That’s what Judge Ronald L. (“Ingenuity”) Buch finds Barrett Business Services, Inc., 166 T. C. 7, filed 3/30/26, to be when BBS seeks to take the  “Work Opportunity Tax Credit (WOTC) and the Empowerment Zone Employment Credit (EZEC) with respect to its clients’ worksite employees for… (years in issue).” 166 T. C. 7, at p. 2.

Judge Buch finds sufficient Congressional guidance to keep the largesse bestowed on commonlaw employees (the hands-on, tell-the-workers what-and-how-to-do, fire-and-hire types) out of the hands of the backoffice payroll bookkeeper types like BBS.

Backstory: ” The WOTC allows employers to claim a tax credit for a percentage of wages paid to individuals of a ‘targeted group.’ See I.R.C. §§ 38(a), (b)(2), 51(a) and (b)(1). individuals of a ‘targeted group’ include certain veterans, ex-felons, individuals with disabilities, or long-term unemployment recipients. I.R.C. § 51(d)(1). The EZEC allows employers to claim a tax credit for a percentage of qualified zone wages paid for services performed by qualified zone employees who both live and work in an empowerment zone. See I.R.C. §§ 38(a), (b)(9), 1396(a), (c)(1), (d)(1). An empowerment zone is an area suffering from high poverty and unemployment in an urban or rural area designated under section 1391(a) by either the Secretary of Housing and Urban Development or he Secretary of Agriculture. See Rev. Proc. 2021-18, § 2.01, 2021-15 I.R.B. 1007, 1007; H.R. Rep. No. 103-111, at 792 (1993), as reprinted in 1993-3 C.B. 167, 368; see also I.R.C. § 1393.” 166 T. C. 7, at pp. 3-4.

While the statutes don’t define “employer,” commonlaw is the rule. BBS’ try to use Section 3401(d)(1) statutory employer cover falls short. Section 3401 is specifically limited to Title C employment taxes. Employment taxes aren’t income taxes.

And for those who care about legislative intent, Judge Buch has the following: “Congress enacted these credits to encourage employers to hire disadvantaged individuals who live and provide services in economically distressed areas. Congress intended the credit to help these disadvantaged individuals and to revitalize these economically distressed areas. Barrett provides employment-related services to its clients, which include payroll services. Barrett is not the entity that is providing the work opportunity for disadvantaged individuals or in distressed economic areas. A statutory employer who pays wages for services provided to another person is not Congress’s intended beneficiary of these credits.” 166 T. C. 7, at p. 10. My kind of judge.

Section 3504 agency only subjects agents of employers to the same liabilities as employers, not the same benefits. And as these are cross-motions for summary J, and the agency relationship is a fact question, Judge Buch can’t tell if BBS is an agent of the various employers who retain their services.