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Payroll
Employee vs. Non-employee Status
Overview
Whenever hiring someone to perform a particular task or service, it is very important that the individual’s employment is properly classified as it relates to Texas Woman’s University. The Internal Revenue Service actively monitors businesses and organizations to enforce the appropriate compensation guidelines based on whether the individual is an employee or independent contractor. For tax purposes, the withholding amount and reporting requirements are very different based upon classification. As a result, if the IRS audited the University’s records and determined that certain individuals should have been classified as “employees” and yet, the University had paid them as “non employees” (independent contractors) through a purchase order, TWU could be liable for taxes plus penalties and interest.
Procedure
To determine the appropriate classification of an individual, the
Requisition for Individual Services should be completed prior to creating a requisition for payment. After completing the questionnaire, forward it to the Purchasing Department. If you have any questions about how to complete the form, contact the Payroll Manager at ext. 3561.
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