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Five Commonly Asked Questions About IRS Form SS-8

Over the years, I've had an increasing number of phone calls from company owners who have received in the mail a disturbing and unwelcome letter from an IRS SS-8 Unit, usually located in Holtsville, New York.

The letter contains a cover letter and also an IRS Form SS-8 Questionnaire entitled "Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding."

The IRS Form SS-8 is four pages loaded with over 50 tough questions about the independent contractor relationship in question. The Questionnaire has vague and complicated questions which companies simply don't know how to answer. A lot of the language is unusual, terms of art really only known to the IRS, some attorneys and other professionals who deal frequently in this legal area.

The IRS SS-8 Unit has the responsibility of handling complaints and requests from workers who are arguing that they have been improperly classified as independent contractors.

The SS-8 Unit sends a request to both the Company and the disgruntled worker asking each to fill out the IRS Form SS-8.

Below are the questions that I am commonly asked by callers:

1. Question: Is the activity as generated by the SS-8 Unit an actual "audit"?

Answer: No. Communications from the SS-8 Unit clearly state that their inquiry is not an IRS audit.

2. Question: Is there a way to appeal the decision that the SS-8 Unit ultimately issues?

Answer: No

3. Question: If the SS-8 Unit finds the worker was misclassified, does that always lead to a follow up audit by the IRS?

Answer: No, but it may.

4. Question: Can the Company submit additional documentation and attach it to the SS-8 form in order to prove that the worker at issue is in fact an independent contractor?

Answer: Yes, this is an excellent idea because it is more persuasive to look at actual documents than just to rely upon unsupported answers on the Questionnaire.

5. Question: How quickly does the SS-8 Unit respond to the questionnaires that are submitted?

Answer: It can take many months before the Decision arrives. It can even take a year or longer!

The written decision that the SS-8 Unit issues is merely an "opinion." It is not an official audit. The decision (whether it finds for or against independent contractor status) is of limited value to the IRS (and the parties) because it only relies upon the limited facts as offered by both parties.

Questions?: For further information or assistance on handling this complex issue and various strategy steps to take in the face of such an IRS request or any independent contractor questions or concerns, please contact Attorney Nancy Joerg at Wessels Sherman's St. Charles, Illinois office: 630-377-1554 or email her at [email protected].

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