Contract Law

[[ This material has been plagiarized directly from a webpage of the US Treasury. However, since this material was published by a government entity, this is a legal plagiarization. Totally uncreative cheesy cut-and-paste, but legal. ]] Corporations | International Businesses | Partnerships | Small Business/Self-Employed

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It is critical that you, the employer, correctly determine whether the individuals providing services are employees or independent contractors. Generally, you must withhold income taxes, withhold and pay Social Security and Medicare taxes, and pay unemployment tax on wages paid to an employee. You do not generally have to withhold or pay any taxes on payments to independent contractors. If you are an independent contractor and hire or subcontract work to others, you will want to review the information in this section to determine whether individuals you hire are independent contractors (subcontractors) or employees. Before you can determine how to treat payments you make for services, you must first know the business relationship that exists between you and the person performing the services. The person performing the services may be - * An independent contractor * An employee (common-law employee) * A statutory employee * A statutory nonemployee In determining whether the person providing service is an employee or an independent contractor, all information that provides evidence of the degree of control and independence must be considered. Common Law Rules Facts that provide evidence of the degree of control and independence fall into three categories: # Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job? # Financial: Are the business aspects of the worker's job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.) # Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business? Businesses must weigh all these factors when determining whether a worker is an employee or independent contractor. Some factors may indicate that the worker is an employee, while other factors indicate that the worker is an independent contractor. There is no "magic" or set number of factors that "makes" the worker an employee or an independent contractor, and no one factor stands alone in making this determination. Also, factors which are relevant in one situation may not be relevant in another. The keys are to look at the entire relationship, consider the degree or extent of the right to direct and control, and finally, to document each of the factors used in coming up with the determination. Form SS-8 If, after reviewing the three categories of evidence, it is still unclear whether a worker is an employee or an independent contractor, Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding (PDF) can be filed with the IRS. The form may be filed by either the business or the worker. The IRS will review the facts and circumstances and officially determine the worker's status. Be aware that it can take at least six months to get a determination, but a business that continually hires the same types of workers to perform particular services may want to consider filing the Form SS-8 (PDF). Employment Tax Obligations Once a determination is made (whether by the business or by the IRS), the next step is filing the appropriate forms and paying the associated taxes. * Forms and associated taxes for independent contractors * Forms and associated taxes for employees Misclassification of EmployeesConsequences of Treating an Employee as an Independent Contractor

If you classify an employee as an independent contractor and you have no reasonable basis for doing so, you may be held liable for employment taxes for that worker (the relief provisions, discussed below, will not apply). See Internal Revenue Code section 3509 for more information. Relief Provisions

If you have a reasonable basis for not treating a worker as an employee, you may be relieved from having to pay employment taxes for that worker. To get this relief, you must file all required federal information returns on a basis consistent with your treatment of the worker. You (or your predecessor) must not have treated any worker holding a substantially similar position as an employee for any periods beginning after 1977. See Publication 1976, Section 530 Employment Tax Relief Requirements (PDF) for more information. Misclassified Workers Can File Social Security Tax Form

Workers who believe they have been improperly classified as independent contractors by an employer can use Form 8919, Uncollected Social Security and Medicare Tax on Wages to figure and report the employee's share of uncollected Social Security and Medicare taxes due on their compensation. See the full article Misclassified Workers to File New Social Security Tax Form for more information. References/Related Topics * Worker Classification Webcast

A critical issue for all businesses is properly classifying workers as employees or independent contractors. The IRS's archived Tax Talk Today Webcast, "What's Hot in Employment Taxes: Independent Contractor or Employee?," focuses exclusively on worker classification issues. * IRS Internal Training: Employee/Independent Contractor (PDF)

This manual provides you with the tools to make correct determinations of worker classifications. It discusses facts that may indicate the existence of an independent contractor or an employer-employee relationship. This training manual is a guide and is not legally binding. * Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding (PDF) * Publication 15-A, The Employer's Supplemental Tax Guide (PDF) has detailed guidance including information for specific industries. * Publication 15-B, The Employer's Tax Guide to Fringe Benefits supplements Circular E (Pub. 15), Employer's Tax Guide, and Publication 15-A, Employer's Supplemental Tax Guide. It contains specialized and detailed information on the employment tax treatment of fringe benefits. * Businesses with Employees * Hiring Employees * Who Is Considered Self-Employed? Note: This page contains one or more references to the Internal Revenue Code (IRC), Treasury Regulations, court cases, or other official tax guidance. References to these legal authorities are included for the convenience of those who would like to read the technical reference material. To access the applicable IRC sections, Treasury Regulations, or other official tax guidance, visit the Tax Code, Regulations, and Official Guidance page. To access any Tax Court case opinions issued after September 24, 1995, visit the Opinions Search page of the United States Tax Court.

Page Last Reviewed or Updated: April 17, 2009

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Assumptions: * reliable channels messages are eventually delivered to their intended recipients, even in the face of router failure

Failure Detectors

- can do either by querying a process to see if it is still responding

- or, a local failure detector can report when a node has failed

- failure detectors can be unreliable/imperfect: they report a process is either suspect or unsuspected of failure. it works simply by sending a message to a process and waiting a timeout period to see if it responds. what is the right timeout value? (especially for an asynchronous system?) if a process respond, just set the timeout period to be the delay time experienced.

- a reliable failure detector reports either unsuspected or failure

Distributed mutual exclusion:multiple processes would like to enter a critical section, and we only want one of the distributed processes to be in a critical section at a given time.

Central server algorithm:processes wanting the enter their critical sections send a message to the server, and the server only gives the lock to one client process. it does not reply to other processes also wanting the enter the critical section until after the first client process is done with the lock. it then gives the lock to the next client process waiting for it. Ring based algorithm:arrange processes in a ring, and pass around a token; only a process with the token can enter the critical section. If a process wants to enter a critical section, it has to wait until it obtains the token. it holds onto the token until it is done executing the critical section. in the case that no process wants to enter a critical section, the token just keeps getting passed around the members of the ring.

Multicast algorithm:If a process wants to enter a critical section, it broadcasts an entry request, and every process is in the state RELEASED, HELD, or WANTED. If every other process responds RELEASED, a process can enter the critical section. If a process is currently in the HELD state (in its critical section), it should not respond until it changes to the RELEASED state.

Maekawa voting algorithm:don't need to get a RELEASED response from all other processes.... just need to get positive (RELEASED) votes back from a subset where the subsets used by any two processes overlap. Maekawa calculated the optimal size for the subsets.

Fault-tolerance:what is the impact of lost messages and process crashes to the algorithms above?

Election algorithms:designed to answer questions like �who should be the central server in the central server mutual exclusion algorithm above? Ring-based election:up to three rounds: round 1 every process send max(received pid, its own id) around the ring, round 2 process with highest pid gets his own pid back and elects himself, round 3 elected process id goes around the ring. if a process dies in the ring, the game is over Bully algorithm: (due to Hector) deals gracefully with failures. Three types of messages: election, answer, coordinator