(A) General. Individuals engaged in the sale of insurance may be either employees or independent contractors under this article.
(1) Where the individual is subject to the direct control of another as to the manner of his or her conduct and is paid a fixed fee, he or she is considered an employee and the amount of the license shall be withheld at the source.
(2) Where the individual is not under the direct control of another and may conduct the sale as he or she sees fit, receiving his or her payment in the form of commission from the sale, he or she is considered an independent contractor and shall file his or her own return and make payment as an independent contractor.
(B) Commissions.
(1) In determining whether the commissions payable by reasons of the selling of any policy by an agent resulted from work done or services performed or rendered in the city, the test shall be the residence of the insured at the time of issuance of the policy, rather than the actual place of solicitation, except where the solicitation is in the city and the agent’s established place of business is within the city, the commission is subject to the license tax regardless of the residence of the insured.
(2) If an agent has an office outside the city as well as an office of his or her own within the city, the commission on policies sold to non-residents, if handled through the outside office, are not subject to a license tax, since under the circumstances, they are not earnings or profits of an independent city employee.
(C) Group insurance commissions. Commissions paid on the sale of contracts of group insurance are subject to the license tax under this article if the group is located within the city as a unit without regard to the residence of the writing agent.
(D) Bonuses and incentive payments. The proportionate part of all bonuses and incentive payments received by an insurance agent, which bears the same ratio to the total amount of bonuses and incentive payments received by him or her, as the amount of commissions received by him or her on policies sold to residents bears to the total amount of commissions received by him or her on all policies sold, to both residents and non-residents, is subject to the license tax under this article.
(E) Advances and drawing accounts.
(1) There are two main types of advances and drawing account payments:
(a) Those which impose upon the agent a written obligation to repay if they are not in fact earned; and
(b) Those which, though offset by commissions as earned, cannot be recovered at law even though the agent fails to produce enough business to justify them.
(2) The first of these two types of advance and drawing account payments is in the nature of a loan and accordingly is never subject to a license tax. All commissions or bonuses, applied toward the repayment of these types of advances and drawing accounts, are subject in accordance with the rules set forth in this section.
(3) The second type of advance and drawing account payment is subject compensation under this article when received, to the extent that it exceeds compensation earned after 7-1-1968.
(F) Collection of license taxes at source. It is the duty of all insurance companies doing business in the city, or general agents in the cases of agents whose contracts are with a general agent alone and to whom payment is made by the general agent or of funds of the general agent, to deduct or withhold monthly or more often the amounts of license tax due on all compensation paid to agents who are considered employees.
(1977 Code, § 20-276) (Ord. 68-10, passed 6-24-1968)