## Facts

- John Walz was a professional, world-renowned cellist who provided musical services to multiple organizations during 2000.
- In 2000, Walz performed for the Los Angeles Opera (opera) and had performed for the opera for about 10 years before that year.
- For the opera, the organization selected the music to be performed, provided Walz with the season’s music, required him to attend rehearsals at set times for set durations, did not allow him to leave rehearsals unless excused, and set the dress uniform for performances.
- In 2000, Walz also performed for the Long Beach Symphony (symphony) and had performed for the symphony for about 20 years before that year.
- Walz’s work for the symphony was performed under conditions similar to those imposed by the opera.
- Both the opera and the symphony treated Walz as an employee, including issuing Forms W-2, withholding taxes, and making pension contributions on his behalf pursuant to a union contract.
- When filing his 2000 federal income tax return, Walz reported himself as an independent professional musician and claimed deductions for business expenses.
- The Commissioner disallowed Walz’s claimed deductions, and Walz challenged that determination in the United States Tax Court.
- The dispute turned on whether Walz was an employee or an independent contractor for his work for the opera and symphony during 2000.

## Issues

1. Was John Walz an employee or an independent contractor for federal tax purposes with respect to his 2000 performance work for the Los Angeles Opera and the Long Beach Symphony?
2. If Walz was an employee, could he claim his performance-related expenses as business deductions on Schedule C as if he were self-employed?

## Decision

- The Tax Court held that Walz was an employee of the Los Angeles Opera and the Long Beach Symphony for the 2000 tax year.
- Because Walz was an employee, he could not treat the W-2 performance income as self-employment income reported on Schedule C, and the court sustained the Commissioner’s disallowance of the claimed deductions as reported.

## Legal Principles

- For federal tax purposes, worker status is determined under common-law agency principles, with primary attention to whether the service recipient has the right to control the manner and means by which the work is performed.
- Facts indicating employee status include the payor’s control over key aspects of the work (such as scheduling and required attendance), and the payor’s ability to impose work rules tied to the performance.
- The parties’ administration of the relationship is relevant, including payroll treatment (Forms W-2 and tax withholding) and participation in employer-provided benefits such as pension contributions made under a union agreement.
- A taxpayer generally may not report wages as self-employment income simply by labeling the relationship differently on a return when the relationship is managed as employment and the payor exercises significant control.

## Conclusion

Walz’s long-running relationships with the opera and symphony, the organizations’ control over rehearsals and performance conditions, and their W-2/withholding and pension practices supported employee classification, so the Tax Court upheld the Commissioner’s disallowance of Walz’s claimed Schedule C business expense deductions for his 2000 performance work.


Walz v. Commissioner, T.C. Summary Opinion 2005-1 (2005)