Worker Classification & ABC Test Flashcards
7 cards from real CPM practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Worker Classification & ABC Test flashcards as text
Section 530 of the Revenue Act of 1978 provides employers relief from employment tax liabilities if they can demonstrate all of the following EXCEPT:
Answer: Signed independent contractor agreements with each worker
Section 530 relief requires reasonable basis, consistency, and timely information reporting, but does not require signed independent contractor agreements.
A payroll manager discovers that a worker classified as an independent contractor was actually performing work under direct supervision. Which form should the worker file to request IRS determination of their status?
Answer: Form SS-8
Form SS-8 (Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding) is filed to request an IRS ruling on worker classification.
Under the common law control test, which factor is given the GREATEST weight in determining worker classification?
Answer: Behavioral control over how the work is performed
Behavioral control—specifically the right to direct and control how the worker performs the job—is the primary factor under the common law control test.
A company treats 50 software developers as independent contractors but classifies 5 similar developers as employees. Under Section 530, this inconsistency would:
Answer: Disqualify the company from Section 530 relief
Section 530 requires consistent treatment of all workers in substantially similar positions; inconsistent treatment disqualifies the employer from safe harbor protection.
Which of the following is a 'reasonable basis' under Section 530 for treating workers as independent contractors?
Answer: A prior IRS audit that examined the classification and made no change
A prior IRS audit in which the same classification was examined and left unchanged constitutes a recognized reasonable basis for Section 530 purposes.
Under the ABC test, Prong C typically requires that the worker be:
Answer: Engaged in an independently established trade, occupation, or business
Prong C of the ABC test requires that the worker be customarily engaged in an independently established trade, occupation, profession, or business of the same nature as the work performed.
A payroll manager at a construction company must classify workers under a state that adopted the ABC test for unemployment insurance. A carpenter who works solely for one general contractor fails which prong most clearly?
Answer: Prong C — independently established business
A carpenter working exclusively for one contractor likely fails Prong C because they do not operate an independently established carpentry business serving multiple clients.