TO:            Vice Presidents, Deans and Directors

FROM:       James A. Hefner, President

SUBJECT:   Classification of Employee and Contractor

DATE:        January 31, 2000

The Internal Revenue Service (IRS) requires the University to take the appropriate steps to ensure that persons who are not full time employees be classified according to the service(s) to be performed. These persons must be classified as either an employee or as an independent contractor in accordance with IRS Publication 15A (Employer’s Supplemental Tax Guide).

If the University classifies a person as an independent contractor and have no reasonable basis for doing so, IRS can hold the University liable for all applicable employment taxes for the person incorrectly classified. Should this occur, such taxes will be credited to the department account from which the action was initiated.

Agreements and contractors currently in the myTSU and have yet to be approved by me, will be returned if the status of the person selected to perform the service(s) is determined to have been inappropriately classified.

In this regard, extreme care should be taken to follow and adhere to IRS established guidelines and criteria when determining the proper classification of the person selected to perform the service(s). This will also prevent delay in processing.

If you have any questions concerning the classification of an employee versus a contractor, your attention is invited to the attached Extract IRS Publication 15A. You may wish to contact the Director of Human Resources at 963-5282 if the person is classified as an employee or the Director of Purchasing and Business Services at 963-5178 if the person is classified as a contractor, for further assistance and direction.

Please give this matter your immediate personal attention.

Please disseminate this information to all initiators of agreements and contractors within your area of responsibility.

Enclosure