EDITOR'S POST
What are the (U.S.) IRS 20 Questions?
Q. What are the (U.S.) IRS 20 Questions?
A. The 20 Questions are a paraphrased version of what the IRS uses to determine if you are an independent contractor or an employee.
The 20 questions exist also to protect individuals from being
taken advantage of by large companies. Without them, the
protection guaranteed to employees such as unemployment
insurance, workmen's compensation, social security, paid overtime, non-discrimination, and right to organize unions would be worthless.
It is not just the IRS that is concerned about these issues. A
bigger concern for the client is legal liability. If you have
someone on site for a long period, and that person is seriously hurt, they are VERY LIKELY to file for workmen's compensation, and claim that they are a common law employee. If their contract ends after a long period, and they can't find work, and can't pay the mortgage, they are likely to file for unemployment insurance.
When retirement time comes around, they may try to force past clients to pay social security.
Text of the Twenty Questions
[From IRS form SS-8 (which you can file with the IRS and let them determine your status).]
- Is the person providing services required to comply with instructions about when, where, and how the work is to be done?
- Is the person provided training to enable him to perform a job in a particular method or manner?
- Are the services provided integrated into the business' operation?
- Must the services be rendered personally?
- Does the business hire, supervise, or pay assistants to help the person performing services under contract?
- Is the relationship between the individual and the person that performs services for a continuing relationship?
- Who sets the hours of work?
- Is the worker required to devote his full time to the person he performs services for?
- Is the work performed at the place of the business of the potential employer?
- Who directs the order or sequence in which the work must be done?
- Are regular oral or written reports required?
- What is the method of payment-hour, week, commission, or by the job?
- Are business and/or traveling expenses reimbursed?
- Who furnishes tools and materials used in providing services?
- Does the person providing services have a significant investment in facilities used to perform services?
- Can the person providing services realize both a profit or a loss?
- Can the person providing services work for a number of firms at the same time?
- Does the person make his services available to the general public?
- Is the person providing services subject to dismissal for reason other than nonperformance of contract specifications?
- Can the person providing services terminate his relationship without incurring a liability for failure to complete a job?