For the most part, salespersons are treated the same as any other workers for payroll tax purposes. Thus, you'll generally have to withhold and pay payroll taxes if your salespersons are your employees. And, except with respect to certain traveling or city salespersons, you won't have any payroll tax obligations with respect to salespersons who are independent contractors.

However, there are two types of salespersons for whom you may be relieved of all federal and most state payroll taxes even if they are properly classified as being your employees:

1. real estate agents
2. direct sellers

This relief is available only if

• substantially all the compensation you pay these salespersons is directly related to sales or other output, as opposed to the number of hours they work, and
• the salespersons perform their services pursuant to written contracts specifying that they will not be treated as employees for payroll tax purposes.

"Direct sellers" are persons who sell or solicit the sale of consumer products at a place of business, such as a home, that is not a permanent retail establishment. The sales can be to the ultimate consumer or to a buyer who purchases the products for resale and on a buy-sell basis, deposit-commission basis, or similar basis.