Matter of Liberman v. Gallman

Summary

The New York Court of Appeals upheld State Tax Commission determinations that a shoe sales representative was an independent contractor rather than an employee and was therefore subject to the unincorporated business tax. The court held that sufficient facts supported the Commission's findings, including the representative's control over sales methods, responsibility for office and clerical expenses, and treatment as self-employed for income-tax withholding purposes.

Holdings

1. The degree of control and direction exercised by the putative employer determines whether a taxpayer is an employee or an independent contractor. On this record, Reider did not exercise sufficient control over the manner in which Liberman solicited sales, and the Commission properly determined that he was not an employee.
2. The Tax Commission's determination must be sustained because the record contains sufficient facts and reasonable inferences to support it, and the determination was not shown to be erroneous as a matter of law, arbitrary, or capricious.
3. Liberman failed to carry his burden of establishing entitlement to the employee exemption from the unincorporated business tax.

Questions Presented

1. Whether the State Tax Commission erred as a matter of law in determining that Liberman was an independent contractor rather than an employee of Reider Shoe Manufacturing Company.
2. Whether the record contained sufficient facts and reasonable inferences to sustain the Commission's determination that Liberman was subject to the unincorporated business tax.
3. Whether Liberman carried his burden of establishing entitlement to an exemption from the unincorporated business tax for services performed as an employee.

Disposition

reversed