Employee/Independent ContractorThe question is frequently raised whether a particular person should be treated as an "independent contractor" or "employee" for federal tax purposes. The following addresses solely the criteria applied by the Internal Revenue Service in making such determinations. The Internal Revenue Code provides that the term "employee" means any individual who, under the usual common law rules applicable in determining the employer-employee relationship, has the status of employee. The question of whether an individual is an independent contractor or an employee is one of fact to be determined upon consideration of the facts and the application of the law and regulations in a particular case. The relationship of employer and employee exits when the person for whom the services are performed has the right to control and direct the individual who performs the services not only as to the results desired, but also as to the details and means by which the result is accomplished. That is, an employee is subject to the will and control of the employer not only as to what shall be done, but also as to how it shall be done. In this connection, it is not necessary that the employer actually direct or control the manner in which the services are performed; it is sufficient if he or she has the right to do so. Other factors characteristic of an employer, but not necessarily present in every case, are the furnishing of tools and the furnishing of a place to work to the individual who performs the services. In general, if an individual is subject to the control or direction of another merely as to the result to be accomplished and not as to the means and methods for accomplishing the result, he is an independent contractor. Consideration must also be given to such factors as the continuity of the relationship and whether or not the individual's services are an integral part of the business of the employer as distinguished from an independent trade or business of the individual himself in which he assumes the risk of realizing a profit or suffering a loss. If the relationship of an employer and employee exists, the designation of employee as a partner, co-adventurer, agent, independent contractor, or other description of the parties as anything other than that of employer and employee is immaterial. Because the determination of whether a particular worker is an employee or independent contractor is fact-specific and may require the exercise of legal judgment, an employer should consult with an attorney before being satisfied with his own determination. It is not possible to address all of the issues relating to employees and independent contractors here. Hopefully, this has answered a few of your general questions. We at Staack, Simms & Hernandez thank you for visiting our website. Please phone, write or e-mail if we can be of any further service to you. |