Loopholes > Federal > Companion Sitter Placement Service Exclusion
DEDUCTION MEDIUM SAVINGS BUSINESS

Companion Sitter Placement Service Exclusion

IRC §3506

Excludes placement agencies from being treated as employers for payroll tax purposes if they act as intermediaries between sitters and clients and do not handle wage payments directly.

Eligibility

Must be in the business of putting sitters (childcare, elderly, or disabled care) in touch with clients, must not pay or receive the sitter's wages, and must be compensated on a fee basis.

Frequently Asked Questions

Who is eligible for the Companion Sitter Placement Service Exclusion?

Must be in the business of putting sitters (childcare, elderly, or disabled care) in touch with clients, must not pay or receive the sitter's wages, and must be compensated on a fee basis.

How does the Companion Sitter Placement Service Exclusion work?

Excludes placement agencies from being treated as employers for payroll tax purposes if they act as intermediaries between sitters and clients and do not handle wage payments directly.

What law authorizes the Companion Sitter Placement Service Exclusion?

The Companion Sitter Placement Service Exclusion is authorized under IRC §3506 of the Internal Revenue Code (Title 26, United States Code).

Statutory Text — IRC §3506

Source: Internal Revenue Code, Title 26, United States Code

§ 3506. Individuals providing companion sitting placement services(a) In generalFor purposes of this subtitle, a person engaged in the trade or business of putting sitters in touch with individuals who wish to employ them shall not be treated as the employer of such sitters (and such sitters shall not be treated as employees of such person) if such person does not pay or receive the salary or wages of the sitters and is compensated by the sitters or the persons who employ them on a fee basis. (b) DefinitionFor purposes of this section, the term “sitters” means individuals who furnish personal attendance, companionship, or household care services to children or to individuals who are elderly or disabled. (c) RegulationsThe Secretary shall prescribe such regulations as may be necessary to carry out the purpose of this section. (Added Pub. L. 95–171, § 10(a), Nov. 12, 1977, 91 Stat. 1356.) Statutory Notes and Related Subsidiaries Effective DatePub. L. 95–171, § 10(c), Nov. 12, 1977, 91 Stat. 1356, provided that: “The amendments made by this section [enacting this section] shall apply to remuneration received after December 31, 1974.” Unemployment Compensation or Social Security Benefits Based on Services Performed Before November 12, 1977, UnaffectedPub. L. 95–171, § 10(d), Nov. 12, 1977, 91 Stat. 1356, provided that: “The amendments made by this section [enacting this section] shall not be construed as affecting (1) any individual’s right to receive unemployment compensation based on services performed before the date of the enactment of this Act [Nov. 12, 1977], or (2) any individual’s eligibility for social security benefits to the extent based on services performed before that date.”