UNIVERSITY SPORTS OFFICIALS EMPLOYEES

FOR FEDERAL EMPLOYMENT TAX
U.S. INTERNAL REVENUE SERVICE, REVENUE RULING 57-119
Rev. Rul. 57-119; 1957-1 C.B. 331
January, 1957

This revenue ruling considered "the status for Federal employment tax purposes of officials who are engaged by an athletic association composed of colleges and universities to officiate at intercollegiate athletic contests participated in by members of the association."

The association is a nonprofit organization composed of several colleges and universities. It was organized to control and manage intercollegiate athletics in the institutions comprising its membership. Its funds are derived from gate receipts from pre-season games, certain radio and television receipts and a percentage of the gate receipts of post-season games. The bylaws of the association provide that it shall select, train and assign officials for all intercollegiate contests, supervise all conference meets and tournaments, and be responsible for all receipts and disbursements.

The association conducts clinics prior to and during the playing season for the purpose of familiarizing the officials with the rules and regulations governing intercollegiate athletics participated in by members of the association. The officials are required to attend these clinics. Each official is furnished a schedule of the season games he is expected to work. They are required to make a report to the secretary of the association after each game, listing all infractions of the rules and showing the type of sportsmanship exhibited by the players and coaches. A representative of the association attends one game each week for the purpose of observing the work of the officials assigned to that game. The services of the officials may be terminated at any time during the playing season by the association, except that once a particular game starts the officials are in complete charge and cannot be removed from the game. The colleges and universities served have no control over the services performed by the officials.

The officials are compensated on a fixed-fee basis for each game worked. The officials for the pre-season games are paid from the funds of the association while the officials for the regular season games are paid by the schools from the gate receipts.

For federal employment tax purposes, an "employee" is defined as "any individual who, under the usual common law rules applicable in determining the employer-employee relationship, has the status of an employee." Further, the revenue ruling notes that the applicable rules "for determining whether under the usual common law rules an employer-employee relationship exists are found in section 31.3121(d)-1(c) of the Employment Tax Regulations." [See the description of Rev.Rul. 87-14 in this edition for a listing of these rules.]

Applying these rules to the facts of this particular situation, the Internal Revenue Service held that "the association exercises or has the right to exercise control over the officials selected, trained and assigned by it to an extent sufficient to establish the relationship of employer and employee for purposes of the taxes imposed by the Federal Insurance Contributions Act." Accordingly, the IRS found that "these officials are employees of the association for such purposes."

An athletic association composed of colleges and universities is the employer for Federal employment tax purposes of officials whom it engages, trains and generally supervises to officiate at intercollegiate athletic contests participated in by members of the association... This conclusion is applicable also for purposes of the Federal Unemployment Tax Act and the Collection of Income Tax at Source on Wages.

The association is liable for the return and payment of all taxes due under the Federal Insurance Contributions Act and the Federal Unemployment Tax Act with respect to the fees received by the officials for officiating at games under its direction and control. The association also is liable for the return and payment of the income tax required to be withheld from the fees paid by it to the officials.