If your company uses independent contractors and you have an hour to spare, you may want to view the IRS’s free webinar on independent contractor classification. The webinar was held on Feb. 15 and is available for viewing here on the IRS video portal. It discusses worker classification definitions, categories of evidence considered in determining a worker’s status, and the details of the new Voluntary Classification Settlement Program (VCSP). More information on the VCSP including FAQs and an application are available here.
In discussing the factors used to determine independent contractor status, Thomas J. Travers, Special Council for the Small Business/Self Employed Counsel Headquarters discouraged employers from taking a “scorecard approach” by piling up factors to see if a majority weigh towards independent contractor status. Instead, he said employers should look at the relationship as a whole to make their decision. In the question and answer session, the speakers clarified that businesses providing training to contractors to comply with other laws does not affect independent contractor status and that filing a VCSP application does not trigger a full-blown audit.
In large part, states follow the same control factor analysis the IRS uses to determine independent contractor status. States may, however, have additional requirements for independent contractors and independent contractor agreements, which should be researched separately before entering into a relationship.