If the University classifies an employee as an independent contractor without a reasonable basis for doing so, the University may be held liable for employment taxes for that worker by the Internal Revenue Service.
The IRS uses three characteristics to determine the relationship between businesses and workers:
- Behavioral Control covers facts that show whether the business has a right to direct or control how the work is done through instructions, training or other means.
- Financial Control covers facts that show whether the business has a right to direct or control the financial and business aspects of the worker’s job.
- Type of Relationship factor relates to how the workers and the business owner perceive their relationship.
When a GU Department submits a contract through the Purchasing & Contracts group, an Independent Contractor Tax Questionnaire (ICTQ) is required to be completed if the contract is with an individual or company with two or less employees. Please read the ICTQ Instructions carefully before submitting your contract. The ICTQ must be completed by the GU department, not the IC. Submitting an inaccurate or incomplete ICTQ will create delays. The Tax Department reviews the questionnaire and contract submitted to the Purchasing & Contracts group as part of the GMS Contract review and approval process. You may want to use the this statement of work template. If you have questions about this process, please e-mail firstname.lastname@example.org.
If the Individual is determined to be an employee and the Individual plans to telework from an state that is not approved by the University (see Financial Affairs Policy 177 for “Establishing New Entities and Presence in New Jurisdictions”), the Tax Department will assist the University Department with questions regarding the “Entities and Presence Policy Form” routing process.