Tax

An independent contractor, as defined by the Internal Revenue Service (IRS), is a service provider hired to perform a job or service, but not provided with the means or method of accomplishing the task. The following three characteristics are reviewed in evaluating and classifying the independent contractor status:

1. Behavioral control - Does the service provider determine how and when the service is performed (given university time constraints where/when applicable)?
2. Financial control - Is the service provider responsible for all business aspects of the job (expenses, tools, insurances, etc.)?
   
3. Type of relationship - Does the service provider receive benefits? Is the service provided a key aspect of the university?

Notes:

1. If there are questions or concerns, please contact your unit's human resource representative or financial administrator, or the Office of Tax Compliance, (607) 255-9465.
2. All inquiries from the IRS, or another taxing agency or government office are to be directed to the Office of Tax Compliance, (607) 255-9465.

Misclassification of a service provider can result in substantial penalties, taxes, and other liabilities, for which the unit can be held responsible.

• University Policy 3.25, Procurement of Goods and Services - contains all of the university guidelines in determining and contracting an independent contractor, including required documents.

• Buying Manual: Purchases with Special Procedures: Paying for Services - Used to determine if the unit has sole responsibility in making the independent contractor determination.

• Service Provider Questionnaire* - Provided by the contracting unit (or responsible university entity) to the service provider for completion. The service provider returns the completed questionnaire to the unit for use in completing the checklist outlined below.
  

• Service Provider Evaluation Worksheet* - Completed by the unit using the answers supplied by the service provider on the Service Provider Questionnaire.

Note: Whether independent contractor/consultant status is accepted or rejected, the completed Service Provider Questionnaire and Worksheet documents must be signed and faxed to the Office for Supply Management Services at (607) 255-9450 for record-keeping purposes. If independent contractor/consultant status is rejected, the service provider can be appointed as an employee through the Division of Human Resources using a University Personnel Action Form (UPAF).

• Certificate of Insurance Request Form - The unit must ensure the service provider has adequate insurance coverage. The unit will send the proof of insurance to the Office of Risk Management and Insurance for review and retention.

• Independent Contractor/Consultant Agreement Form* - Contract between the university and the service provider regarding services, timetable, payment, tax, liability, etc.
  
  
• Entertainment Contractor Agreement Form* - Contract between the university and the entertainment provider, except major entertainment to be performed at places such as Statler, Bailey, etc.

• Supplier Information Form* - An application used by Cornell as a substitute for the W-9 form containing all of the service provider's pertinent information. The request form is an online application, the data obtained is retained by the university to fulfill record retention requirements.

*These forms are available on the Supply Management Services Web site.

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