Resources & Forms
Tax Compliance Forms & Resources
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Worker Classification (FS06)
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What's the difference between an employee and independent contractor?
IRS Definitions
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Employee: anyone who performs services for you is your employee if you can control what will be done and how it will be done. This is so even when you give the employee freedom of action. What matters is that you have the right to control the details of how the services are performed.
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Independent contractor: an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done.
The IRS guidance states that when evaluating an employer’s relationship with an individual, consider the facts that fall into 3 categories:
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Behavioral Control – if the university has the right to direct and control what & how work is done through instructions, training, etc.
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Financial Control – if the university has a right to direct or control the financial and business aspects of the individual’s job.
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Relationship of the Parties – the type of relationship between the employer and individual
In addition to the IRS guidance, the state of Texas provides guidance and resources for making this determination.
The Texas Workforce Commission (TWC) requires employers to use the IRS 20-Factor test to determine whether an individual should be classified as an employee or independent contractor.
For your convenience, TWC’s guidance is embedded in this interactive worksheet.
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Why does it matter?
The following factors are impacted by classification:
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Health insurance coverage
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Retirement benefits
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Workers’ compensation
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Unemployment
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Wage & hour
These employer actions are considered ‘red flags’ and can trigger an audit of an independent contractor’s status:
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Using terms such as “1099 employees” or “contract labor”
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Having contractors wear company-branded name badges or uniforms
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Giving contractors a company email address or cc’ing them on company emails
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Inviting contractors to company parties and other events using the same invitation that goes to regular employees
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Giving contractors company benefits or wage advances
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Having contractors sign company policy handbooks
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Having contractors sign non-competition agreements
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What do I need to do?
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Prior to contracting with an individual to engage in work on behalf of TXST, make sure you gather sufficient information from the requestor before proceeding.
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Complete the Employee vs. Independent Contractor Determination form (TXST form #FS-06) and submit to Purchasing.
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Each contract or PO that contains a request to pay an individual will be reviewed to ensure compliance.
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If you have questions, contact Human Resources, Payroll, or Procurement.
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IRS Video - Worker Classification
This link to the IRS Videos discuss the definition of an employee and how to determine whether a worker is an employee or independent contractor.
https://www.irsvideos.gov/Business/Resources/WorkerClassification
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in Learning: Hiring Contract Employees
in Learning: Hiring Contract Employees
https://www.linkedin.com/learning/hiring-contract-employees/welcome?u=51086649
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Other sources:
Independent Contractor (Self-Employed) or Employee? | Internal Revenue Service (irs.gov)
https://www.irs.gov/taxtopics/tc762
Publication 1779 (Rev. 3-2012) (irs.gov)
Classifying Employees & Independent Contractors | Texas Workforce Commission
Form C-8: Employment Status - A Comparative Approach (texas.gov)
https://thecompanylawyer.com/employee-vs-independent-contractor/
https://www.depts.ttu.edu/payroll/tax-compliance/tax-manual/documents/employee-vs-ic.pdf
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COVID-19 Federal and State Reporting
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Instructions to Report COVID-19 Work Hours
INSTRUCTIONS TO REPORT COVID19 WORK HOURS
The Office of Financial Services is reaching out to you for assistance with identifying and reporting COVID-19 costs. This will provide TxST the best support for eligibility of any related funding for COVID-19 to include federal, state, local and private funding that might be available because of the national emergency declaration.
Additionally, we will be able to assess the full financial impact of COVID-19 disaster and comply with regulatory reporting requirements.
Follow the COVID-19 Related Reporting Instructions and submit your COVID19 Emergency Work Hours on the SAP Reporting Tool no later than Monday, June 8, 2020. Thereafter departments should submit updated responses by the last working day of every month.
Please submit your responses no later than Monday, June 8, 2020. Thereafter departments should submit updated responses by the last working day of every month.
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SAP Portal COVID-19 Work Hours
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FEMA Definition of Emergency Work
Emergency Work (Categories A-B): Work that must be performed to reduce or eliminate an immediate threat to life, protect public health and safety, and to protect improved property that is significantly threatened due to disasters or emergencies declared by the President
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IRS Forms
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Form SS-4
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Form W-7
An ITIN is a 9-digit number issued by the U.S. Internal Revenue Service (IRS) to individuals who are required for U.S. federal tax purposes to have a U.S. taxpayer identification number but who do not have and are not eligible to get a social security number (SSN).
Use this form to get or renew an individual taxpayer identification number (ITIN) for federal tax purposes if you are not eligible for a social security number.
