A worker filed Form SS-8 against your company: the 45-day letter, how Brookhaven decides, what the determination does and does not do, and the examination lead it creates

What the SS-8 program decides

"The SS-8 program issues determination letters to firms and workers on the proper classification of a worker for purposes of federal employment taxes and income tax withholding. An SS-8 technician applies the law to the facts and circumstances submitted with Form SS-8 ... to determine whether the worker is performing services as an employee or independent contractor" (IRM 7.50.1.1.1, Dec. 27, 2023). The program sits in SB/SE and "All SS-8 requests are processed by the Exam Field Support Operation located at the Brookhaven Campus." It is a determination program, not an examination: no return is audited and no tax is assessed by the SS-8 unit. The tax comes later, if at all, from the examination the determination can start.

Most requests come from workers who received a 1099-NEC and believe they should have had a W-2, often after a dispute over expenses, unemployment or Social Security credit. A firm can also file, usually to settle the status of a class of workers before it builds a 1099 program around them. Either way the other party is written to.

The clock, from the firm's side

On a worker's request, "Within five business days of receiving processable confirmation from SS-8 technician, prepare and mail Letter 5367, Notification to Firm, to the firm with a blank Form SS-8. Allow 45 days for the firm to complete and submit the Form SS-8" (IRM 7.50.1.5.15, Dec. 27, 2023). The worker is told to expect 180 days, with interim letters every 180 days after that while the case waits for a technician; cases are assigned "based on the earliest received date (first in, first out)." A firm's own request mirrors this: the firm gets Letter 3891-A, and the worker gets Letter 5367 and 45 days.

Letter 5367 is the firm's one invitation to put its facts in. The blank Form SS-8 asks the same questions the worker answered: who controls the work, who sets hours, who provides tools, whether the worker has other clients, how pay is set, whether there is a contract, what the firm's other workers in the same role are called. The firm's answers and attachments (the contract, invoices, evidence of the worker's own business) are what the technician weighs against the worker's.

What happens if you do not answer

"If there is no reply to Letter 5367 sent previously, then refer the received Form SS-8 as a streamline case for processing ... If a reply is received to the above Letter 5367, refer the received Form SS-8 as a full determination case" (IRM 7.50.1.5.15). The streamline criteria themselves are redacted in the published manual, but the structure is plain: a case with only the worker's form is decided on the worker's form. A firm that ignores Letter 5367 has not avoided a determination; it has conceded the facts.

The firm's reply is also what makes a determination possible when the worker's form is weak. The technician's required research on firms (Exhibit 7.50.1-7) is IRS account research; it does not include calling the firm's customers or reading its contracts unless they are sent in.

How the technician decides

"SS-8 technicians will use guidelines in IRM 4.23.5.7, Common Law Standard, to process a full determination case. SS-8 technicians will apply the common law standards, and rules for corporate officers and statutory employees, to determine whether the worker is an employee or an independent contractor," checking statutory non-employee status (direct sellers, licensed real estate agents) first (IRM 7.50.1.5.15.1, Dec. 27, 2023). The analysis is written on Form 14430, SS-8 Determination Analysis, which goes to both parties with the letter. The case notes must contain "Analysis of the three evidentiary areas" (behavioral control, financial control, relationship of the parties) and "Determination and support for the decision made."

Two fact patterns get special handling. A worker who received "both a Form W-2 and Form 1099-MISC or Form 1099-NEC" from the same firm is examined to decide whether the 1099 is a supplemental wage issue (a bonus or reimbursement that belonged on the W-2) rather than a classification question (IRM 7.50.1.5.6). And a three-party arrangement (a staffing firm, a PEO, a platform between the worker and the client) does not get a determination at all: "Determination letters will not be issued in three party arrangements," and the worker receives an information letter instead, Letter 5081 (appears to be an employee) or 5082 (appears to be a contractor), which "is advisory only and is not binding on the Service" and is not copied to either firm (IRM 7.50.1.5.10.1).

The determination letters

When the finding is employee, the technician also enters a code on the worker's account showing the SS-8 case is closed (TC 971 AC 074), which is what lets the worker file Form 8919 to pay only the employee share of Social Security and Medicare on the 1099 income. That filing is the usual practical consequence for the worker; the firm's consequence is below.

