Groomer Strong: A Look at IRS Rulings

  • While these are not rulings coming out of cases against groomers, the hair industry is about the closest industry to grooming in how businesses are set up with clients and workers. You can see in these, the common issue seems to be in who the clients pays for the services.



    Wolfe v. United States, 77-1 U.S.T.C ¶ 9346 (D.N.D. 1977) Facts: Hair stylists are paid on a percentage of gross receipts; hair stylists handle own clients; hair stylists provide own supplies; appointments are made through one receptionist; hair stylists set their own hours and have their own keys to the shop; money from services is paid to the salon; hair stylist decides what prices to charge; hair stylists are responsible for bounced checks; and hair stylist are not required to work on salon's customers.              Decision: Employee

    Revenue Ruling 70-488, 1970-2 C.B. 219 Facts: Barber is paid a percentage of the money from services performed; salon sets hours of work; required to wear a uniform.              Determination: Employee

    Revenue Ruling 73-591, 1973-2 C.B. 337 Facts: Salon agrees to furnish, repair, and maintain all equipment; hair stylist is paid on a percentage of gross receipts; no credit work or free work can be done without the approval of the salon owner; working hours are set; hair stylist furnished a report each day to the owner reflecting the day's receipts.      Determination: Employee

    Revenue Ruling 73-592, 1973-2 C.B. 338 Facts: Rents for a fixed monthly fee; the salon furnished heat, light, water, and supplies, hair stylist retains the money collected; hair stylist sets own hours of work.         Determination: Independent Contractor

    Revenue Ruling 57-110, 1957-1 C.B. 329 Facts: Fixed weekly fee; owner furnished heat, light, water and supplies; barber provides own tools; barber sets own hours of work; and barber collects his own money and does not account to the salon owner for revenue earned. Determination: Independent contractor

    A Henry, d.b.a Center Beauty Shop, 78-1 U.S.T.C. ¶ 9433 (E.D. Tenn 1978) Facts: Rent is based on a percentage of gross receipts; no receptionist; anyone in the salon will answer the phone; salon furnishes the supplies; hair stylists collect own money; hair stylists set own hours of work; prices were set by an agreement among the hair stylist; and minimum rent payment is $50.   Determination: Independent Contractor