Assessing Compliance

Determining Contractor Compliance

The most reliable way to protect your business from these risks is to ensure that all independent contractors and consultants are compliant with the IRS's guidelines for working independently. Attaining and maintaining compliance, however, is a challenge-one that is always subject to several levels of ambiguity and the inherent inconsistency of human analysis.

While the IRS's widely known "20 Questions" criteria were the de facto set of qualification guidelines for many years, it has recently moved away from relying exclusively on these questions. It now focuses its qualification assessments primarily on establishing the degree of control the client has over contingent workers as it pertains to three factors: behavioral control, financial control, and the type of relationship of the parties.

• Behavioral control covers facts that show whether the business has a right to direct or control how the work is done through instructions, training, or other means.
• Financial control covers facts that show whether the business has a right to direct or control the financial and business aspects of the worker's job.
• Type of relationship covers facts that show how independent contractors and their clients perceive their relationship.

Talk with our experts to find out more about the MBO Compliance Assessment program.