I’m a Classical Conversations Director and I have a local CPA. I have a question about independent contractor status for tutors. The articles I read here seem to suggest we should treat tutors as employees. Yet, for several years I worked as a tutor for national online tutoring company as an independent contractor. I was given training, direct oversight, evaluations, worked for 5-10 hours a week, yet I was an independent contractor.
What is the difference with CC tutors in the eyes of the IRS? Just trying to understand!
Thank you for contacting me.
You seem to assume that your worker classification as an Independent Contractor as a tutor for a national online tutoring company was the correct classification. I’m not convinced it was.
You only told me four bits of information about your relationship with the online tutoring company (I was given training, direct oversight, evaluations, worked for 5-10 hours a week), yet three of those practices (training, evaluations, and oversight) would confirm your status should have been as an employee, not an Independent Contractor.
When I make a worker determination, I do not base my conclusions on what other companies have done or are doing. I base my conclusions on the IRS guidelines, tax court cases, IRS rulings, and the facts and circumstances of each case.
You asked, “What is the difference with CC tutors in the eyes of the IRS?” There may not be many differences in the online tutoring and tutoring for CC, but I don’t assume that you were correctly treated as an IC when you did the online tutoring.
Classical Conversations offers an ebook I wrote, Taxes for Licensed Classical Conversations Directors, where I explain the options to CC Directors in how to pay tutors. You can treat your tutors as Independent Contractors and in the ebook I explain the risks and consequences involved.
You might show portions of the ebook to your local CPA and get his/her opinion. If he or she determines your tutors are Independent Contractors, then you should request that your CPA put his/her conclusion in writing and on firm letterhead. A letter like that could possibly help you avoid IRS penalties if you are ever investigated by the IRS. But let’s hope you never need it!
If you have more questions, I would be happy to arrange a phone consultation with you. We can discuss a lot of topics in an hour, but in particular your questions about paying your tutors.
Carol Topp, CPA