Independent Contractors-Taxation - Carnegie Mellon University

Independent Contractors

An independent contractor is an individual or sole proprietor who is contracted to perform work for the university utilizing their own methods, and the means by which the work is accomplished is not controlled by Carnegie Mellon University.  An independent contractor is normally engaged in an established business, trade or profession.  As such, an independent contractor is not an employee of Carnegie Mellon and is treated differently with respect to tax withholdings, employee benefits and payment methods.

Mistakenly classifying an employee as an independent contractor can result in significant fines and penalties.  The IRS continues to seek out and impose penalties on organizations that treat employees as independent contractors and fail to withhold taxes.  As a result, the IRS considers 20 factors in determining a worker's status.  Meeting just one of the conditions may qualify that worker as an employee; however, the 20 factors are used as guidelines to determine whether sufficient control is present to establish an employer-employee relationship.  Not every factor is applicable in every situation and the degree of importance of each factor depends on the type of work and individual facts and circumstances.  All relevant factors are considered in making a determination and no one factor is decisive. 

Carnegie Mellon University uses an independent contractor checklist to assist schools and departments in determining whether individuals performing services should be hired as an employee or an independent contractor.  

If the determination is an independent contractor, please refer to the Guide to Supplier Forms.  All the necessary steps for determining and procuring the services of an independent contractor should be completed before any services are performed.

If you need assistance of have any questions regarding the Checklist or determination of independent contractors vs. employees, please contact the the Tax Department directly.

What is the difference between an independent contractor and an employee?

What should the department do if they are not sure whether an individual is considered an independent contractor or employee?

What is the process for hiring independent contractors?

What if I forget to complete the Checklist and contact the University Contracts Office instead?

What is the purpose of the Independent Contractor Checklist?

Who should complete the Independent Contractor Checklist?

Does the Independent Contractor need to sign the Checklist?

Where does the completed Independent Contractor Checklist get sent for approval?

What is the average turn-around time for approval of the Checklist?

Can the Checklist be emailed?

What do I do with the Checklist once it has been approved by Taxation and returned to the department?

Does an individual need to complete the Checklist every time work is being performed by the same independent contractor?

Is there any particular question on the Checklist that causes an individual to be considered an employee vs. independent contractor or vice versa?

What is the effective date of the revised Checklist and process?