Source: https://www.mass.gov/technical-information-release/tir-05-11-effect-of-new-employee-classification-requirements-under-gl
Timestamp: 2019-04-22 14:03:40+00:00

Document:
On July 19, 2004, the Massachusetts Legislature enacted an emergency law that amended chapter 149 of the General Laws. See St. 2004, c. 193, "An Act Further Regulating Public Construction in the Commonwealth" ("Act"). In pertinent part, the Act repealed G.L. c. 149, § 148B, "Employee Status; Exceptions; Penalties" and replaced it with new section 148B. See St. 2004, c. 193, § 26, effective July 19, 2004. The new law affects the classification of employees and independent contractors for purposes of G.L. chs. 149 (Labor and Industries) and 151 (Minimum Fair Wages) and provides criminal and civil penalties for improper classification under these chapters. The Massachusetts Attorney General is responsible for administering the provisions of G.L. c. 149. See G.L. c. 149, § 2. The Commissioner of Revenue is charged with administering the Massachusetts wage withholding laws under chapter 62B. See G.L. c. 14, § 6(1); G.L. c. 62C, § 3.
The purpose of this Technical Information Release is twofold. First, it announces that the amendments to chapter 149, § 148B do not change the statutory definitions of "employer" or "employee" found in chapter 62B of the General Laws. Accordingly, for wage withholding purposes under chapter 62B, the status of workers as employees or independent contractors is governed by section 3401 the Internal Revenue Code and the applicable regulations promulgated pursuant to that provision. This TIR summarizes the differences in the general rules for determining employee/independent contractor status under chapters 149 and 62B. Second, this TIR announces that the Commissioner will accept determinations of employee or independent contractor status, as described in this TIR, by the Internal Revenue Service for purposes of identifying income tax withholding obligations under chapter 62B.
3. The individual is customarily engaged in an independently established trade, occupation, profession or business of the same nature as that involved in the service performed. See G.L. c. 149, § 148B(a)(1)-(3), inclusive.
The amendment also provides for various penalties for failure to properly classify individuals according to chapter 149, § 148B. See G.L. c. 149, § 148B(d). Whoever fails to classify individuals in accordance with this section, and in so doing fails to comply with chapter 149 or chapter 151, §§ 1, 1A, 1B, 2B, 15, or 19; or chapter 62B, is subject to all of the criminal and civil remedies, including debarment from public works projects, as provided in G.L. c. 149, § 27C. Furthermore, whoever fails to classify an employee under G.L. c. 149, § 148B, and in so doing violates chapter 152 (Workers' Compensation), is subject to criminal penalties provided in G.L. c. 152, § 14, as well as all of the civil remedies, including debarment, provided in G.L. c. 149, § 27C. Liability for these violations extends to any entity and the president and treasurer of a corporation, and any officer or agent having the management of the corporation or entity. See G.L. c. 149, § 148B(d).
The Internal Revenue Service issues formal determinations regarding the status of workers as employees and independent contractors for purposes of determining federal withholding obligations. These determinations are made in response to requests submitted on IRS Form SS-8 (Determination of Employee Work Status for Purposes of Federal Employment Tax Obligations). The Commissioner does not issue formal determinations in this area. The Commissioner will accept a copy of that IRS determination and will treat the parties in accordance with that determination for Massachusetts withholding purposes. If a person has not obtained an IRS determination, the person may request one in accordance with the instructions on Form SS-8, which is available on the IRS website. In the absence of an IRS determination, the Commissioner will apply federal law for purposes of determining whether a company must deduct and withhold Massachusetts income taxes from monies paid to its workers.
1. For Massachusetts withholding purposes, "wages" also include periodic payments and nonperiodic distributions as defined in I.R.C. § 3405 and subject to federal withholding; contributions paid by governmental units and free public libraries on behalf of the employee pursuant to G.L. c. 32, § 22(10) or payment by governmental units for retirement pay of judges pursuant to G.L. c. 32, § 65D(i) and not otherwise included as wages in G.L. c. 62B, § 1.
2. For rules regarding withholding of tax by persons other than employers ( e.g., promoters making payments as compensation for personal services of performers including athletes and entertainers), taxpayers should refer to GL. c. 62B, § 2, as amended by St. 2004, c. 262, § 21. The Commissioner will amend regulation 830 CMR 62B.2.1, Withholding of Taxes on Wages, in 2005 to explain these requirements in further detail.

References: § 148
 § 26
 § 2
 § 6
 § 3
 § 148
 § 148
 § 148
 § 148
 § 27
 § 148
 § 14
 § 27
 § 148
 § 3405
 § 22
 § 65
 § 1
 § 2
 § 21