What the determination does, and does not do

Three limits matter for a payer. The determination is not an assessment: nothing is owed because of it, and the SS-8 unit cannot collect anything. It is not a section 530 decision: the firm may still be entitled to relief from the employment tax, as explained on section 530 and late 1099s, and the technician is told not to weigh it. And it is not final against an examiner: "Field examiners must follow the guidelines in IRM 4.23.18.5, Employment Tax Examination Determinations that Differ from SS-8 Determination Letters, if they disagree with the SS-8 determination" (IRM 7.50.1.8.5), so an examiner can reach a different answer with a procedure for doing so.

There is no appeal of a determination letter. The handbook provides for reconsideration (IRM 7.50.1.5.16), which is a request from either party with facts the technician did not have. The worker-side route to a court is the examination that follows and, if the firm disputes it, the Tax Court under IRC 7436 after a Letter 3523.

It gets published

"IRC 6110 requires determinations to be posted for a worker classification request be made available to the public. This is accomplished by posting the final determination to IRS.gov on the SS-8 Determinations of Worker Classification page" (IRM 7.50.1.5.15.2, Dec. 27, 2023). The posted document is Form 14430-A, a one-page redacted version of the analysis, with "the names, addresses, and other identifying details of the person to whom the written determination pertains" removed. Before posting, the requester (the worker, or the firm if it filed) gets Letter 441, Notice of Intention to Disclose, and 20 days to ask for more redaction; after 90 days, or sooner if the requester agrees, the page goes up. A firm that did not file the SS-8 is not sent the Letter 441. The occupation, the facts and the reasoning are public; the firm's name is not. The SS-8 determinations explorer indexes every posted document by industry, occupation, outcome and year.

When no determination is issued

The technician checks the firm's and worker's accounts for freeze codes before working the case. "If an open audit, Appeals, or Criminal Investigation involvement exists," the case is referred to that function and the SS-8 unit issues Letter 6491 rather than a determination, because the annual revenue procedure prohibits "issuing a formal determination when the worker classification issue is the subject of an open audit" (IRM 7.50.1.5.5, Dec. 27, 2023). A firm already under an employment tax examination, or in Appeals on the same class of workers, will not receive a determination from Brookhaven; the examiner or Appeals officer decides. Government employers go to the State Social Security Administrator instead.

Related cases: one determination covers the class

"When a worker submits Form SS-8 for an occupation for a specific firm, and the SS-8 program has already issued a determination letter with regard to that occupation for the firm, the SS-8 technician will compare the cases to determine whether the facts are the same (even if for different years)" (IRM 7.50.1.5.4.1, Dec. 27, 2023). If they are, the same answer goes out, to the new worker and to the firm again, as a related case. A firm with twenty drivers and one adverse determination should expect the next nineteen to be decided the same way on request. The reverse also holds: a contractor determination, once issued, is applied to the next request about the same role.

The examination lead

After the letters go out, the technician makes referrals to LB&I, TE/GE and the fraud coordinator where the criteria in Exhibit 7.50.1-11 are met, and documents fraud indicators from the handbook's checklist. For an SB/SE firm the referral is automatic in effect: the SS-8 database is visible to the function that selects employment tax examinations, and "Once the Form SS-8 is assigned for audit, the assigned examiner must contact the SS-8 technician who worked the Form SS-8 case to obtain copies of any pertinent documentation." Whatever the firm sent, or failed to send, in answer to Letter 5367 is the examiner's starting file. What that examination then looks like is on the backup withholding examination and the Classification Settlement Program.

What to do with Letter 5367

• Answer it, inside 45 days. Silence converts the case to the worker's version of the facts and leaves the same record for the examiner.
• Answer the form the IRS sent, fully. Form SS-8 is long because the common law test is long. Attach the contract, invoices, the worker's business registration or insurance, evidence of other clients, and the 1099s you filed.
• Say what the rest of the class looks like. The technician is deciding the occupation, not only the person. If other workers in the role are treated the same way and have been for years, say so; it is also the substantive consistency half of section 530.
• Check PMFOL first. The 1099s must have been filed on time for section 530 to be available later; see what the IRS sees about you on PMFOL.
• If the worker was on both a W-2 and a 1099, explain the 1099. A bonus or reimbursement on a 1099-NEC is a supplemental wage problem fixed with a W-2c, and it is the pattern the handbook singles out.
• If an examination is already open, say so. The SS-8 unit will not rule, and the examiner will decide.
• Keep the determination and the Form 14430. If the finding is employee, it is the fact pattern an examiner starts from and the time to assemble the section 530 file. If it is contractor, it is the best evidence of reasonable basis you will ever have for that role.

Questions people ask