Guidelines from Guru

The US website has just published some legal advice for clients hiring freelancers. In an article entitled Hiring independent contractors without getting into trouble with the IRS, lawyer Stephen Fishman offers guidance as to what clients need to do to avoid the consequences of the IRS viewing freelancers as employees.

The Guru site is used by freelancers from all sectors and touts itself as "the Web's premier exchange for connecting independent professionals with contract projects." The article is a step by step guide for clients and includes an assessment of how the IRS classifies freelancers and/or disguised employees. Of course it mentions the ubiquitous Microsoft case and the claim made by freelancers to participate in the share option scheme.

The advice comes years after the 1980s introduction of the US equivalent of IR35. Clearly uncertainty still exists. When the US regulations were introduced, reportedly only 15% of contractors held onto their independent company status. Thanks to the action taken by PCG and others, UK contractors seem to be faring much better, with the Inland Revenue quoting recently that 50% of the contracts they have assessed are outside the new regulations.

What is required now is to get a few more clients educated about the effects of IR35 – and the risks they face, so that genuine businesses can survive and reduce the threat of uncertainty.

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Mark Roderick