Employment Agency Fee is Deductible Under Section 162 of the Internal Revenue Code as an Expense Incurred In Carrying On a Trade or Business

Analyses the Tax Court case Primuth v. Commissioner. In Primuth, David Primuth was a corporate executive who sought to secure new employment. He hired a company to assist for a fee that was payable regardless of whether or not new employment was secured. The consulting firm researched, analyzed, and set up interviews for Primuth and found him new employment, which he accepted. Primuth attempted to deduct the consulting fee on his income tax return, which was disallowed by the commissioner who argued that only fees for securing new employment were deductible. The Tax Court disagreed, holding that taxpayers may be in the business of being employees and the line for deductibility is drawn upon whether or not the employment sought was actually secured. The author believes, however, that this question is not settled, as courts are still reluctant to follow this precedent.