What tax-related responsibilities does a Sales Representative have as a result of being associated with Exit?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
imposed upon it by EXIT [Trade Name], except those required by state law and those specifically outlined in this Agreement, the intent of which is to ensure compliance with such laws and to ensure minimum standards of quality control consistent with the industry. Nothing contained in this Agreement shall be regarded as creating any relationship, such as joint venture, partnership or shareholder, between EXIT [Trade Name] and Sales Representative other than that of an independent contractor real estate agent.
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Sales Representative acknowledges that as an independent contractor (non-employee) affiliated with EXIT [Trade Name], Sales Representative is responsible for the payment of all Sales Representative's own federal income taxes and self-employment taxes (FICA) together with any and all corresponding state, county and local taxes, if any, and Sales Representative agrees to meet those responsibilities. Sales Representative waives any claims Sales Representative has or may have against EXIT [Trade Name] now or in the future related to taxes or the right of EXIT [Trade Name] not to withhold, pay or contribute to taxes on behalf of Sales Representative.
2. SALES REPRESENTATIVE RESPONSIBILITIES
- a) General Responsibilities. Sales Representative may obtain listings and/or other real estate related service contracts, solicit purchasers and/or lessees for all types of interests in and to real estate or for related services. Any and all listings of real estate or of any interest in real estate and all other real estate related service contracts approved by EXIT [Trade Name] shall be taken in the name of EXIT [Trade Name], which shall be the broker of record for all such transactions.
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, Sales Representatives are considered independent contractors and are responsible for handling their own tax obligations. This means that Exit will not withhold taxes from their commission payments. Sales Representatives must pay their own federal income taxes, self-employment taxes (FICA), and any applicable state, county, and local taxes.
To ensure compliance, Sales Representatives must complete and submit an IRS Form W-9 to Exit. This form provides Exit with the necessary information to report payments made to the Sales Representative to the IRS. The Sales Representative Agreement also includes a clause where the representative waives any claims against Exit related to taxes or the right of Exit not to withhold, pay, or contribute to taxes on their behalf.
Exit does offer some assistance to Sales Representatives regarding certain fees and dues. Specifically, Exit will receive monies from the Sales Representative for real estate board and association fees, dues, or assessments, and for personal tax remittance. Exit will hold these funds in trust and remit them on the Sales Representative's behalf in a timely manner by issuing a check to the relevant board, association, or taxation department. However, this is limited to the specific fees and dues mentioned and does not extend to the Sales Representative's overall income tax obligations.
Prospective Sales Representatives should carefully consider these tax responsibilities and consult with a tax professional to understand their obligations and plan accordingly. They should also ensure they accurately complete and submit the required IRS Form W-9 to Exit.