The majority of controversies that arise regarding the status of workers as employees or as independent contractors for employment tax purposes concern the common law rules. The common law tests are subject to various formulations, but underlying each of these formulations is the requirement of control.

The Internal Revenue Manual lists the following 20 factors that the IRS considers in determining the existence of an employer-employee relationship:

• whether a worker is required to comply with other persons' directions about how the work is to be performed, whether or not instructions are actually given;
•  whether a worker is trained by requiring an experienced worker to work with the worker or by using other methods to indicate that the employer wants the services performed in a particular manner;
• whether the worker's services are integrated into the business operations;
• whether services are rendered personally;
• whether the person for whom services are performed hires, supervises, or pays assistants;
• whether there is a continuing relationship between the parties;
• whether set hours of work are established for the worker;
• whether the worker must devote substantially full-time to the person for whom services are performed;
• whether work is performed on the premises of the person for whom services are performed;
•  whether a worker must perform tasks in an order prescribed by the person for whom services are performed;
• whether the worker must submit oral or written reports;
• whether the method of payment is regular or on a job-by-job basis;
• whether the worker's business or travel expenses are paid by the person for whom services are performed;
• whether tools and materials are furnished to the worker;
• whether the worker invests in facilities used by him in performance of the service;
• whether the worker takes a risk of profit or loss;
• whether the worker works for more than one firm at a time;
• whether the services are made generally available to the public;
• whether there is a right to discharge the worker;
• whether the worker has a right to terminate the relationship without incurring liability.

 For more information, contact your accountant.