Over the years tax advisors have warned about classifying workers as independentcontractors rather than employees.
Many businesses find it advantageous to retain contract labor rather than to hire employees.
This practice allows the business to avoid the payroll taxes, insurance, and benefit costs associated with employees. The IRS closely scrutinizes the independent contractor classification because it recognizes that many taxpayers may find the savings too tempting, and therefore classify employees as independent contractors. The IRS has developed guidelines for determining whether work is, in fact, contract labor. The 20 factors relate primarily to the concept of control. In general, anyone who performs services for you is your employee if you have the right to direct and control them.