TheTax and Regulatory Compliancetopic in the APS Certification Program covers IRS guidelines for determining independent contractor status, critical for 1099 reporting and avoiding worker misclassification. The IRS uses three categories:Behavioral Control(degree of controlover work results),Financial Control(control over finances, e.g., payment terms, investment in tools), andType of Relationship(contract terms, permanency). Thejob titleassigned is not a factor, as status depends on actual work arrangements, not labels.
Option A (The degree of control the employer exercises over the worker’s work results): Part of Behavioral Control, assessing how much the employer directs the worker’s tasks. This is a valid category.
Option B (The amount of control the employer has over the worker’s finances): Part of Financial Control, evaluating payment methods, expense reimbursement, and worker investment. This is a valid category.
Option C (The job title assigned to the worker): Not a factor. The IRS focuses on the nature of the work relationship, not the title (e.g., “contractor” vs. “employee”). Correct answer.
Option D (The type of relationship established between the parties): Part of Type of Relationship, considering contracts, benefits, and permanency. This is a valid category.
Reference to IOFM APS Documents: The APS e-textbook underTax and Regulatory Compliancestates, “IRS independent contractor status is determined by Behavioral Control, Financial Control, and Type of Relationship, not by job titles, which are irrelevant to actual work arrangements.” The training video explains, “Job titles don’t determine contractor status; the IRS looks at control and relationship factors.”
