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revised 2/9/2011 TT
INDEPENDENT CONTRACTOR TRAINING
revised 2/9/2011 TT
SCOPE OF TRAINING Definition of Independent Contractor Types of Contracts Completing the Contracts Requesting Payment Other issues:
Risk AssessmentPayments to PERA Service RetireesPayments to non-US CitizensContract Violations
Contacts
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INDEPENDENT CONTRACTS What is an Independent Contractor?
An individual operating under a SS#, performing a service for payment but is not subject to UNC’s controls to accomplish the results of the contract.
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THE IRS MONITORS INDEPENDENT CONTRACTOR PAYMENTS
Employers are legally required to pay employment taxes and withhold income tax on the wages of workers classified as employees.
If the worker is legitimately characterized as an independent contractor, the employer is not responsible for employment-related taxes.
Determining the correct employment relationship is often an ambiguous task.
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IT’S A MATTER OF CONTROL! To determine if employee or independent
contractor, the IRS looks at:Who controls the process: work place, hours worked, reporting time, paperwork, etc.
This is important because….~UNC could lose delegated authority to write contracts;~Contracts would have to go to the State for approval, causing delays;~UNC could be responsible for payingback taxes for the person being paid
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AN EMPLOYEE IS AN INDIVIDUAL WHO PERFORMS SERVICES THAT ARE:
Subject to the will and control of the employer
In what must be done
And how it must be done
An employee can be given considerable discretion and freedom of action, however…
The employer has the legal right to control both the method and the result of the services.
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AN INDEPENDENT CONTRACTOR IS AN INDIVIDUAL WHO PERFORMS SERVICES THAT ARE: Not subject to the
will and control of the employer.
The employer can only control the result of the work, not the means and methods of accomplishing the result.
Independent contractors are hired for their expertise and receive no training from the institution that purchases their services.
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HOW TO CHOOSE – EMPLOYEE OR INDEPENDENT CONTRACTOR?
Employee vs. Independent Contractor (person cannot be both in same calendar year)
Review 20/10 questions to determine status If answer “Yes” to “A” or “B”, person MUST be paid
as employee A. Does UNC pay others to do same duties? B. Has individual been paid as employee previously
for performing the same duties he/she will be performing?
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IRS 20 QUESTIONS 1. Are there instructions? 2. Is there training or direction? 3. Services integrated into business
operation? 4. Services rendered personally? 5. Do they work with other employees? 6. Continuing relationship? 7. Are there set hours? 8. Is it considered full-time? 9. Is work completed on employer’s
premises? 10. Is the sequence of work set by
employer?
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20 QUESTIONS (CONTINUED) 11. Regular reports? 12. Regularly scheduled payments? 13. Payment for business/travel expenses? 14. Employer furnishes tools and
materials? 15. Works for one employer at a time? 16. Quit without incurring liability? 17. Can person be fired? 18. Profit/loss from services rendered? 19. Major investment by employee? 20. Do they offer same services to public?
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HOW DO I PAY PEOPLE? Independent contractor operating under
a SSN to be paid less than $25,000……
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TYPES OF CONTRACTS Standard Services Invoice – SSI Independent Contractor Agreement
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STANDARD SERVICE INVOICE (SSI)Must meet the following criteria:
Under $5,000 for entire project Under 6 months to perform service Payment will be made in a lump sum
when work is completed
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FILLING OUT SSI PAPERWORKSimple and easy:
SSI Contract (revised version 07/10) Colorado Special Provisions (terms and
conditions) 10 questions W-9 Check Request
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FLOW OF PAPERWORK - SSI Prepare SSI and W-9 Signed by all parties Remember to include Disclosure
Statement if contractor is a PERA retiree collecting benefits
Attach to Check Request Send to Accounts Payable
Remember: Payment can only be made in advance if department will hold check and present upon completion of service
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INDEPENDENT CONTRACTOR AGREEMENTMust be used when ANY one of the
following apply:
$5,000 or more for entire project ~ but under $25,000
6 months or more to perform service Multiple payments to be made during
service period
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FILLING OUT IC PAPERWORK?? The independent Contractor Agreement
MUST be filled out and signed by all parties before the contractor starts work.