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Form W-8BEN
Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting (Individuals).
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Form W-BEN-E
Certificate of Status of Beneficial Owner for United States Tax Withholding and Reporting (Entities).
Form W-8 BEN-E is used by foreign entities to document their status for purposes of chapter 3 and chapter 4, as well as other code provisions.
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Form 8233
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Texas Comptroller Forms
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Sales by Exempt and Other Nonprofit Organizations
The exemption from sales tax is for items an organization buys, not for the items it sells. Exempt organizations and other nonprofit organizations must get a sales tax permit and collect and remit sales tax on all taxable items they sell, unless an exemption or exception applies.
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Sales and Use Tax Chart
When you calculate the sales tax by multiplying the tax rate by the sales price, calculate the tax to the third decimal place. If the third decimal place is equal to or greater than five, round up to the next cent. If the third decimal place is four or less, round down to the next cent.
EXAMPLE: You sell a taxable item for $250 and must charge 8.25 percent tax. The tax rate multiplied by the sales price equals $20.625. Because the third decimal place is a five, round up and charge $20.63. You can also use a rate chart.
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Purchases - Tax Exemption Chart
Use this chart to determine which tax exemptions may apply to your organization. Remember that while federal and Texas state and local government entities are automatically exempt from the taxes indicated in the chart, nonprofit organizations must apply with the Comptroller’s office and receive exempt status.
Texas public schools, colleges and universities have a dual exemption as both educational organizations and as government entities.
Purchases must relate to the nonprofit’s exempt purpose. Employees and volunteers cannot buy personal items tax free, even if traveling on official business or if reimbursed by the nonprofit organization.
Beer, wine and liquor purchases do not usually qualify for exemption because they are not part of the nonprofit’s exempt purpose. An exempt religious organization can claim an exemption when it buys sacramental wine.
Organization Sales Tax State Hotel Tax Local Hotel Tax Motor Vehicle Tax Charitable Yes Yes No No Educational – Public College/University Yes Texas schools only No Texas schools only Federal Tax Exemption 501(c)(3), (4), (8), (10) or (19) Yes No No No Texas State and Local Government Agency Yes No No Yes
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How to Claim Tax Exemption - Sales Tax and Hotel Tax
Sales Tax
If a nonprofit organization has qualified for sales tax exemption with the Comptroller’s office, it can claim a sales tax exemption when it buys a taxable item by giving the seller a properly completed Form 01-339, Texas Sales and Use Tax Exemption Certification (exemption certificate) (PDF).
An authorized agent can buy items tax free by giving the seller a properly completed exemption certificate in the exempt nonprofit organization’s name. An “authorized agent” is a person designated by the exempt organization to buy items on its behalf.
Sellers do not have to accept an exemption certificate. If a seller does not accept an exemption certificate, the exempt organization can ask the seller for a completed Assignment of Right to Refund (PDF) to request a refund directly from the Comptroller’s office.
Hotel Tax
If a nonprofit organization has qualified for hotel tax exemption with the Comptroller’s office, it must give the hotel a properly completed Form 12-302, Texas Hotel Occupancy Tax Exemption Certificate (PDF), and letter of hotel tax exemption from the Comptroller’s office at check-in. The exemption is only for the state hotel tax and not local hotel taxes. The Comptroller’s Tax-Exempt Entity Search lists nonprofits that are exempt from state hotel tax.
An employee traveling on official business for the exempt organization qualifies for the exemption. A representative claiming an exemption who is not an employee of the exempt organization must pay the hotel directly with the organization’s funds, such as an organization check, credit card or direct billing, to qualify for the exemption.
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Motor Vehicle Rental Tax Exemption Certificate
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TXST Tax Compliance Forms
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Sales Tax & Hotel Tax Exemption Certifications
Any authorized agent or employee of Texas State University who is purchasing an item necessary to Texas State's exempt functions should complete all blank sections of the Exemption Certificate, sign it, and provide it to the Texas vendor to ensure the purchase is tax free. Please be specific as possible when completing the "Description" area of the certificate. A copy of the completed Exemption Certificate should be maintained in your records.
Upon any questioning during a State audit, responsibility for explaining the purchases will fall upon the individual whose signature is presented at the bottom of the certificate.
TXST Sales Exemption Certification
TXST Sales Exemption Business Card
TXST Hotel Occupancy Tax Exemption Certificate
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Foreign Source Income Exclusion Statement
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Foreign National Information Form FS05
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Vehicle Control Sheet
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Courtesy Car Declaration Form
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Sales Tax Resources
