Legal Question in Tax Law in Massachusetts

This is an often asked question & a confusing area for many taxpayors. The essential factors the Internal Revenue Service considers in determining whether an individual is an employee or independent contractor are;

1) The existence of Written Contracts;

2) The payment of Employee Benefits;

3) The Permanency of the relationship;

4) Services provided are the Key Activity of the business;

There is, however, a Safe Harbor under the "Section 530 Relief Requirements", which all must be satisfied to avoid employment taxes;

1) Reasonable Basis for not treating worker as employee;

2) Substantive Consistency in treatment ( you have treated similar workers as independent contractors) and

3) Reporting Consistency in filing ( you have filed the appropriate forms consistent with the worker being an independent contractor ie; 1099- MISC etc).