West Virginia Code of State Rules › Agency 110 - Tax › Title 110 - LEGISLATIVE RULE STATE TAX DEPARTMENT › Series 110-15 - Consumer Sales And Service Tax And Use Tax › Section 110-15-60 - Employee or Independent Contractor

Current through Register Vol. XLI, No. 28, July 12, 2024
60.1. Services rendered by an employee to his
				or her employer are exempt from the consumers sales and service tax and use
				tax. On the other hand, services rendered by an employee to his or her employer
				which do not fall within the scope of the employee-employer relationship or the
				contract of employment, and services rendered by independent contractors are
				subject to the consumers sales and service tax and use tax unless some other
				exemption provision in Section 9 of these regulations applies.
60.2. There may be situations where the issue
				is whether a person is an employee or an independent contractor. Generally, the
				relationship is that of employer-employee if the person for whom services are
				performed has the right to control and direct the individual who performs the
				services, not only as to the result to be accomplished by the work, but also as
				to the details and means by which the result is accomplished.
60.3. Following are factors to be considered
				when determining the nature of the relationship. The factors are designed to be
				only guidelines and where appropriate, the Tax Department will look beyond the
				formal aspects of the relationship to determine its substance.
60.3.1. Instructions. - A worker who is
				required to comply with other persons' instructions about when, where, and how
				he or she is to work is ordinarily an employee.
60.3.2. Training. - Requiring a worker to
				receive training shows that the person or persons for whom the services are
				performed want the services performed in a particular way.
60.3.3. Integration. - Integrating the
				worker's services into the business operations generally shows that the worker
				is subject to direction and control.
60.3.4. Services Rendered Personally. - This
				shows the person for whom the services are performed is interested in the
				methods used to accomplish the work as well as the results, and indicates the
				person exercises control.
60.3.5.
				Hiring, Supervising, and Paying Assistants. - If a person for whom services are
				performed hires, supervises, and pays assistants, this generally shows control
				over the workers on the job. But if one worker hires, supervises, and pays the
				other assistants pursuant to a contract under which the worker agrees to
				provide materials and labor and under which the worker is responsible only for
				the attainment of a result, then this indicates an independent contractor
				status.
60.3.6. Continuing
				Relationship. - This indicates an employer-employee relationship. It may exist
				where work is performed at frequently recurring although irregular
				intervals.
60.3.7. Set Hours of
				Work. - This is a factor indicating control.
60.3.8. Full Time Required. - Shows control
				over the amount of time the worker spends working and impliedly restricts the
				worker from doing other gainful work. An independent contractor, on the other
				hand, is free to work when and for whom he or she chooses.
60.3.9. Doing Work on Employer's Premises. -
				Control over the place of work is indicated when the person or persons for whom
				the services are performed have the right to compel the worker to travel a
				designated route, to canvass a territory within a certain time, or to work at
				specific places as required.
60.3.10. Order or Sequence Set. - If the
				person for whom the services are performed has the right to establish the
				routines and schedules to be followed, that right is a factor indicating
				control.
60.3.11. Oral or Written
				Reports. - A requirement that the worker submit regular or written reports to
				the person for whom services are rendered indicates a degree of
				control.
60.3.12. Payment by Hour,
				Week, Month. - This indicates an employer-employee relationship provided it's
				not just a convenient way of paying a lump sum agreed upon as the cost of a
				job. Payment made by the job or on a straight commission generally indicates
				that the worker is an independent contractor.
60.3.13. Payment of Business and Traveling
				Expenses. - An employer, to be able to control expenses, generally retains the
				right to regulate and direct the worker's business activities.
60.3.14. Furnishing Tools and Materials. -
				Tends to show an employer-employee relationship.
60.3.15. Significant Investment. - If a
				worker invests in facilities that he uses in a performing service and that are
				not typically maintained by employees (such as maintaining an office rented at
				fair market value from an unrelated party), that factor tends to indicate that
				the worker is an independent contractor. Special scrutiny is required for
				certain types of facilities, such as home offices.
60.3.16. Realization of Profit or Loss. - For
				example, if the worker is subject to a real risk of economic loss due to
				significant investments or a bona fide liability for expenses, such as salary
				payments to unrelated employees, that factor indicates that the worker is an
				independent contractor.
60.3.17.
				Working for More Than One Firm at a Time. - This generally indicates an
				independent contractor status. However, a worker who performs services for more
				than one person may be an employee of each of the persons, especially where
				such persons are part of the same service arrangement.
60.3.18. Making Service Available to General
				Public. - Doing so on a regular and consistent basis indicates an independent
				contractor relationship.
60.3.19.
				Right to Discharge. - This is a factor indicating that the worker is an
				employee and the person possessing the right to discharge is an employer. An
				independent contractor cannot be fired so long as he produces a result that
				meets the contract specifications.
60.3.20. Right to Terminate. - If a worker
				has the right to quit at any time without incurring liability, this indicates
				an employer-employee relationship.