Chapter 4: Employment Taxes
4.1 INTRODUCTION
4.2 EMPLOYEE VERSUS INDEPENDENT CONTRACTOR CLASSIFICATION
(a) IRS Position on Employee/Independent Contractor Classification
(i) The 20-Factors Test
(ii) Training Manual Tests
(iii) Judicial Tests
(b) Section 530 Relief
(i) The “Reasonable Basis Test”
(ii) The “Substantive Consistency” Requirement
(iii) The “Return Filing Consistency” Requirement
(iv) Issues Relating to Employee Status
(v) Burden of Proof
(vi) Benefits of Section 530 Relief
(c) IRS Classification Settlement Programs
(d) Section 3402(d) Relief Procedures
(e) Can an Individual Be Classified as an Employee and Independent Contractor at the Same Time?
(f) Classification of Workers Commonly Hired By Colleges and Universities
(i) Instructors and Adjunct Faculty
(ii) Proctors
(iii) Researchers
(iv) Accountants
(v) Consultants
(vi) Corporate Officers/Directors and Trustees
(vii) State Elected and Appointed Officials
(viii) Psychologists Working in a Hospital
(ix) Short-term Guest Lecturers
(x) Executive Education Instructors
(g) Other College and University Classification Cases and Rulings
4.3 SOCIAL SECURITY TAX EXEMPTION FOR STUDENTS
(a) The Student FICA Exception
(i) History of the Student FICA Exemption
(ii) Prior IRS Position
(iii) Current IRS Position
(iv) Treatment of Medical Residents
(b) Students Performing Domestic Services
(c) Students Employed at Hospitals
(d) Students in “Work Study” Programs
4.4 THE NONRESIDENT ALIEN EXCEPTION
(a) General Rules
(b) Income Tax Treaties
(c) Social Security Totalization Agreements
(d) College or University Conscious Refusal to Honor Exemption
4.5 STATE COLLEGE AND UNIVERSITY EMPLOYEES
4.6 CLASSIFICATION OF SIGNING BONUSES AND TERMINATION, EARLY RETIREMENT, ROYALTY, AND SETTLEMENT PAYMENTS
(a) Termination Payments
(b) Early Retirement Payments
(c) Royalty Payments
(i) Section 1235 Analysis
(ii) Royalties Paid by Issuance of Capital Stock
(d) Settlement Payments
(e) Payment of Plaintiff’s Attorneys’ Fees
(f) Signing Bonuses
4.7 TAX TREATMENT OF STUDENT LOAN DISCHARGES UNDER SECTION 108(F)
4.8 DEFERRED COMPENSATION PAYMENTS
(a) Section 457 Plans
(b) The Section 409A Requirements
(c) Nine-Month Salary Paid Over Twelve Months
