Employee or independent contractor? The answer depends on various tests, and determines how a worker is classified for employment purposes, including tax withholding. A proposed federal reg states that direct sellers of tangible consumer goods are independent contractors, and direct sellers of intangible goods aren’t. In a Chief Counsel Advice (CCA), the IRS found no distinction between tangible and intangible goods, and therefore stated that direct sellers of intangible goods may be treated as independent contractors, in spite of the proposed reg. (CCA 201652020)

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