another section (I don't have the cite.) that says that directors or members of the governing board of an exempt organization are also not employees. This is where the term statutory nonemployee derives.

Statutory employees are defined in Section 3121.

So... basically what we have is certain professions who under common law are employees but by statute will be considered nonemployees (independent contractors). And we have certain professions who under common law are not employees (they're independent contractors) but by statute will be considered employees and subject to FICA, etc.

I know consultants who, once upon a time, were Independent Contractors even though they worked on the company's premises, with their schedules determined by the company, etc. Under current law, they'd be employees. They are not, in either/any case, "statutory employees", but they are (or would be if the circumstances hadn't changed) employees because the law says so.

Seth