If you have a reasonable basis not to treat a worker as a worker, you may be exempt from paying employment taxes for that worker. To obtain this discharge, you must submit all necessary federal information on a basis that corresponds to your treatment of the worker. You (or your predecessor) must not have treated a worker in a essentially similar position of employee for periods from 1977. For more information, please see 1976, Section 530 Of the PDF Employment Tax Tax Relief Requirements. A misclassified worker may lead the alleged employer to be held liable for workplace injuries outside of the protection of the workers` compensation system and penalties. Financial control: does the company have the right to direct or control the financial and commercial aspects of the worker`s work? The IRS determines the status of the workforce on a case-by-case basis and examines several factors – including behavioural, financial and control factors – to determine status. If you are not uncertain about the status of people working for your company, you can request a report from the IRS. See poor classification of staff as an independent contractor and DOL Issues Guidance on Independent Contractors. The IRS will consider certain factors to determine whether a worker is self-employed or should be an employee of a company. These factors include, according to lawyer Christy L.
Foley, but not limited to: organizations or individuals can apply for an official provision of worker status under the IRS test by filing the IRS SS-8 form. There is no light line test to determine when a workforce should be classified as an employee and not as an independent contractor. However, much of the information is available to help organizations make decisions on a case-by-case basis. Once the decision has been made to meet staffing needs by independent contractors, organizations can take several practical steps to effectively manage independent contractors. The IRS considers those providing services to be employees because they do not have a reasonable basis to qualify as independent contractors. By default, the university will pay all employees and students (employees or not) through a payslip based on their existing relationship with the college. If a strong argument can be made that the services provided are independent of the relationship between staff/student and college and that staff/student provide similar services to the general public, these individuals are considered independent contractors by completing the status determination form or the independent holder based on the 20 common law factors used by the Internal Service to classify individuals as independent contractors or as employees. Workers` Compensation Act.
The test of independent contractor status under workers` compensation legislation varies from state to state. To learn more about the wage compensation test in a given state, employers can contact the National Ministry of Labour relations or the National Ministry of Labour. The consequences of misclassification may vary depending on the recommendation of the classification.