TN 11 (11-11)

RS 02101.217 Taxicab Drivers

A. Definition of a taxicab driver

A taxicab driver drives a public passenger vehicle within a limited area for a fee. The vehicle is usually fitted with a taximeter.

B. Regulatory rules of taxicab drivers

Taxicab drivers work under a variety of circumstances due to regulations of public utility commissions, city, town, and State ordinances, and union and company rules.

  • Drivers may own taxicabs or rent them on a flat rate or mileage basis.

  • Their pay may be in the form of a straight salary, a commission on the amount of fares collected, the balance of the total amount collected minus rental fees, and miscellaneous expenses, or salary plus commission.

  • Tips usually represent a substantial portion of the driver's pay.

Usually, cab owners do not control a driver who leases a taxicab on a flat-rate basis. The cab owner:

  • has no interest in the number of miles of operation, and

  • receives a certain income regardless of whether or not the cab driver operates the cab.

However, if the cab driver leases the cab on a mileage-rate basis, the lessor's income depends on the use of the cab and the lessor must have some control over the driver to insure against investment loss.

C. Taxicab drivers as employees

Taxicab drivers are employees when:

  • they (or the employer) can terminate the relationship at any time;

  • their pay is in the form of a salary, or salary plus a percentage of fares;

  • the employer exercises control over the driver while the driver possesses the cab;

  • the taxicab driver must comply with government rules and firm regulations to ensure proper care and handling of the cab;

  • they must report personally and regularly, or furnish written reports;

  • they must account for fares collected;

  • they must work specified hours or assigned shifts, pick up passengers on call, and occasionally report their location;

  • the employer instructs them on appearance, behavior, manner of seeking patrons, routes, order of services, and time off from duty;

  • they must perform the services personally;

  • they incur no business expenses; and

  • they have no investment, or opportunity for profit or risk of loss.

D. Taxicab drivers as independent contractors

Taxicab drivers are independent contractors when:

  • the taxicab driver leases the cab from the lessor, and the lessor receives the cab rental income;

  • they can choose their work shift, and there is no control over when and where they work;

  • the taxicab driver does not have to report his or her location and he or she is not instructed on where to seek patrons;

  • the taxicab driver must comply with government rules and firm regulations to ensure proper care and handling of the cab;

  • the taxicab driver owns and drives their own cab, or lease it on a flat rate basis and pay a specified rental on a daily, weekly, or similar time basis;

  • their sole compensation is the fares and tips they collect from patrons; or

  • they have the opportunity for profit or risk of loss.

E. Reference

IRS Publication 15-A, Employer’s Supplemental Tax Guide at

To Link to this section - Use this URL:
RS 02101.217 - Taxicab Drivers - 11/10/2011
Batch run: 07/03/2014