Hello,
If someone is currently contracted with an organization and becomes an employee while continuing to offer contract services with the same company, how different would the services for each position need to be? Specifically, if someone was providing healthcare/epidemiologist services as both a contractor and an employee with the same company funded under different grants and working with different patients would that raise any red flags with the IRS about misclassification or constitute a conflict of interest?
Thank you!
Hi Epi,
IRS determines the workers classification based on three categories collectively.
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Common Law Rules
Facts that provide evidence of the degree of control and independence fall into three categories:
Businesses must weigh all these factors when determining whether a worker is an employee or independent contractor. Some factors may indicate that the worker is an employee, while other factors indicate that the worker is an independent contractor. There is no “magic” or set number of factors that “makes” the worker an employee or an independent contractor and no one factor stands alone in making this determination. Also, factors which are relevant in one situation may not be relevant in another.
The keys are to look at the entire relationship and consider the extent of the right to direct and control the worker. Finally, document each of the factors used in coming up with the determination.
Unquote
It is uncommon that one person can be an independent contractor and an employee with the same company (same name, same Federal ID, EIN).
The company's revenue sources (different grants) and customers (different patients) have no bearing on worker's classification.
Hope this helps. Thank you.