Which of the following statements regarding the classification of real estate agents is FALSE according to IRS rules?

Which of the following statements regarding the classification of real estate agents is FALSE according to IRS rules?

• A. The brokerage may require an independent contractor to have a cell phone.
• B. An agent must be licensed to act as an independent contractor.
• C. A written contract is necessary for independent contractor status.
• D. Independent contractors can determine their own work hours.

Answer: (A)

The statement is considered false because, according to IRS rules, while a brokerage may recommend or suggest that an independent contractor have a cell phone for business purposes, it cannot impose such a requirement in a manner that controls the contractor's work environment or methods. The essence of an independent contractor relationship is the degree of independence in how they manage their work. Mandating that an independent contractor have specific tools or equipment, like a cell phone, could undermine their classification as an independent entity since it can imply a level of control typically associated with an employee relationship. The other statements reflect the IRS's criteria for classifying workers correctly. An agent must be licensed to operate in the real estate industry legally, reflecting professionalism and adherence to regulatory standards. Additionally, having a written contract is essential for establishing independent contractor status, as it clarifies the terms of the working relationship. Lastly, independent contractors typically enjoy the freedom to set their work hours, further distinguishing them from employees who have set schedules dictated by their employer.

The statement is considered false because, according to IRS rules, while a brokerage may recommend or suggest that an independent contractor have a cell phone for business purposes, it cannot impose such a requirement in a manner that controls the contractor's work environment or methods. The essence of an independent contractor relationship is the degree of independence in how they manage their work. Mandating that an independent contractor have specific tools or equipment, like a cell phone, could undermine their classification as an independent entity since it can imply a level of control typically associated with an employee relationship.

The other statements reflect the IRS's criteria for classifying workers correctly. An agent must be licensed to operate in the real estate industry legally, reflecting professionalism and adherence to regulatory standards. Additionally, having a written contract is essential for establishing independent contractor status, as it clarifies the terms of the working relationship. Lastly, independent contractors typically enjoy the freedom to set their work hours, further distinguishing them from employees who have set schedules dictated by their employer.