Packard Thurber v. Commissioner

PACKARD THURBER, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. Packard Thurber v. Commissioner Docket No. 28916. United States Board of Tax Appeals 20 B.T.A. 1208; 1930 BTA LEXIS 1954; October 9, 1930, Promulgated *1954 Petitioner held not to have been an employee of a State or a political subdivision thereof and not entitled to the benefits of section 1211 of the Revenue Act of 1926. A. G. Ritter, Esq., for the petitioner. C. H. Curl, Esq., for the respondent. SEAWELL *1208 The Commissioner determined deficiencies in income tax for 1922 and 1923 in the respective amounts of $1,569.65 and $1,343.89. In said years the State of California had a workmen's compensation, insurance and safety act and the petitioner was one of a number of physicians designated to treat patients sent them for medical attention by the State Industrial Accident Commission, fees for such services being paid from the State compensation insurance fund. The issue is whether or not petitioner, in the circumstances of the instant case, was an employee of the State and entitled to the benefits of section 1211 of the Revenue Act of 1926. The case is submitted on the pleadings and testimony of witnesses at the hearing. *1209 FINDINGS OF FACT. The petitioner is a practicing physician and surgeon, residing in Los Angeles, Calif. During the years in question he was designated*1955 as one of eight physicians residing in Los Angeles who treated patients sent them by the State Industrial Accident Commission, the compensation for such services being paid from the State compensation insurance fund, in accordance with a schedule of fees fixed by said commission. The Industrial Accident Commission consisted of three commissioners appointed by the governor, as provided by the California statutes. Said commission administers the State compensation insurance fund. The commission possessed the power to "appoint" its attorney, an assistant to such attorney, a secretary, assistant secretaries and the manager of the compensation insurance fund, all of whom held office at the pleasure of the commission. Such manager, before entering on the duties of his office, was required to give an official bond in the sum of $50,000, which had to be approved by the commission and filed in the office of the secretary of state. The manager also had to take and subscribe an official oath. The commission also had the power to "employ" such other assistants, officers, experts, statisticians and other employees as it might deem necessary to carry out the provisions of the statute. *1956 Over the petitioner and other physicians similarly designated by said manager to render medical services as heretofore indicated, there was a medical director. The petitioner in the circumstances of his employment had no written contract or agreement with the commission nor with the manager of the compensation insurance fund. He held no commission from the State. He was simply designated as one of a number of physicians authorized by the commission and by the manager of the compensation insurance fund to treat patients sent him by the commission and receive fixed fees therefor from said fund, which fund, aside from any State appropriation that might be made to it, was obtained from contractors who were required to pay into it premiums for the protection of their employees. The petitioner took no oath of office and gave no bond. He held his employment for no definite period of time but at the pleasure of the commission or said manager. While rendering service and being paid as indicated, he was allowed to carry on his general practice of medicine, giving preference, however, to patients sent him by the commission. In 1922 petitioner's total income was $19,926.88, of which*1957 $15,222.48 was received from the compensation insurance fund. *1210 In 1923 his gross income was $34,223.72, the gross income from fees from said fund being $24,653.63. If the fees received from the compensation insurance fund are taxable, the amount of the tax is not disputed. OPINION. SEAWELL: It is not contended in behalf of the petitioner that he is an officer of the State of California, but it is insisted that during the taxable years he was a State employee and the fees which he received from the State compensation insurance fund for professional services rendered patients sent him by the State Industrial Accident Commission are not taxable income. In the Revenue Act of 1926, it is provided: SEC. 1211. Any taxes imposed by the Revenue Act of 1924 or prior revenue Acts upon any individual in respect of amounts received by him as compensation for personal services as an officer or employee of any State or political subdivision thereof (except to the extent that such compensation is paid by the United States Government directly or indirectly), shall, subject to the statutory period of limitations properly applicable thereto, be abated, credited, or refunded. *1958 In the circumstances of the instant case and in view of recent decisions of this Board and decision of the Supreme Court of the United States in , reversing the , which reversed this Board in , there is no occasion for any extended discussion. The petitioner is not shown to have held any commission from the State or any written appointment by, or contract with, any officer of the State. He took no oath and gave no bond. He was simply one of a number of physicians designated by State officers to treat on a scheduled fee basis patients who might be sent him by them for such treatment. There was some supervision of his work by a medical director and the fees which were received by petitioner came from the compensation insurance fund, but such, in our opinion, did not make him an employee of the State in the sense of the statute. While giving preference in the matter of treatment to patients sent him by the State Industrial Accident Commission, his practice as physician and surgeon was not confined to them and*1959 a substantial part of his income from his practice was from other or outside sources. The fact that he did certain medical work at the instance or request or upon the designation of some State officer and was paid therefor from a fund administered by such officer or officers did not make him an employee of the State or of a political subdivision thereof. *1211 On the authority of the cases cited below, we hold the petitioner is not an employee of the State of California and is not entitled to claim the benefits of section 1211 of the Revenue Act of 1926, and the action of the respondent in holding the fees received by him from said State fund taxable is approved. See ;; ; ; ; and . Judgment will be entered for the respondent.