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Tax Compliance Office

Independent Contractor Determination

Overview

The University must properly classify individuals provided services as an employee or an independent contractor. 

All individuals who perform services are considered employees unless the relationship, supported by documentation, satisfies the Internal Revenue Service standards for an independent contractor status.

Prior to engaging an independent contractor, the employee or independent contractor status must be determined. Departments must submit an Independent Contractor Determination (ICD) checklist for each calendar year in which an individual is engaged to perform services in order for the individual to be appropriately classified. 

Several Business and Finance departments work collaboratively to determine the classification of payments to individuals. Those departments include: Tax Department, Payroll Department, Accounts Payable, and Human Resources.

 

Independent Contractor Determination (ICD) Form

Independent Contractor FAQs

Procedure

  • Department completes Independent Contractor Determination Checklist before engaging individual or company.
  • Checklist is routed electronically for review and person submitting the form receives an email notification that checklist was submitted.
  • Tax Department reviews checklist and determines classification as either employee or independent contractor.
  • Department receives an email advising of classification determination

Classification

If the individual is classified as an employee, the department should contact Human Resources at smuhr@smu.edu for assistance in processing the individual as a Kelly Services employee or a temporary SMU employee (available in limited circumstances).

If the individual is classified as an independent contractor, the department can proceed with the engagement. Please note that the Accounts Payable Department requires an approved independent contractor classification before processing a payment.

Questions regarding the checklist can be forwarded to independentcontractors@smu.edu.

Questions regarding completing the statement of work can be forwarded to melanieb@smu.edu.

Definitions

An employee is an individual who is hired by SMU, or Kelly Services to work at SMU, and the employee is paid through payroll. SMU controls and directs the person's activities, both in terms of what must be done and how it must be done.

Examples of characteristics of an employee are:

  • Performs duties dictated or controlled by others
  • Is given training for work to be done
  • Anyone who teaches a course from which students may receive academic credit

An independent contractor, often referred to as a consultant, is an individual, sole proprietor, single member, LLC, or unincorporated business, which renders services to the general public. 

Examples of characteristics of an independent contractor are:

  • Operates under a business name
  • Has multiple clients
  • Maintains a separate workplace
  • Not supervised by an SMU employee
  • May have his/her own employees
  • Maintains a separate business bank account
  • Advertises his/her business services
  • Invoices for work complete
  • Sets own work hours and has own tools