Accounts Payable Topic: Independent Contractor
Click here to download the ISP Form.
IMPORTANT INFORMATION: MUST READ BEFORE ENTERING INTO A CONTRACT WITH A CONSULTANT.
Effective immediately: THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS: Section 1 subsection 6. Chapter 284 of NRS is hereby amended by adding thereto a new section to read as follows.
6. Each board of commission of this State, each school district in the State and each institution of the Nevada System of Higher Education that employs a consultant shall, at least once every 6 months, submit to the Interim Finance Committee a report setting forth:
(a) The number of consultants employed by the board, commission, school district or institution;
(b) The purpose for which the board, commission, school district or institution employs each consultant;
(c) The amount of money or other remuneration received by each consultant from the board, commission, school district or institution; and
(d) The length of time each consultant has been employed by the board, commission, school district or institution.
The purpose of this form is to be used for contracts with individuals engaged in technical, professional or specialized skills 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); and
- Who are not otherwise employed by the Nevada System of Higher Education (which includes CCSN, DRI, and GBC, TMCC, UNLV, UNR, WNCC, or NSHE System Administration.
- Contracts $10,000 or more must be presented to the Purchasing Department by means of a requisition where the contracting process is controlled by rules of open competitive bidding.
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 both the results as well as the means and methods of the worker.
his/her treatment by the IRS for tax and social security purposes;
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 is established by the IRS, DOL, and the courts. At UNLV, the Accounts Payable Department has the responsibility to interpret this 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 timely and accurately.
Determination as to whether an individual is treated as an independent contractor or employee can effect the status of an individual in several regards, including:
his/her treatment by the Department of Labor for purposes of overtime calculation under the FLSA;
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; and
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.