It is critical that Hamilton College correctly determine whether the individuals providing services to the College are employees or independent contractors. Generally, the College must withhold income taxes, withhold and pay Social Security and Medicare taxes on wages paid to an employee. No taxes on payments are withheld for independent contractor services. The IRS and other government agencies assess significant penalties for misclassification of employees as independent contractors.
IRS GUIDELINES
Service provider classification is based on facts and circumstances; no one fact determines service provider classification. The IRS currently emphasizes three broad based categories: behavioral control, financial control, and the overall relationship.
Behavioral Control:
Independent contractors determine how they will accomplish the task. If Hamilton provides training and/or instructions about how to complete the task, the service provider should generally be classified as an employee.
Financial Control:
Independent contractors have significant investments in their businesses. A service provider who works at home generally does not have a significant investment in the business.
Relationship:
Independent contractors have a broad customer base. If the service provider works primarily for Hamilton, the service provider should generally be classified as an employee.
INSTRUCTIONS
The department head or supervisor is responsible for completing the following steps when procuring an individual's services.
Send both original forms to the Co Office along with a W-9 for new vendors. Upon review, the Business Office will return a copy of the Independent Contractor checklist indicating the contractor status determination.
The table below provides information on a limited number of payments exempt from independent contract review.
Services Exempt from Independent Contractor Review
Transaction Type
IC Review Required?
Written Contract Required
W-9 Required On File
Low Dollar (currently < $500)
No
Yes
Yes
Architectural/Engineering Services
No
Yes
Yes
Athletic Official
No
Yes
Yes
Caterer
No
Yes
Yes
Disc Jockey
No
Yes
Yes
Construction Contractor
No
Yes
Yes
Entertainer-Public Event
No
Yes
Yes
Guest Lecturer
No
No
Yes
Honorarium
No
No
Yes
Human Subject Fee
No
No
Yes
Translator: Foreign Language
No
Yes
Yes
Translator: Deaf
No
Yes
Yes
Writer-Scholarly publications or Hamilton Magazines
