Classification for Tax Purposes
University policy as stated in Administrative Policy and Procedure number 262 was issued to ensure that each service provider (worker) is properly classified as an employee or independent contractor in accordance with federal and state tax and labor laws.  University departments that engage service providers must submit the required documentation for determination of a worker's tax status before any services are performed or payment requests are processed. 

Because the potential liabilities and penalties are significant if an individual is treated as an independent contractor and later found to be an employee, each working relationship must be thoroughly researched and analyzed.  Before a working relationship is established, departments should complete and submit an Employee Versus Independent Contractor Classification Checklist.xls to the Tax Compliance section of the Controller's Office.  The purpose of the checklist is to gather information to assist in the proper determination of the worker as an employee or an independent contractor.  Federal and State regulations assume all services are provided by employees and puts the burden of proof on the employer to show that an independent contractor relationship exists.