The IRS groups evidence of the degree of control and independence into three primary categories:

Behavioral Control – relates to the business’ control, or right to direct and control what and how the worker performs the service. Factors to be considered are the type and extent of instructions given, training and evaluations provided

Financial Control – pertains to whether the business controls, or has the right to control the economic aspects of the worker’s activities. Factors to be considered are the investment in the equipment required, unreimbursed expenses (especially whether fixed ongoing costs are incurred by the worker regardless of current work being performed), profit or loss opportunity, payment method and whether services are available to the relevant market

Relationship of the Parties – refers to facts that illustrate how the worker and business perceive their relationship. For example, are there written contracts or employee type benefits provided (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?

If you have questions, please contact Victor C. Belgiorno at 516-861-3704 or VBelgiorno@dsjcpa.com or Christopher J. Sena at 516-541-6549 or chrissena@dsjcpa.com.

 

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