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Employee vs. Independent Contractor

Employee vs. Independent Contractor. Finance Division Presentation Minneapolis College of Art & Design Auditorium 150 March 17, 2009 1:30 – 2:30 pm. PURPOSE OF TRAINING. Higher scrutiny on classification of workers within businesses due to increase in tax evasion and fraud.

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Employee vs. Independent Contractor

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  1. Employee vs. Independent Contractor Finance Division Presentation Minneapolis College of Art & Design Auditorium 150 March 17, 2009 1:30 – 2:30 pm

  2. PURPOSE OF TRAINING • Higher scrutiny on classification of workers within businesses due to increase in tax evasion and fraud. • Significant fines and penalties administered to businesses that incorrectly classify workers. • Need for clarification on how to differentiate between the types of workers.

  3. IRS TEST Behavioral control Financial control Relationship of the parties ABC TEST Absence of control Business is unusual and/or away Customarily doing business as an independent contractor IRS TEST or ABC TEST?

  4. EMPLOYEE We provide training We control hiring, supervising and paying of assistants We set hours of work We set required work order or sequence We pay by the hour, week, or month We provide tools and materials Continuing, exclusive relationship INDEPENDENT CONTRACTOR Specialized skills Independently hires, directs and pays subcontractors assistants Work hours self-determined Work order or sequence self-determined Paid by project Bring/use own tools and materials Provides similar services to multiple businesses WHAT’S THE DIFFERENCE?

  5. PROCEDURES

  6. Determination of Work Status Form

  7. INDEPENDENT CONTRACTOR FORMS

  8. Federal W-9 Form

  9. W-9 Detail • Use Form W-9 only if Payee is a US person. • Definition of a US person: • An individual who is a US citizen or US resident alien. • A partnership, corporation, company, or association created or organized in the US or under the laws of the US. • An estate (other than a foreign estate) or • A domestic trust • Exempt payees are: • Organizations exempt from tax under section 501(a) • The US or any of its agencies or instrumentalities • Foreign governments and international organizations • Corporations

  10. W-8 Form, page 1

  11. W-8 Form, page 2

  12. Independent Contractor Agreement

  13. MCAD Check Request Form

  14. EMPLOYEE FORMS

  15. Employee Action Notice Form

  16. Federal I-9 Form

  17. Federal W-4 Form

  18. EMPLOYEE FORMS MCAD Intranet > Department and Services > Human Resources > Forms > Employment Employee Action Notice I-9 Form W-4 Form INDEPENDENT CONTRACTOR FORMS: MCAD Intranet > Department & Services > Business Office > Downloads Determination of Work Status Form W-9 Form (US Persons) Check Request Form IC Agreement *W-8 Form (Non-US persons)- please contact Gao Thao FORMS CAN BE FOUND ON INTRANET AT:

  19. Questions?? • AP-Independent Contractor: • Mary Yang Thao, Asst. Controller x1742 • Gao Thao, Accounting Asst. (A/P) x 1712 • Payroll-Employee: • Hope Denardo, Accounting Asst. (Payroll) x 1710 • Jo Bailen, HR Asst. x 1770

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