TV Commercial Set Designer Was an Independent Contractor

In Quintanilla v. Commissioner, T.C. Memo. 2016-5, the U.S. Tax Court concluded that a set designer for TV commercials was an independent contractor and not an employee for tax purposes.  This case provides a good example of factors that show that a worker is in fact an independent contractor.

Facts & Procedural History

Mr. Quintanilla was in the media and broadcasting industry.

He did production work on advertisements and TV commercials.

He was hired by a variety of production companies in 2009 and 2010.

The court described Mr. Quintanilla’s jobs as follows: “His skills don’t fit snugly within the industry’s usual classifications, and
Quintanilla’s titles varied from job to job. They included “driver”, “hyphenate driver,” and “set dresser.” Each of these titles has a defined meaning in the industry: A “driver” drives people, props, or other equipment and may or may not provide his own vehicle. A “hyphenate driver” is a driver who can also do a second job such as build sets or provide other services. A “set dresser” can build or paint a set, move sets or furniture, or act as a foreman and oversee a crew who do these things. But the roles on the smaller crews of commercial shoots blur, and Quintanilla’s title for a job did not always accurately describe what role he filled.”

Mr. Quantanilla was generally issued a Form W-2, Wage and Tax Statement, and the company listed on the Form
W-2 as the employer was usually a payroll company.

Mr. Quantanilla reported this income on Schedule C, Profit and Loss from Business, on his 2009 and 2010 income tax returns.

The IRS asserted that Mr. Quantanilla was an employee, not an independent contractor. As such, the IRS argued that this income should be reported on Schedule A, Itemized Deductions, rather than Schedule C. This would cause many of the associated expenses to be limited and possibly to trigger an alternative minimum tax or AMT liability.

The IRS’s primary argument was that Mr. Quantanilla was an independent contractor because the producers had a vision of the set in mind, they retained a large degree of control over Quintanilla.  The court disagreed.  It had little difficulty in determining that these factors showed that Mr. Quantanilla was an independent contractor and not an employee.

The court generally considers a number of factors in deciding whether a worker has enough autonomy in his work to be an independent contractor, including:

  • The degree of control exercised by the principal over the worker,
  • The worker’s investment in his workplace,
  • His opportunity to make a profit or suffer a loss,
  • Whether the principal can fire him,
  • Whether the work is part of the principal’s regular business,
  • The permanency of his relationship with the principal,
  • The relationship the parties believed they were creating, and
  • The principal’s provision of employee benefits.

The court considered these factors generally, concluding that they showed that Mr. Quintanilla was an independent contractor.

The court’s rationale is as follows:

We conclude that almost all these facts favor finding that Quintanilla was an independent contractor and not an employee. The most important is that Quintanilla had a large degree of control as to how to accomplish the tasks he had to do throughout the year. A production company sometimes gave Quintanilla a sketch drawn by a set designer. And sometimes it just gave him the director’s vision for the project. But in either situation Quintanilla had a large degree of independence in determining how to accomplish the project. He ordered props and modified them to the specs, he had authority to hire additional workers as needed, and he had the authority not to use workers that weren’t performing.

As such, the court sustained the taxpayer’s tax return filing position.