Tax Court’s Checklist

By Jason Watson (Google+)

The Tax Court uses seven general factors that have been created over time through common law in conjunction with the IRS’s Tax Regulations.

1. Degree of control exercised by the principal over the details of the work
2. Which party invests in the facilities used in the work
3. The opportunity of the individual for profit and loss
4. Whether the principal has the right to discharge the individual
5. Whether the work is part of the principal’s regular business
6. The permanency of the relationship
7. The relationship the parties believe they are creating

The Tax Court references Weber v. Commissioner, 103 T.C. 378, 387 (1994) which was later affirmed by the 4th District Court in 60 F.3d 1104 (1995).

The degree of control is typically given the most weight, but the Tax Court ponders all the factors when making a determination.