Surprisingly, many of the withholding rules that every employer must comply with are contained in old statutes — at least old by tax standards. In recent years, a few of the relevant Internal Revenue Service (IRS) forms have been revised, but not much has changed at the conceptual level. Do you understand the withholding issues as they apply to your HVACR business?

Naturally, the term “employee” must be distinguished from an “independent contractor” for purposes of employment tax obligations. An employer is not required to withhold taxes on payments made to independent contractors. A common law definition of “employee” focuses on the control that is or isn't exercised over what is done and how it is done. The IRS also uses a 20-factor test to assist in making the determination of whether a worker is an employee or an independent contractor.