Services Under Contracts Regarded as Personal Services and Applicable Deductions on Pay Roll Forms for Withholding Taxes

B-82269: Apr 5, 1949

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Shirley Jones
(202) 512-8156


Office of Public Affairs
(202) 512-4800

GAO was asked to determine a decision as to (1) whether the services under certain contracts entered into by the Weather Bureau for the janitor, ground keeping and grass cutting services are to be regarded as personal services for which payments are to be made on pay roll forms with necessary deductions for withholding taxes; (2) whether the decision, if affirmative, would be the same if the janitors were required to furnish mops, buckets, soap, etc., and the persons who care for the grounds were required to furnish the necessary equipment to mow the lawn, rake the leaves, etc.; and (3) whether the contracts could be considered as covering annual labor not in the course of the Weather Bureau’s business as described in the Bureau of Internal Revenue and therefore exempt from the withholding tax.

The determination as to whether the services to be rendered under a particular contract are personal or nonpersonnel will depend upon the terms of and the circumstances surrounding the contract. Generally, persons engaged under contract on other than a personal services basis are those who do not perform their work under the supervision and control of the Government. And, while the furnishing of supplies and equipment to the person as engaged, would frequently indicate that such person was an employee, that rule would not necessarily hold good in all cases. An agreement could be made that one party will, by means of supplies and equipment supplied by the other, accomplish in his own way and in his own time a specified result and that payment will be made of an agreed amount from the accomplishment of such result. Such a case is easily distinguished from an agreement under which one person performs certain actions at the direction and under the supervision of the other, has no responsibility for the result obtained, and is paid a specified sum for a specified period of time.