We are applying strict IRS guidelines to the problem of cross-pollination between employees and contractors. Is there any additional guidance other than fearfully reading IRS guidelines?


We have several research articles that address the employee vs. contractor status as seen through the eyes of the IRS. The report on our site titled 1099-MISC Filing Basics has the general guidelines from the IRS. Unfortunately, there is not a hard and fast rule regarding how to handle the employee/contractor definition, and not another source. The IRS will typically judge on a case-by-case basis using its guidelines as a way to gauge the situation. The IRS used to refer to a 20-point list but has done away with that in favor of evaluating a situation in terms of a company's behavioral control, financial control and the type of relationship of the parties (see the report referenced above). We encourage you to post the question in the Forums/Message section of the Web site to get feedback from your peers as to how they have handled contractors. They may have some actual experience with the IRS performing a contractor audit and the results.

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