Information For Vendors

Terms and Conditions of Purchase Order

How to Sell to the Â鶹´«Ã½ ​

Independent Contractor

The IRS and the Alaska Department of Labor (DoL), require Independent Contractor Determinations for all service providers who are not incorporated.  The default position of the IRS and DoL is that all non-incorporated individuals providing service to the University should be classified as employees unless it is clear that the individual qualifies as an independent contract under all of the IRS common law factors.  These factors include:

  1. : Does the company control or have the right to control what the worker does and how the worker does his or her job?
  2. : Are the business aspects of the worker’s job controlled by the payer? (these include things like how the worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)
  3. : 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?

Non-incorporated service providers will be asked to complete Section A of the University’s Independent Contractor Status Determination Form.  This will allow the University to determine if the service provider can be classified as an independent contractor under IRS common law factors.  The department requesting services will complete Section B of the Independent Contractor Status Determination Form.  This will allow the University to determine if the services sought are eligible to be outsourced to an independent contractor.  Under IRS and DoL rules, many services which are currently, or have been previously, performed by University employees cannot be outsourced.  In addition, Independent Contractor Determinations may require review by Risk Management to assess the level of risk associated with the contractor's activities.  The risk manager may specify appropriate types and levels of insurance the contractor must have prior to providing service.

IRS Revenue Ruling 87-41 identifies 20 factors that should be considered as guidelines to determine the degree of control over the individual. Not every factor is applicable in every situation, and the degree of importance of each factor varies depending on the type of work and individual circumstances. However, all relevant factors are considered in making a determination, and no one factor is decisive. It does not matter that a written agreement may take a position with regard to any factors or state that certain factors do not apply, if the facts indicate otherwise.

  1. Instructions.  An employee must comply with instructions about when, where and how to work. Even if no instructions are given, the control factor is present if the employer has the right to control how the work results are achieved.
  2. Training.  An employee may be trained to perform services in a particular manner.  Independent contractors ordinarily use their own methods and receive no training from the purchasers of their services.
  3. Integration.  An employee's services are usually integrated into the business operations because the services are important to the success or continuation of the business. This shows that the employee is subject to direction and control.
  4. Services rendered personally. An employee renders services personally. This shows that the employer is interested in the methods as well as the results.
  5. Hiring, supervising and paying assistants. An employee works for an employer who hires, supervises, and pays workers. An independent contractor can hire, supervise, and pay assistants under a contract that requires him or her to provide materials and labor and to be responsible only for the result.
  6. Continuing relationship. An employee generally has a continuing relationship with an employer. A continuing relationship may exist even if work is performed at recurring although irregular intervals.
  7. Set hours of work.  An employee usually has set hours of work established by an employer. An independent contractor generally can set his or her own work hours.
  8. Full-time required.  An employee may be required to work or be available full-time. This indicates control by the employer. An independent contractor can work when and for whom he or she chooses.
  9. Work done on employer's premises.  An employee usually works on the premises of an employer, or works on a route or at a location designated by an employer.
  10. Order or sequence set.  An employee may be required to perform services in the order or sequence set by an employer. This shows that the employee is subject to direction and control.
  11. Oral or written reports.  An employee may be required to submit reports to an employer. This shows that the employer maintains a degree of control
  12. Payment by hour, week or month.  An employee is paid by the hour, week, or month. An independent contractor is usually paid by the job or on a straight commission.
  13. Payment of business and/or traveling expenses. An employee's business and travel expenses are generally paid by an employer. This shows that the employee is subject to regulation and control.
  14. Furnishing of tools and materials.  An employee is normally furnished significant tools, materials, and other equipment by an employer.
  15. Significant investment.  An independent contractor can make a significant investment in the facilities he or she uses in performing services for someone else.
  16. Realization of profit or loss.  An independent contractor can make a profit or suffer a loss.
  17. Works for more than one person or firm.  An independent contractor is generally free to provide his or her services to two or more unrelated persons or firms at the same time.
  18. Offers services to general public.  An independent contractor makes his or her services available to the general public.
  19. Right to fire.  An employee can be fired by an employer. An independent contractor cannot be fired as long as he or she produces a result that meets the specifications of the contract.
  20. Right to quit.  An employee can quit his or her job at any time without incurring liability. An independent contractor usually agrees to complete a specific job and is responsible for its satisfactory completion, or is legally obligated to make good for failure to complete it.

Tax Information

  • (PDF)

Where can I get more information?

Please visit or call the purchasing offices for more information. We are here to help. Contact information follows.

Â鶹´«Ã½
Procurement & Contract Services
2025 Yukon Drive, Suite 001
PO Box 757940, Fairbanks, Alaska 99775-7940

Fairbanks:
Phone:(907) 474-7315

Fax: (907) 474-7720

Email:  ua-PCS-main@alaska.edu

 

Â鶹´«Ã½ Southeast
Business Office
11120 Glacier Highway
Juneau, Alaska 99801
Phone:  (907) 796-6371
Fax: (907) 796-6469
Web: