If you do not satisfy any of the above, you may still qualify for Section 530 Relief by demonstrating that you have some reasonable basis for classifying your workers as independent contractors (Rev. Proc. 85-18).

The issue of whether or not a worker is an employee or independent contractor is complex and subjective. It is an area of tax law where there is no definitive answer. Before any decision can be made as to how your workers should be classified, you must give careful consideration to the IRS’ 20 factor test.

All of the factors that are applicable to your situation must be analyzed. Once it is determined how the individual should be classified, be sure you have communicated this with your workers and they fully understand this classification.