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Internal Revenue Service regulations state that payments made to individuals for services where an employer/employee relationship exists are subject to employment taxes and withholdings. Therefore, only payments to independent contractors will be approved for payment other than through University payroll. The purpose of the Determination of Contractor Status form is to determine whether the payee should be deemed an independent contractor as defined by the IRS, or an employee subject to employment taxes and withholding. The following questions must be answered by the department requesting the services to be provided prior to the commencement of the services. No contractor payment will be processed without the completion of this information.
Please complete the form early in the grant or contract development process - even if you do not know the name(s) or social security number(s) of the potential contractor(s). The name of the position will suffice. You may do one form for each group of contractors for your project in this way. Disposition as independent contractor or employee can then be determined while you complete the proposal. Check yes or no to each of the questions from your knowledge of what the position will do to accomplish the objectives of the proposal. It is important that early action is taken because it affects the fringe benefit rates in the proposal budget. There is no fringe if it is decided that the position is that of an independent contractor, because the contractor is responsible for paying his own fringe benefits and taxes. If the position is determined to be that of a part-time Western employee, use the part-time fringe rate.
If the position (with no name or social security number associated) is at first determined to be an independent contractor position (at the time of the proposal), but you hire (after the award) a person who is or has recently been on the WKU payroll, then you must pay the person through payroll as an employee and include fringe benefits along with salary. This may require some re-budgeting. Please contact the Office of Sponsored Programs for assistance.