Internal Revenue Manual update MT 5(10)00-2
The IRS has been concerned for a number of years with the problem of persons reporting their income taxes as self-employed when in fact they are more properly characterized as employees.
The IRS and General Accounting Office are conducting a joint study to determine whether 1099 forms (annual information returns issued to self-employed workers) may reveal workers more properly classified as employees. In particular, the IRS noted recently that the study of 1099 forms has revealed a "universe" of self-employed persons who received all of their business income (reported on Schedule C of Form 1040) from a single employer.
The IRS is in the process of determining whether such a relationship is an indication of a misclassification of employees as self-employed. This is a significant issue for clergy, many of whom continue to report their federal ...