It is critical that Bowdoin correctly classify individuals providing services to the College as either employees or independent contractors. Generally, the College must withhold taxes on wages paid to employees; the College is NOT required to withhold taxes on payments to independent contractors. The IRS and other government agencies assess significant penalties if employees are misclassified as independent contractors. To ensure compliance, please refer to the new Independent Contractor policy below PRIOR to signing an agreement for services.
Service provider classification is based on facts and circumstance; no one fact determines service provider classification. The IRS currently emphasizes three broad categories: behavioral control, financial control, and the overall relationship.
- Behavioral control: Independent contractors determine how they will accomplish a task. If Bowdoin provides training or instruction about completing 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 does not have a significant investment in their business should generally be classified as an employee.
- Relationship: Independent contractors have a broad customer base. If the service provider works primarily for Bowdoin, then the service provider should generally be classified as an employee.
The department head or supervisor is responsible for completing the following steps when procuring an individual's services, (if not covered by the chart below) before any services are performed:
- Send an Independent Contractor Questionnaire to the service provider for completion and request its return directly to you.
- After receipt, complete the Independent Contractor Checklist.
- Send both original forms to the Controller's Office along with a W-9 for new vendors. (A W-9 must always be on file; otherwise, the vendor cannot be paid.) Upon review, the Controller's Office will return a copy of the Independent Contractor checklist indicating the status determination.
- Written agreements are usually required (see below) and need to be submitted to Accounts Payable prior to services being provided. Click here for a contract template. Please contact Meg Hart at firstname.lastname@example.org or 725-3092 regarding any contract greater than $5,000 or with any significant potential risk (i.e. involving children, boats, alcohol, animals, etc.).
The following are Independent Contractors that are exempt from Independent Contractor Review:
|Type||IC Review Required?||Written Agreement Required?|
|Guest Lecturer||No||No (invoice backup for Accounts Payable is needed)|
|Honorarium||No||No (invoice backup for Accounts Payable is needed)|
|Human Subject Fee||No||No|