SU # 58__Independent Contractor Agreements Flashcards
What is the main difference between an employee and an independent contractor?
The main difference between the two is an issue of control, as established by income tax laws.
What are the three common-law categories that determine the level of control an employer has?
Behavioral
Financial
Type of relationship
What are the conditions of the IRS safe harbor test?
The person must be a properly licensed real estate agent.
Gross income from all output must be based on production and not on hours worked.
A written agreement must exist between the independent contractor and the broker stating that the contractor will not be treated as an employee for income tax purposes.
What are three important questions to ask when negotiating a contract?
What are the start-up costs?
Who pays the expenses?
What is the commission schedule?
Which of the following must a broker legally provide to an employee?
Pension plan
Unemployment insurance
Health insurance
Sales commission
Unemployment insurance
What can a broker require of his independent contractors?
They must work at the office.
They must receive a salary.
They must attend weekly sales meetings.
They must sign a written agreement.
They must sign a written agreement.
Who established “safe harbor rules?”
IRS
MLS
IDFS
HUD
IRS
Which of the following must be included in an employment agreement?
Duty Assignment and Compensation
Management Structure and Benefits
Health Insurance and Expense Reporting
Travel Expenses and Sick Leave Policy
Duty Assignment and Compensation
In an IRS audit, which of the following situations would cause the IRS to think that a contractor might really be an employee?
The license attends sales meetings.
The licensee gets a commission.
The licensee takes unpaid sick days.
The licensee receives an hourly wage.
The licensee receives an hourly wage.
For an independent contractor, how is the issue of withholding tax dealt with by the managing broker?
Managing Broker withholds tax monies
Managing Broker pays all withholding tax monies
Managing Broker does not withhold tax monies
Managing Broker escrows all withholding tax monies
Managing Broker does not withhold tax monies
If a licensee joins a company as an independent contractor, which of these will he probably have to pay for on his own?
Contract Forms
For Sale signs
Listing Ads
Health insurance
Health insurance
Which of these statements about an independent contractor is true?
He or she gets a regular salary with bonuses.
He or she is reimbursed for all business expenses.
He or she is paid commission on all sales.
He or she will get three weeks of paid vacation every year.
He or she is paid commission on all sales.
In this type of program, an agent may start out at a lower percentage rate and then graduate to higher rate as his or her production increases.
Advancement payment plan
Step plan
Graduated payment plan
Progressive plan
Graduated payment plan
Which of these guidelines is not part of the IRS safe harbor test?
Income must be based on sales input.
There must be a written contract in place.
The contractor must be licensed as a real estate salesperson or broker.
Contractors must have access to workers compensation benefits.
Contractors must have access to workers compensation benefits.
