                   COURT OF APPEALS OF VIRGINIA


Present: Judges Bray, Bumgardner and Senior Judge Hodges
Argued by teleconference


CENTRAL DELIVERY SERVICE
 OF WASHINGTON, INC.
                                         MEMORANDUM OPINION * BY
v.   Record No. 2046-00-2                JUDGE WILLIAM H. HODGES
                                            NOVEMBER 6, 2001
VIRGINIA EMPLOYMENT COMMISSION


          FROM THE CIRCUIT COURT OF THE CITY OF RICHMOND
                    Theodore J. Markow, Judge

          E. Duncan Getchell, Jr. (William H.
          Baxter II; McGuireWoods LLP, on briefs), for
          appellant.

          William A. Diamond, Assistant Attorney
          General (Mark L. Earley, Attorney General;
          Richard B. Zorn, Senior Assistant Attorney
          General, on brief), for appellee.


     Central Delivery Service of Washington, Inc. (Central

Delivery) appeals a July 27, 2000 circuit court order affirming a

decision of the Virginia Employment Commission (the VEC).    The VEC

held that services performed by contract carrier courier drivers

for Central Delivery constituted "employment" for which Central

Delivery is liable for unemployment insurance taxes pursuant to

Code § 60.2-212 and that their services were not exempt under Code

§ 60.2-219(22).   Central Delivery argues that the VEC and the

circuit court erred in denying their exemption from state

     * Pursuant to Code § 17.1-413, this opinion is not
designated for publication.
unemployment taxation.   For the reasons that follow, we agree and

reverse.

                             BACKGROUND

     For unemployment compensation purposes, the term "employment"

is defined in Code § 60.2-212.    Generally, that term means any

service performed for remuneration or under any contract of hire.

The VEC, in its commission decision, determined that the services

performed by Central Delivery's drivers constitute "employment"

under Code § 60.2-212, and that issue is not before us on appeal.

However, Code § 60.2-619 contains a list of services that are

statutorily exempt from the "employment" definition.   Code

§ 60.2-619(22) provides that the term "employment" shall not

include:   "Service performed . . . as a driver of an executive

sedan . . . provided the Commission is furnished evidence that

such individual is excluded from taxation by the Federal

Unemployment Tax Act" (FUTA).    The VEC and the circuit court

determined that Central Delivery had not provided the VEC with

sufficient evidence to prove that its drivers are excluded from

FUTA taxation.   Central Delivery appeals from that determination.

     In its findings of fact, the VEC found that Central Delivery

is engaged in, among other things, delivery and messenger

service.   Central Delivery engages the services of contract

courier drivers to perform the actual deliveries according to

customer specifications.    It is the status of these drivers that

is at issue in this case.   The VEC noted that the Internal

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Revenue Service (IRS) has audited Central Delivery on several

occasions.   In 1996, representatives of Central Delivery

responded to the IRS "20 questions" with respect to whether the

contract operators are independent contractors or employees.      By

a form letter dated in February 1996, the district director of

the IRS advised Central Delivery that it had completed the

review and had taken action indicated by the check below.       The

box that read, "We have accepted the report" was checked.

                              ANALYSIS

     The findings of the VEC as to the facts, "if supported by

the evidence and in the absence of fraud, shall be conclusive,

and the jurisdiction of the court shall be confined to questions

of law."   Code § 60.2-500(B)(1).   "On appeal, we consider the

evidence in the light most favorable to the finding by the VEC."

V.E.C v. Thomas Regional Directory, Inc., 13 Va. App. 610, 613,

414 S.E.2d 412, 415 (1992).   Thus, unless we can say as a matter

of law that the evidence established the exceptions, the VEC's

decision must be upheld.   In this case the evidence provided by

Central Delivery was sufficient to establish that its drivers

are excluded from taxation by FUTA.      Code § 60.2-219(22).

     In Revenue Ruling 87-41, 1987-1 C.B. 286, the IRS provided

a list of factors used to determine whether contractors are

"employees . . . for the purposes of . . . the Federal

Unemployment Tax Act."   The list of factors is the IRS's "20

questions" that Central Delivery answered in its audit and which

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the IRS accepted.    Code § 60.2-219(22) required Central Delivery

to furnish "evidence" of its drivers' exemption from FUTA

taxation.    Although the VEC asked Central Delivery to provide an

IRS Form SS-8 specific to the individuals in question, the

statute allows, as the VEC acknowledged, other evidence which

would demonstrate the drivers' exemption.    The IRS letter

accepting Central Delivery's "20 questions" answers sufficiently

demonstrated that the IRS considered Central Delivery's drivers

exempt from FUTA taxation.    See Rev. Rul. 87-41, 1987-1 C.B.

286.    Thus, as a matter of law, the evidence supported a finding

that Central Delivery is exempt from state unemployment taxes

under Code § 60.2-219(22).

       Accordingly, the decision of the circuit court is reversed.

                                                          Reversed.




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