“An independent contractor is a natural person, firm or corporation who agrees to perform services for a fixed price according to his/her or its own methods and without subjection to the supervision or control of the other contracting party, except as to the results of the work, and not as to the means by which the services are accomplished” -S.A.M. 0320
An ISP form is to be used for contracts with individuals engaged in technical, professional or specialized services such as guest speakers, athletic officials, consultants, performers and to request honorarium payments to individuals who:
- Provide one-time nonrecurring services.
- Are to be paid less than $10,000 (no receipts required, total payment reportable as taxable income by form 1099).
- Who are not otherwise employed by the Nevada System of Higher Education (which includes CSN, DRI, and GBC, TMCC, UNLV, UNR, WNCC, or NSHE System Administration).
In general, an employee is an individual who performs a service for the university and operates under the direction and control of the university or its employees. Direction and control can be inferred to exist when the university has the RIGHT to control the results as well as the means and methods of the worker.
An independent contractor is a person engaged by the university to perform specific functions or tasks at his or her own discretion with respect to the means and methods used to accomplish the assignment.
For tax purposes and wage and hour compliance, the Internal Revenue Service (IRS) and the Department of Labor (DOL) require that UNLV classify workers as either employees or independent contractors, also known as consultants or independent service providers (ISP's). The criteria for making this determination are established by the IRS, DOL, and the courts. At UNLV, the Accounts Payable Department has the responsibility to interpret these criteria and apply it to worker classification. The Assistant Controller for Accounts Payable will determine if a review by the IRS (via form SS8) is required in cases where it is not clear if the worker is an employee or an independent contractor.
The status of a worker as either an independent contractor or employee must be determined accurately to ensure that workers and the university can anticipate and meet their tax and record keeping responsibilities accurately and in a timely fashion.
Determination of Status
Determination as to whether an individual performing services for the State should be treated as an independent contractor or as a State employee is an important one. That determination can affect the individual’s status in several regards, including:
- His/her treatment by the IRS for tax and social security purposes.
- His/her treatment by the U.S. Department of Labor for purposes of overtime calculation under His/Her Labor Standards Act.
- His/her treatment by the insurance companies providing workers’ compensation coverage relative to coverage for on-the-job injury; however, if the contractor qualifies as a sole proprietor as defined in *NRS Chapter 616A.310, and has elected not to purchase industrial insurance for himself/herself, the sole proprietor must submit to the contracting State agency a signed and notarized affidavit so stating.
- His/her treatment by the State Industrial Insurance System relative to coverage for on-the-job injury.
- His/her treatment by the Employment Security Department in the determination of unemployment benefits.
- His/her treatment by the courts in determining possible liability of the State of Nevada for his/her actions.
Following the common law standard, the employment tax regulation provides that an employer-employee relationship exists when the institution for which the services are performed has the right to direct and control the worker who performs the services. This control refers not only to the result to be accomplished by the work, but also to the means and details by which that result is accomplished. In other words, a worker is subject to the will and control of the institution not only as to what work shall be done but also how it shall be done. It is not necessary that the institution actually direct or control the manner in which the services are performed; it is sufficient if the institution has the right to do so.
Warning: The use of a nonresident alien as an independent contractor can be a lengthy and difficult process. Many additional forms and increased scrutiny are necessary when bringing a nonresident alien onto campus. Prior to initiating any of the paperwork discussed in this document, please contact Debbie Honrath at 702-895-1243 the Non-Resident Alien Tax Specialist for assistance with foreign visitors.
*NRS 616A.310 “Sole proprietor” defined. “Sole proprietor” means a self-employed owner of an unincorporated business and includes working partners and members of working associations. Coverage remains in effect only if the sole proprietor remains a domiciliary of Nevada.
(Added to NRS by 1975, 1017; A 1987, 598)—(Substituted in revision for NRS 616.114)