Film Cos. Cannot Pass Tax Liabilities To 3rd Parties: Fed. Circ.

By Stephanie Russell-Kraft (September 10, 2013, 7:25 PM EDT) -- The Federal Circuit ruled Tuesday that third-party payroll services must apply common law employment relationships when determining federal employment tax wage caps, ending a dozen-year dispute between the IRS and media production payroll company Cencast Services LP.

In a precedential opinion for the Federal Circuit written by Circuit Judge Timothy B. Dyk, the court unanimously ruled in favor of the IRS in a group of consolidated tax refund cases, finding that Cencast, one such payroll service company, could not tax production company workers as if they were employees of Cencast, and not the individual studios.

Previously, individual employees that worked on...

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