The IRS,
INDEPENDENT CONTRACTORS
and You!

Chapter Title

Detailed Chapter
Table of Contents

COMPLETE CHAPTER
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• Chapter summary          1 / 1

• Expectations: Reasonable and unreasonable          1 / 1

• Business forms and the independent contractor          1 / 8

• Who has the greatest chance of audit?          1 / 15

• Non-wage payments to officer/shareholders          1 / 16

• Tax consequences for the payee worker as an IC          1 / 18

• Specific issue: Workers' compensation          1 / 20

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• Chapter summary           2 / 1

• Trust fund employment tax          2 / 2

• Non-trust fund employment tax          2 / 5

• Additions to tax          2 / 7

• The IRS audit compared to the state audit          2 / 8

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• Chapter summary          3 / 1

• Step 1. Treatment          3 / 1

• Step 2. Common law rules          3 / 2

• Step 3. Statutory rules          3 / 2

• More here than meets the eye          3 / 2

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• Chapter summary          4 / 1

• Treatment is within the control of the payer entity          4 / 2

• Treatment in the independent contractor agreement          4 / 2

• Treatment as an employee by supplying fringe benefits          4 / 3

• IRS Form 1099-MISC          4 / 5

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• Chapter summary          5 / 1

• Usual common law rules          5 / 2

• Matters of fact -- expanded list -- 51 criteria          5 / 5

•  1) Control of means or details          5 / 5

• 2) Control of ends or results only          5 / 6

• 3) Orders          5 / 6

• 4) Right to terminate or fire at-will          5 / 6

• 5) Distinct trade, occupation, profession,
  or business, engaged in by worker          5 / 7

• 6) Holding services out to general public by worker          5 / 7

• 7) Worker has needed licenses, permits,
  certificates, etc.          5 / 8

• 8) Doing business as a corporation          5 / 9

• 9) Fictitious or assumed business name (d/b/a)          5 / 10

• 10) Use of FEIN by worker          5 / 11

• 11) Work done under worker's name          5 / 12

• 12) Free training for worker          5 / 13

• 13) Detailed work instructions or procedures          5 / 14

• 14) High skill work or occupation          5 / 15

• 15) Routine or schedule established by firm          5 / 16

• 16) Regular reporting by worker          5 / 17

• 17) Invoices from worker          5 / 18

• 18) Work must be done personally          5 / 19

• 19) Worker hiring help          5 / 20

• 20) Worker supplied tools and other
  instrumentalities          5 / 20

• 21) Work clothes provided by firm          5 / 21

• 22) Significant investment in business by worker          5 / 22

• 23) Ability to list and/or to sell the enterprise          5 / 23

• 24) Worker held out as employee to clients
  or customers of firm          5 / 24

• 25) Worker advertising          5 / 25

• 26) Office away from home          5 / 26

• 27) Lengthy job or continuous relationship          5 / 27

• 28) Payment by unit of time          5 / 28

• 29) Bonuses          5 / 29

• 30) Insurance bought by firm          5 / 30

• 31) Deductions from compensation          5 / 31

• 32) Regular guaranteed amount          5 / 32

• 33) Bond obtained by firm to cover worker          5 / 33

• 34) Custom that work is done by non-employees          5 / 34

• 35) Full time work or long hours          5 / 35

• 36) Drawing accounts or advances provided
  to worker          5 / 36

• 37) Fringe benefits provided to worker          5 / 37

• 38) Anti-competition clauses          5 / 38

• 39) Secrecy clauses          5 / 39

• 40) Payer not in business          5 / 39

• 41) Many sources of income from the
  relevant activity          5 / 40

• 42) Significant risk of loss          5 / 41

• 43) Integration          5 / 42

• 44) Free sales leads          5 / 42

• 45) Fixed product prices          5 / 43

• 46) Mandatory sales meetings          5 / 44

• 47) Direct collection by worker of fee from
  customer or client          5 / 45

• 48) IRS Form 1099-MISC given to worker          5 / 46

• 49) INS Form I-9, Employment Eligibility
  Verification Form, for worker          5 / 47

• 50) Belief of parties that IC relationship exists          5 / 48

• 51) Payment of expenses          5 / 49

•  Specific state examples          5 / 50

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• Chapter summary          6 / 1

• Statutory independent contractor          6 / 2

• Section 530 safe-haven          6 / 2

• No Section 530 for certain technical service firms          6 / 13

• Proposed changes to Section 530 safe-haven          6 / 15

• Direct sellers and real estate salespeople as
  statutory independent contractors: IRC 3508          6 / 19

• Corporate officers are statutory
  employees: IRC 3121(d)(1)          6 / 22

• Four special types of statutory
  employees: IRC 3121(d)(3)          6 / 24

• Defenses to IRC 3121(d)(3) statutory employee status          6 / 27

• The statutory employee under IRC 3121(d)(3)
  and federal income tax withholding          6 / 29

• The "ABC" statutory test          6 / 32

• Specific issue: Are unlicensed construction contractors
  statutory employees?          6 / 37

• Specific issue: Casual labor exceptions          6 / 39

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• Chapter summary          7 / 1

• Worst case reclassification assessment          7 / 2

• Criminal prosecution for willful misclassification          7 / 2

• Statute of limitations concerning IRS assessment
  of employment tax          7 / 4

• Liability where good faith misclassification:
  IRC 3509 relief          7 / 6

• Liability where bad faith misclassification:
  IRC 3402(d) income tax withholding offset          7 / 13

• Liability where bad faith misclassification:
  IRC 6521 employee FICA tax adjustment          7 / 18

• Interest-free adjustments of FICA and FITW taxes:
  IRC 6205(a)          7 / 19

• Employee liable for FICA taxes even if not withheld          7 / 21

• The Trust Fund Recovery Penalty: IRC 6672          7 / 25

• Specific issue: Can IRC 3509 and IRC 6672 apply
  at the same time?          7 / 31

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• 1) Can I switch my workers from ICs to employees?          8 / 1

• 2) What are the risks if I switch my workers from ICs
  to employees?          8 / 1

• 3) How do I switch from IC to employee?          8 / 2

• 4) When do I switch my workers from ICs to employees?       8 / 2

• 5) If I switch my workers from ICs to employees, is that
  an admission that they were always employees?          8 / 3

• 6) Will switching my workers from ICs to employees
  trigger an audit?          8 / 3

• 7) Will incorporating, and then switching my workers
  from ICs to employees, help?          8 / 3

• 8) Is employee leasing a safe, long term solution to
  my IC problem?          8 / 4

• 9) Can I switch workers from employees to ICs? 8 / 4

• 10) What are the risks if I switch my workers from employees to ICs? 8 / 5