Yes, the fact that she did not get a W-2 and have taxes withheld makes her by default, an Independent Contractor. If she chooses not to pursue the matter, she will be responsible for both her and the employer portion of the SE tax.
The general rule is that an individual is an independent contractor if
the payer has the right to control or direct only the result of the work,
not what will be done and how it will be done. Small businesses
should consider all evidence of the degree of control and independence in the
employer/worker relationship. Whether a worker is an independent
contractor or employee depends
on the facts in each situation.
Consequences
of Misclassifying an Employee
Classifying an
employee as an independent contractor with no reasonable basis for doing so
makes employers liable for employment taxes. Certain employers that can provide
a reasonable basis for not treating a worker as an employee may have the
opportunity to avoid paying employment taxes. See Publication
1976, Section 530 Employment
Tax Relief Requirements for more information.
Workers who
believe an employer improperly classified them as independent contractors
can use Form 8919 to figure and report the employee’s share of
uncollected Social Security and Medicare taxes due on their compensation.
The IRS Small
Business and Self-Employed Tax Center provides a multitude of resources for small businesses
as well as self-employed independent contractors
