HQ 225561 - 19 CFR 111.3(a); personnel from one company performing clerical support for other company are not employees of other company; "employee"; 54 Fed. Reg. 13,136; "independent contractor". - United States International Trade Commision Rulings

United States International Trade Commision Rulings And Harmonized Tariff Schedule

faqs.org Rulings By Number Rulings By Category Tariff Numbers

faqs.org > Rulings and Tariffs Home > Rulings By Number > 1995 HQ Rulings > HQ 225339 - HQ 226123 > HQ 225561

Previous Ruling Next Ruling
HQ 225561

February 10, 1995

BRO-2-01-CO:R:C:E 225561 AJS

CATEGORY: BROKERS

Mr. Randy L. Pohler
International Consultation Services
P.O. Box 999
Del Rio TX 78841

RE: 19 CFR 111.3(a); personnel from one company performing clerical support for other company are not employees of other company; "employee"; 54 Fed. Reg. 13,136; "independent contractor".

Dear Mr. Pohler:

This is in reply to your request of July 5, 1994, concerning the scope of the term "employees" as it relates to 19 CFR 111.3(a).

FACTS:

Your company provides clerical support to companies involved in the importation of assembled or manufactured merchandise. We assume that your company provides this support through its own personnel. Your company is employed by companies which do not wish to maintain offices and or employees on the United States- Mexico border. Normally, these companies would have a manufacturing plant in Mexico and a plant manager who would travel from the U.S. to Mexico daily to oversee the plant operations. The clerical support provided by your company includes, but is not limited to, inter-company memorandums, English/Spanish translations, form preparation, charts/graphs, etc. The plant manager would direct that your personnel accomplish clerical tasks in support of the companies import/export activities. All documents requiring a signature are signed by the plant manager who, of course, has a power-of- attorney to sign customs documents. Your company is paid on a weekly basis for providing this clerical support.

Based on our previous correspondence (i.e., HQ 224768 October 20, 1993), it is understood that you are submitting this request in connection with the language of section 648 of the North American Free Trade Agreement Implementation Act (Act of

December 8, 1993, 107 Stat. 2053, Pub. L. No. 103-182). That section amended 19 U.S.C. 1641 to include within the definition of "Customs business" the preparation of documents or forms intended to be filed with the Customs Service in furtherance of the statutory listed activities. This letter is intended to cover only that understanding.

ISSUE:

Whether personnel from your company are "regular employees or officers" of the companies for which they perform clerical support within the meaning of 19 CFR 111.3(a).

LAW AND ANALYSIS:

19 CFR 111.3(a) provides that an importer or exporter transacting customs business solely on his own account and in no sense on behalf of another is not required to be licensed, nor are his "authorized regular employees or officers" who act only for him in the transaction of such business.

Customs has previously discussed the meaning of the terms "employee" and "employer" as they relate to the terms "responsible supervision and control" in 19 U.S.C. 1641. See 54 Fed. Reg. 13,136 (1989). In our discussion, we cited to 26 U.S.C. 3401(c) and (d) in which these terms are defined for purposes of the Internal Revenue Code. In addition, we stated that the common law rules in determining the employer-employee relationship apply. Marvel v. U.S., 719 F. 2d 1507, 1514-1516 (10th Cir. 1983). Generally, by virtue of 26 U.S.C. 3402, an employer is required to deduct and withhold a tax on the wages of each employee. Under 26 U.S.C. 3403, an employer is liable for the payment of the tax imposed by section 3402. Your request states that your company is paid on a weekly basis for providing clerical support. No information is provided concerning the deduction or withholding arrangement for your personnel. We assume that your company deducts and withholds a tax on the wages of its personnel. Therefore, it does not appear that your personnel are employees of the other companies under these definitions.

In the above discussion, Customs also stated that in an employer-employee relationship, unless it can be shown that an employee was clearly outside the scope of the employment, an act of the employee binds the employer. If the subject personnel are provided from your company, it would not appear that their acts would bind the other companies. Therefore, it also does not appear that your personnel are employees of the other companies under this definition.

Customs additionally stated that an employee has been defined as a person who renders service to another for wages and who in the performance of such service is entirely subject to the direction and control of the employer. Weaver v. Weinberger, 392 F. Supp. 721, 723 (S.D. W. Va 1975); Beliz v. W.H. McLeod & Sons Packing Co., 765 F.2d 1317, 1327-1330 (5th Cir. 1985); and Sandwiches, Inc. v. Wendy's Intern., Inc., 654 F.Supp. 1066 (E.D. Wis. 1987). If your company is providing personnel to other companies, it would not appear that such personnel would satisfy this definition. We assume that your company would be paid a fee for the services performed by its personnel and not wages. In addition, we assume that your personnel are entirely subject to the direction and control of your company in the performance of the subject clerical support. Your request states that the plant manager would direct that your personnel accomplish the subject clerical tasks. Inasmuch as your company is providing its expertise in the import/export area, it would naturally follow that your company would direct and control the performance of clerical tasks related to this area.

In our above discussion concerning "employee" and "employers", we stated that "a person who hires an independent contractor does not enter into an employer-employee relationship: as such, an independent contractor retains the right to select the method and manner to perform the work, free from the direction and control of the person who hires the contractor in all matters, except as to the result or product of the work." As discussed previously, we assume that your company would select the method and manner for its personnel to perform the subject clerical tasks for the other companies. We assume that the plant manager for the other company would only direct that the clerical tasks be accomplished. Accordingly, your personnel would appear to be independent contractors of the other companies.

HOLDINGS:

Personnel from your company are not "regular employees or officers" of the companies for which they perform clerical support within the meaning of 19 CFR 111.3(a).

Sincerely,

John Durant, Director
Commercial Rulings Division

Previous Ruling Next Ruling