20 criteria

[Snaggletoof]

At the height of the controversy for the Employee vs. Independent Contractor issue, the IRS issued "20 criteria" they used to assess the issue. I used to have a list of these 20 criteria, and am confronted with a situation where I need to convey my opinion about an obvious situation.

Does anyone know what happened to these "20 criteria?" My opinion is the IRS didn't want to keep them around because they were too specific. Specifics are a thing to be envied by most of us, but not the IRS. When the burden of proof is on the taxpayer, IRS specifics afford an opportunity for a taxpayer to claim "safe harbor."

[Bees Knees]

TTB, page 5-23 and 5-24 talks about these. They were originally contained in Rev. Rul. 87-41. The IRS has since combined some and divided them up into three groups; behavioral control, financial control, and the type of relationship between the worker and the one who did the hiring.

[Hoosier Tax Guy]

Form SS-8 is filled out by the user and filed with the IRS for an official determination of worker/independent contractor status. You might want to fill it out to clarify matters, even if you don't file it. It's a good guide of what IRS's position is likely to be.

[dyne]

The 20 common law factors can be used to determine if a person is an employee or
self-employed. Ten years ago I had a client who was clearly an employee and
18 of the 20 factors so indicated. Still IRS insisted that he pay the self-employment
tax. I asked for an appellate conference and the conferee advised that I was right in
my arguement but it was IRS's position that my client owned the tax.
My client contacted a tax attorney who advised him to pay the tax as the attorney's
fee would exceed the tax in dispute. I came to realize at that time that IRS will
disregard ALL rules when they see fit to do so. So, the 20 common law factors are
good but not necessarily the last word. In many instances the use of the 20 common
law factors will result in about half indicating an employee and about half indicating
a self-employed person, so the problem is not solved. IRS has used the 20 common
law factors for many years to determine that the persons involved are employees and
then assesses payroll taxes. Yet in my case they disregarded their own Rev Ruling.