Question

In determining whether a person is an employee or an independent contractor the Internal Revenue
Service will chiefly consider

a.the degree of control the employer exercises over the work to be done.

b.how the person is paid (periodically or by project).

c.what skill does the work require.

d.what is the length of employment.

Answer 1

Solution: The correct option is ( a)

In determining whether a person is an employee or an independent contractor the internal revenue service will chiefly consider(a) the degree of control the employer exercises over the work to be done:

The degree of control means whether an employer has the right to control what the person does and how he does his work and whether the business aspects of the work are controlled by the payer               in terms of the remuneration paid and the reimbursement for the expenses.

If the person appointed is required to follow the instructions given to him regarding when the work is to be done, where to work and how should the work be done and completed then he is in the position of the employee and does not function as an independent contractor. The instruction given to the employee may be in the form of procedures and manuals which are in writing and guide the person as to how the results are to be achieved. If the control is exercised by the employer in giving the training to the person over the specific method of performance by making him participate in meetings or asking a senior employee to give him on job training then the relationship is that of an employer and employee.

If the person appointed is relatively free from the control of the payer and the person is in a position to work for a number of people at the same time without being controlled by the person appointing him and also in a position to earn a profit or loss from the work done by him then it means that he is functioning in the capacity of an independent contractor.

If the control over the work to be done is exercised in a manner that the tools and materials required to perform the work are given by the payer then the relationship is that of an employer and employee.