CAN YOU HELP ME PREPARE A MEMO TO ANSWER THIS QUESTION?

Matt Olson, Kenley Jansen, Dansby Swanson and Austin Riley are the directors and founders of The University of the State of Arkansas (USA), a private, not-for-profit organization that offers online bachelors programs. All four have experience as welders. USA offers an online bachelors degree in applied science (BAS) in welding. Swanson regularly teaches the introductory course, WELD 101.

Directors are compensated at the rate of $250,000 per year plus direct expenses to attend meetings. All directors are properly treated as independent contractors.

The four founders rotate the leadership roles annually. Accordingly, Swanson was the chairperson of the board of directors in 2000, 2004, 2008, 2012, 2016, and 2020.

The directors provide broad oversight, but day-to-day operations of USA are managed by the corporate officers. Max Fried has led the position of Chancellor, roughly equivalent to CEO, since 20015. Officers are treated as employees.

Full-time faculty are also treated as employees. However, part-time faculty are treated as independent contractors. In 2020, Swanson received $5,000 in compensation for teaching WELD 101.

The IRS has instituted a payroll tax audit of USA for the years 2020 and 2021. The agents position is that all part-time faculty must be treated as employees, and that Swanson cannot both be an independent contractor and an employee for the same period. The agent proposes that all of Swansons compensation be treated as wages.

Fried wants you to let him know if the part-time faculty must be treated as employees. What additional information do you need to answer this question? More importantly, can Swanson be both an employee and an independent contractor in the same year?

Possible research aids: 3121(a), 3121(d)(1), 3401(a). Rev. Rul. 58-505, 1958-2 C.B. 728