1 / 8

Employee vs Independent Contractor

Learn the key factors to determine whether someone is an employee or an independent contractor, and the civil and criminal penalties for misclassification.

marten
Download Presentation

Employee vs Independent Contractor

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Employee vs Independent Contractor

  2. How to recognize an Employee Under common-law rules, anyone who performs services for you is your employee if you can control what will be done and how it will be done. This is so even when you give the employee freedom of action. What matters is that you have the right to control the details of how the services are performed.

  3. How to recognize an Independent Contractor • Operate as their own business • Are experts in their industry • Openly market their services • Are engaged for a specific project or time period • Submit invoices for work completed • Determine when they work • Are responsible for their own taxes • Are not eligible for company benefits • Can subcontract or delegate work

  4. Civil Penalties • Failure to file: 5% per month during the period of failure to file employment tax returns, up to a max of 25% IRC Section 6651 • Underpayment of tax: 20% of the underpayment of tax attributable to a substantial understatement of tax or negligence IRC Section 6662 • Civil Fraud: 75% of the underpayment that is attributable to fraud IRC Section 6663 • Willful failure to collect and pay taxes: 100% of total tax not collected and paid IRC Section 6672 • Failure to file correct information returns: $50 per return, up to a maximum of $250,000 per year IRC Section 6721 Penalties of misclassification • Criminal Penalties • Willful failure to collect or pay tax: maximum of $10,000 and imprisonment for not more than 5 years IRC Section 7202 • Willful failure to provide statement to employees: maximum of $10,000 and imprisonment for not more than 1 year IRC Section 7204

  5. Case Study #1 Answer: Employee, non-exempt

  6. Case Study #2 Answer: Independent Contractor, non-exempt

  7. End

More Related