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Title 26 — Internal Revenue CodeRelease 119-73

§3508 Treatment of real estate agents and direct­ sellers

Title 26 › Subtitle Subtitle C— - Employment Taxes › Chapter CHAPTER 25— - GENERAL PROVISIONS RELATING TO EMPLOYMENT TAXES › § 3508

Last updated Apr 6, 2026|Official source

Summary

Treat people who work as qualified real estate agents or as direct sellers as independent contractors for this title. They are not employees, and the people who hire them are not employers. A "qualified real estate agent" is a licensed salesperson who is paid mostly based on sales or results (not hours) and who has a written contract saying they are not an employee for federal tax purposes. A "direct seller" is someone who sells consumer products in homes or outside a permanent store, or delivers newspapers or similar items, who is paid mostly based on sales or results and who has a written contract saying they are not an employee for federal tax purposes. The rule does not apply under subtitle A if the person is treated as an employee under section 401(c)(1).

Full Legal Text

Title 26, §3508

Internal Revenue Code — Source: USLM XML via OLRC

(a)For purposes of this title, in the case of services performed as a qualified real estate agent or as a direct seller—
(1)the individual performing such services shall not be treated as an employee, and
(2)the person for whom such services are performed shall not be treated as an employer.
(b)For purposes of this section—
(1)The term “qualified real estate agent” means any individual who is a sales person if—
(A)such individual is a licensed real estate agent,
(B)substantially all of the remuneration (whether or not paid in cash) for the services performed by such individual as a real estate agent is directly related to sales or other output (including the performance of services) rather than to the number of hours worked, and
(C)the services performed by the individual are performed pursuant to a written contract between such individual and the person for whom the services are performed and such contract provides that the individual will not be treated as an employee with respect to such services for Federal tax purposes.
(2)The term “direct seller” means any person if—
(A)such person—
(i)is engaged in the trade or business of selling (or soliciting the sale of) consumer products to any buyer on a buy-sell basis, a deposit-commission basis, or any similar basis which the Secretary prescribes by regulations, for resale (by the buyer or any other person) in the home or otherwise than in a permanent retail establishment,
(ii)is engaged in the trade or business of selling (or soliciting the sale of) consumer products in the home or otherwise than in a permanent retail establishment, or
(iii)is engaged in the trade or business of the delivering or distribution of newspapers or shopping news (including any services directly related to such trade or business),
(B)substantially all the remuneration (whether or not paid in cash) for the performance of the services described in subparagraph (A) is directly related to sales or other output (including the performance of services) rather than to the number of hours worked, and
(C)the services performed by the person are performed pursuant to a written contract between such person and the person for whom the services are performed and such contract provides that the person will not be treated as an employee with respect to such services for Federal tax purposes.
(3)This section shall not apply for purposes of subtitle A to the extent that the individual is treated as an employee under section 401(c)(1) (relating to self-employed individuals).

Legislative History

Notes & Related Subsidiaries

Editorial Notes

Amendments

1996—Subsec. (b)(2)(A). Pub. L. 104–188 added cl. (iii).

Statutory Notes and Related Subsidiaries

Effective Date

of 1996 Amendment Pub. L. 104–188, title XI, § 1118(b), Aug. 20, 1996, 110 Stat. 1764, provided that: “The

Amendments

made by this section shall apply to services performed after December 31, 1995.”

Effective Date

Pub. L. 97–248, title II, § 269(e), Sept. 3, 1982, 96 Stat. 553, provided that: “(1) In general.—Except as provided in paragraph (2), the

Amendments

made by this section [enacting this section and amending section 410 of Title 42, The Public Health and Welfare] shall apply to services performed after December 31, 1982. “(2) Subsection (c).—The

Amendments

made by subsection (c) [amending provisions set out as a note under section 3401 of this title] shall take effect on July 1, 1982.”

Rules and Regulations

Pub. L. 97–248, title II, § 269(c)(3), Sept. 3, 1982, 96 Stat. 553, provided that: “Nothing in section 530 of the Revenue Act of 1978 [set out as a note under section 3401 of this title] shall be construed to prohibit the implementation of the

Amendments

made by this section [enacting this section, amending section 410 of Title 42, The Public Health and Welfare, and amending provisions set out as a note under section 3401 of this title].”

Reference

Citations & Metadata

Citation

26 U.S.C. § 3508

Title 26 — Internal Revenue Code

Last Updated

Apr 6, 2026

Release point: 119-73