This Employment Tax Resource Courtesy of
The Independent Contractor Report
James R. Urquhart III, Esq.
Editor

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Table of Contents

Laws & Other Resources Related To
The Independent Contractor vs. Employee Issue

1. Selected laws

2. IRS Forms, Publications & Other Material

3. GAO Reports & Testimony

Selected Laws -- [Top]

1. IRS 20 Factors --- Full Text & Explained
2. Section 530 of the Revenue Act of 1978, as amended --- Full Text
   * This section is commonly referred to as a safe harbor or safe haven
3. IRC Section 7436 -- New Tax Court Jurisdiction --- Full Text
   * Effective August 5, 1997 (date of enactment of Taxpayer Relief Act of 1997)
   * Gives employer right to take employment status dispute to Tax Court without prepayment of tax
   * Gives Tax Court power to review IRS denial of Section 530 safe-harbor relief
   * Gives employer the right to seek costs and fees under IRC 7430
   * Requires IRS to provide a Notice of Determination
   * Suspends assessment AND collection of tax while matter is before Tax Court

IRS Forms, Publications & Other Material -- [Top]

1. IRS Publication 1779
   Independent Contractor or Employee (Rev. 2-97)
   This publication is written as a tax resource for the payee-worker rather than the payer-firm. This may explain why it is a short publication. The publication explains three main facts that the IRS uses to determine whether a worker is an independent contractor or an employee: Behavioral control, Financial control and Relationship of the parties.
2. IRS Publication 1976
   Independent Contractor or Employee? Section 530 Requirements (Rev. 9-96)
   This publication is written for the business or payer-firm that has been selected for an IRS employment tax audit. The section 530 safe-harbor "provides businesses with relief from federal employment tax obligations if certain requirements are met." This one-page publication briefly summarizes the three requirements: Reasonable basis, substantive consistency and reporting consistency.
3. IRS 20 Factors. Full Text & Explained

General Accounting Office (GAO)
Reports & Testimony -- [Top]

1. U.S. General Accounting Office Testimony:
   Employment Taxes and Small Business
   Brief Summary of Testimony:
   Discusses the complexity of tax laws and the compliance burden this complexity places on taxpayers. GAO focuses on employment taxes, FITW, FICA, FUTA. [ GAO / T-GGD-97-21, Nov. 8, 1996, 26 pages ]
   Full Text Copy of GAO Testimony in Adobe Acrobat PDF format
2. U.S. General Accounting Office Report:
   Tax Compliance of Nonwage Earners
   Brief Summary of Report:
   IRS data show that taxpayers (like independent contractors) earning most of their income from nonwage sources are more likely to have problems paying their taxes than wage earners. [ GAO / GGD-96-165 ]
   Full Text Copy of GAO Report in Adobe Acrobat PDF format