TN 13 (02-12)
RS 02101.440 Merchandise for Resale or Supplies for Use in Purchaser's Business Operations
A. Tangible and intangible merchandise
Merchandise must be for resale or for use in the business operations of the purchaser. The phrase “merchandise for resale” includes only tangibles that do not lose their identity as they pass through the purchaser’s hands. The phrase “supplies for use in the business operations” means supplies principally used in conducting the purchaser's business. Generally, it includes all tangible merchandise that is not “merchandise for resale.” Services such as radio time, and advertising space are intangible items and not within the definition. However, advertising novelties and calendars constitute supplies within the definition.
B. Services related to sales
The fact that salespeople perform substantial work in servicing the product(s) they sell does not necessarily preclude meeting the requirements of the Social Security Act Section 210 (j) (3) or correspondingly, the Internal Revenue Code Section 3121 (d) (3) (D). For example, a salesperson who spends a day selling a machine and a day supervising its installation, and perhaps training the purchaser's personnel in its use, may still have performed these services as a full-time salesperson. The furnishing of these services by the salesperson may be a necessary part of the incentive for the buyer to purchase the product. Therefore, the question is whether the total activity is essentially a selling activity. If it is, the services related to such sales, even though substantial, are an integral part of the sale. If it is not, the worker does not meet the requirements for a statutory employee.