question
I would love to know the law on remote interns. Schools would like students to work with us remotely and we are open to this, but it would be helpful to know what laws there are related to payroll and taxes.
Susan Johnston
Founder/Director, New Media Film Festival
NewMediaFilmFestival.com
answer
The question that must be answered to determine how to handle the workers for payroll and tax purposes is, "Are your remote interns employees or independent contractors?" To answer this question you normally must look at each remote intern's situation individually and make a determination for each worker.
The rules for determining whether a remote intern is an employee or an independent contractor are the same as for other workers. At the heart of the matter is the degree of control you have over the worker.
Generally, the worker is an independent contractor when you only have the right to control the result of the work and not the means and methods of accomplishing the result. There are numerous factors to consider and it is possible that some factors indicate employee status while others indicate independent contractor status. The factors are weighed for relevance and importance on a case-by-case basis with no set formula.
Further guidance can be found in IRS Publication 15-A, Employer's Supplemental Tax Guide, www.irs.gov/pub/irs-pdf/p15a.pdf. Also, a completed IRS Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding, www.irs.gov/pub/irs-pdf/fss8.pdf, can be filed to ask the IRS to decide for you.
However, it can take at least six months to receive a determination from the IRS, making this approach impractical for some. Lastly, you may wish to review your specific situation with a CPA who is familiar with the rules to help you make a determination and advise you accordingly.
About the author
Steven E. Warren, CPA, MBT,
is director of taxation at Lehrman, Flom & Co., P.L.L.P, and adjunct professor at Opus College of Business at the University of St. Thomas
