Independent Contractor or Employee? How to Make The Call — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily
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White Paper published by The HR Specialist


For years, the IRS has relied on a 20-factor test to determine whether a worker is considered an "employee" or an "independent contractor." Conferring contractor status on a worker often benefits the employer, who is then not obligated to withhold income tax or to pay Social Security and unemployment taxes.

The 20-factor test has been losing ground in the courts and in Congress. Recognizing this, the IRS published new instructions to help auditors (and employers) determine worker status.

The guidelines set forth three main categories of evidence that the agency thinks are most important in making the determination. Following is an abbreviated synopsis of each factor, as summarized with permission by Vern Hoven, CPA, of The California Enrolled Agent magazine:


I. Does behavioral control over the worker exist?

Behavioral control focuses on whether the business...(register to read more)

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