I am not an accountant or lawyer. FWIW:

As others have mentioned, the IRS has some fuzzy rules about the line between employee and "outside contractor". I do my own taxes and from what I've read, I believe the problem arises when your income comes primarily from one client, you work a significant amount of time for that client (e.g. over half-time), and/or the client provides you with space and/or tools for providing the service. In such cases the IRS may view the title "consultant" or "contractor" as a dodge for the employer to avoid paying benefits (e.g. medicare, FICA and unemployment) and to avoid doing income tax withholding. As I recall the "rules" are subject to considerable interpretation, but there are guidelines based on case law in various tax books. (Lasser's book used to include some, but I haven't used it in some time.) I used to do quite a bit of contract work for a university and they were always concerned about tracking this issue. You might want to ask your tax accountant for advice.

...Jim Hansen


>Hi all -
>
>A client of mine just mentioned that her legal department told her there were some issues/requirements dealing with consultants that have been working under contract for more than 3 years. Any HR-types (or others) out there know anything about this? I've never heard this?
>
>Thanks.!