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Division Director

Christina Smith

Assistant Directors

Rick Sweet

Rachael Lieblick


Accounting and Auditing
200 East Gaines Street
Tallahassee, FL 32399-0318

(850) 413-5510
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March 15, 2002

COMPTROLLER'S MEMORANDUM NO. 05 (2001-02)

SUBJECT: DETERMINATION OF EMPLOYEE OR INDEPENDENT CONTRACTOR STATUS

Many agencies have been struggling with a basic decision any employer must make when hiring a worker to perform a service: is the worker an employee or an independent contractor? Prior to knowing how to treat payments for services, you must first know the business relationship that exists between you as the employer and the person performing the services. The following tax-related information is provided to assist employing agencies and universities in determining whether the worker is an employee or an independent contractor.

The Internal Revenue Service relies on the common law test in making worker status determinations for the purposes of Federal income tax withholding and the withholding and payment of social security and Medicare taxes. Facts that provide evidence of the degree of control over and independence of the worker fall into three categories: behavioral control, financial control, and the type of relationship of the parties. IRS Publication 15, Employer's Tax Guide, and Publication 15-A, Employer's Supplemental Tax Guide, provide information about worker status, explains the differences between an employee and an independent contractor and gives examples to help with classifying workers. These publications may be obtained from the IRS Web Site at www.irs.gov.

Employers that misclassify employees as independent contractors and have no reasonable basis for doing so may be held liable for employment taxes for that worker. See Internal Revenue Code, Section 3509, for more information.

If you want the IRS to determine whether a worker is an employee, file Form SS-8, Determination of Employee Work Status for Purpose of Federal Employment Taxes and Income Tax Withholding, with the IRS. Forms and publications may be obtained from the IRS Web Site at www.irs.gov or call 1-800-829-3676.

If there are any questions concerning this information, please contact Ernest Thompson at (850) 410-9432, SUNCOM 210-9432, or email ethompso@mail.dbf.state.fl.us.