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Keywords

attorneycorporation

Related Cases

Dunn & Clark, P.A. v. C.I.R. for and on Behalf of U.S., 57 F.3d 1076, 1995 WL 338811, 75 A.F.T.R.2d 95-2714, 95-2 USTC P 50,383

Facts

Dunn & Clark, P.A. is a law corporation with Robin Dunn and Stephen Clark as its only directors, officers, and attorneys. From 1987 to 1989, the corporation did not pay its attorneys wages but instead made payments characterized as dividends. The IRS assessed employment taxes on these payments, leading Dunn & Clark to sue for a refund after paying the taxes, arguing that the payments were not wages and that the attorneys were not employees.

Issue

Whether the attorneys of Dunn & Clark, P.A. were employees and whether the payments made to them were considered wages for the purpose of employment taxes.

Rule

The term 'employee' includes any officer of a corporation who performs substantial services, and 'wages' encompass all remuneration for employment, regardless of how payments are characterized.

Analysis

The court applied the definitions of 'employee' and 'wages' to the facts of the case, determining that the attorneys, as the only directors and officers of the corporation, performed substantial services and were therefore employees. The court also concluded that the payments made to them, although characterized as dividends, were in fact wages since they were made in compensation for the services rendered.

Conclusion

The court affirmed the IRS's assessment of employment taxes, ruling that the attorneys were employees and the payments made to them were wages.

Who won?

The IRS prevailed in the case because the court found that Dunn & Clark's attorneys were employees and that the payments made to them were indeed wages, thus justifying the IRS's tax assessment.

The IRS prevailed in the case because the court found that Dunn & Clark's attorneys were employees and that the payments made to them were wages, thus justifying the IRS's tax assessment.

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Keywords

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