What is a complete contract? Signed by contractor Signed by authorized signer for FOAP being
charged Signed by Human Resources Director Signed by Grants Administrator (SPARC), if
applicable Signed by UNC Controller Reviewed by Accounts Payable
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FILLING OUT IC PAPERWORK…
Independent Contractor Agreement~ Revised version 07/10
Colorado Special Provisions (terms and conditions)
20 questions (Personal Services Classification Analysis)
W-9
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FLOW OF PAPERWORK - IC
Send all documents to Accounts Payable. We will route for HR, grant, purchasing if over $5000 and controller’s signatures.
A/P will return completed contract to originating department once contract is signed in full.
To request payment, attach contract to check request and submit to Accounts Payable.
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TO REQUEST PAYMENT: Single payment:
Original signature at bottom section of Page 4 authorizing payment: Left side for payment after services complete Right side for check to be held and presented
upon completion of services
• Attach original contract to check request and submit to Accounts Payable
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MULTIPLE PAYMENTS Make copies of contract Submit original contract with first payment
request. Attach to check request. For subsequent payments, use copy of
contract with check request. However: Needs original signature in bottom section
of Page 4 authorizing partial payment Complete section for multiple payments
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MORE ON….
How do I pay people: What about…
Employees Former employees Businesses Sole Proprietors
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CURRENT EMPLOYEE:
Active faculty member - use PSA
Active GA/TA – most likely can pay as temporary or technical/professional, hourly or salaried Contact Human Resources for assistance
Active student employee – pay using EPAF Contact Financial Aid if student receives work study
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FORMER EMPLOYEE:
Remember – an individual cannot be paid as an employee and as an independent contractor in the same calendar year
Faculty member – temporary or technical/professional
GA/TA – temporary or technical/professional Contact Human Resources for assistance
Former student employee – pay using EPAF
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BUSINESS: Independent contractor doing business
as a sole proprietor, operating under a FEIN (Federal Employer Identification Number):
Use DPO for payments under $2,000
Use purchase requisition (PO) for payments of $2,000 or more
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INDIVIDUAL TO BE PAID MORE THAN $25,000:
Independent contractor doing business under a SSN (Social Security Number) to be paid more than $25,000:Competitive bidding appliesContact Purchasing department for assistance
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SUMMARY
Fully executed contract consists of: Independent Contract with all signatures
FOAP authorization & date Contractor signature & date HR signature & date SPARC signature & date (if grant funds) Purchasing signature if over $5,000 (encumbered) UNC Controller & date A/P review and initialed
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SUMMARY (CONTINUED)Advantages of SSI? Fewer signatures required No pre-approvals 10 questions instead of 20 (no signature required)
Processing Timeframes: Allow 1-2 weeks for Independent Contracts Allow 1-2 days for SSI Get all paperwork and signatures to avoid delays in
processing
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STUMBLING BLOCKS… Avoid vague wording:
“Fall/Spring semester” (need specific dates) “Various” or “Approximately” “Contractor’s Choice”
If don’t know exact $ amount them put in maximum $ Don’t say “amount plus expenses”
Don’t make travel arrangements or try to reimburse for expenses These items must be included in contract
amount
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RISK ASSESSMENT FOR VENDORS
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PAYMENTS TO PERA RETIREES When we contract with an individual who is
retired under Colorado Public Employees Retirement Association (PERA) We must send pay PERA contributions on their
payments UNC Payroll calculates amount due and sends
monies to PERA Effective January 1, 2011 PERA will be
withholding an amount equal to 10.5% of the amount paid to the retiree by the University from their benefit.
Contact PERA for question regarding this issue
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PAYMENTS TO NON-US CITIZENS Check status at time contract is being
discussed Could be tax/treaty requirements Contact Lacey Snyder, Tax Accountant,
351-1828 [email protected]
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AFTER THE FACT CONTRACTS When completing the Independent
Contractor Agreement, all signatures must be acquired and dated prior to the service beginning
If contractor starts work prior to fully executed contract, then requires State of Colorado approval (long delays)
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CONTACTS Terri Thomas, AP Manager, Carter Hall 1002, 351-1836
Fax 351-1142, [email protected]
Mary Jantz, UNC Purchasing Department, Carter Hall 1002, 351-2287,
Fax 351-1142, [email protected]
Sandi Coleman, UNC Contract Coordinator, Carter Hall 4th Floor,
351-2040, [email protected]
Lacey Snyder, Payments to non-US citizens, General Accounting,
Carter Hall 1002, 351-1928, [email protected]
• Sue Stone, PSA and Temporary Employment, Human Resources,
Carter Hall 2002, 351-2631, [email protected]
