---
kind: "section"
citation: "26 U.S.C. § 3508"
title: "26"
title_heading: "Internal Revenue Code"
number: "3508"
heading: "Treatment of real estate agents and direct­ sellers"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/26/3508"
units:
  - "Subtitle C — Employment Taxes"
  - "Chapter 25 — General Provisions Relating to Employment Taxes"
---

# §3508. Treatment of real estate agents and direct­ sellers

- (a) **General rule—** For purposes of this title, in the case of [services](/usc/26/3231.md?p=e-2-C-i) performed as a qualified real estate agent or as a direct seller—
  - (1) the individual performing such [services](/usc/26/3231.md?p=e-2-C-i) shall not be treated as an [employee](/usc/26/3121.md?p=d), and
  - (2) the person for whom such [services](/usc/26/3231.md?p=e-2-C-i) are performed shall not be treated as an [employer](/usc/26/3231.md?p=a).
- (b) **Definitions—** For purposes of this section—
  - (1) **Qualified real estate agent—** 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](/usc/26/3231.md?p=e-2-C-i) performed by such individual as a real estate agent is directly related to sales or other output (including the performance of [services](/usc/26/3231.md?p=e-2-C-i)) rather than to the number of hours worked, and
    - (C) the [services](/usc/26/3231.md?p=e-2-C-i) performed by the individual are performed pursuant to a written [contract](/usc/26/101.md?p=f-3-A) between such individual and the person for whom the [services](/usc/26/3231.md?p=e-2-C-i) are performed and such [contract](/usc/26/101.md?p=f-3-A) provides that the individual will not be treated as an [employee](/usc/26/3121.md?p=d) with respect to such [services](/usc/26/3231.md?p=e-2-C-i) for Federal tax purposes.
  - (2) **Direct seller—** 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](/usc/26/3231.md?p=e-2-C-i) directly related to such trade or business),
    - (B) substantially all the remuneration (whether or not paid in cash) for the performance of the [services](/usc/26/3231.md?p=e-2-C-i) described in [subparagraph (A)](#b-2-A) is directly related to sales or other output (including the performance of [services](/usc/26/3231.md?p=e-2-C-i)) rather than to the number of hours worked, and
    - (C) the [services](/usc/26/3231.md?p=e-2-C-i) performed by the person are performed pursuant to a written [contract](/usc/26/101.md?p=f-3-A) between such person and the person for whom the [services](/usc/26/3231.md?p=e-2-C-i) are performed and such [contract](/usc/26/101.md?p=f-3-A) provides that the person will not be treated as an [employee](/usc/26/3121.md?p=d) with respect to such [services](/usc/26/3231.md?p=e-2-C-i) for Federal tax purposes.
  - (3) **Coordination with retirement plans for self-employed—** This section shall not apply for purposes of subtitle A to the extent that the individual is treated as an [employee](/usc/26/3121.md?p=d) under [section 401(c)(1)](/usc/26/401.md?p=c-1) (relating to self-employed individuals).

## Source credit

(Added Pub. L. 97–248, title II, § 269(a), Sept. 3, 1982, 96 Stat. 551; amended Pub. L. 104–188, title I, § 1118(a), Aug. 20, 1996, 110 Stat. 1764.)

## Notes

### 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: 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. 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].”