Instructions For Form De 542 - Completing The Report Of Independent Contractor(S) (Page 2 of 4) in pdf

FREQUENTLY ASKED QUESTIONS AND ANSWERS ABOUT THE

CALIFORNIA INDEPENDENT CONTRACTOR REPORTING LAW

(California Unemployment Insurance Code Section 1088.8)

Q1.

Who has to report?

A1.

Any business or government entity (defined as a “service-recipient”) that is required to file a federal Form 1099-MISC for

services performed by an independent contractor (defined as a “service-provider”) must report.

Q2.

Who is a service-recipient?

A2.

A service-recipient is any business or government entity that is required to file a federal Form 1099-MISC for services

performed by an independent contractor. A service-recipient means any individual, person, corporation, association, or

partnership, or agent thereof, doing business in this State, deriving trade or business income from sources within this State,

or in any manner in the course of trade or business subject to the laws of this State. A service-recipient also includes the

State of California or any political subdivision thereof, including the Regents of the University of California, any charter city,

or any political body not a subdivision or agency of the State, and any person, employee, department, or agent.

Q3.

Who is a service-provider?

A3.

A service-provider is defined as an independent contractor; an independent contractor is any individual or sole proprietor

who is not an employee of the service-recipient for California purposes and who receives compensation or executes a

contract for services performed in or outside California.

Q4.

What information do I report?

A4.

You are required to provide the following information.

Business or government entity’s (service-recipient):

Independent contractor’s (service-provider):

Federal employer identification number or

First name, middle initial, and last name

social security number

Social security number

California employer account number (if applicable)

Address

Business name, address, and telephone number

Start date of contract (if no contract, date

payments equal $600 or more)

Amount of contract, including cents (if applicable)

Contract expiration date (if applicable)

Ongoing contract (check box if applicable)

Q5.

When do I have to report?

A5.

As of January 1, 2001, you must report information to EDD within twenty (20) days of either making payments totaling

$600 or more or entering into a contract for $600 or more with an independent contractor in any calendar year, whichever

is earlier. Report each independent contractor once each year.

Q6.

What do I do if it is difficult to determine when the contract with equal or exceed $600 or if there is no set contract amount?

A6.

If you are unable to determine when total payments made equal or exceed $600, you may estimate the dollar amount of

the contract and check the box on the DE 542 that indicates “ongoing.” If there is no set contract amount, you may report

when the aggregate payments in a calendar year equal or exceed $600 and check the “ongoing” box.

Q7.

If the cost of parts and materials is included in the contract or payments, is this cost included in determining if the $600

threshold has been met?

A7.

Yes. If either the contract amount or amount paid includes the cost of parts or materials, that cost is to be included in

determining whether the service-provider has been paid $600 or more.

Q8.

How do I report?

A8.

Report independent contractors on the Report of Independent Contractor(s) (DE 542). If you are hiring a large number of

independent contractors, you are encouraged to send the information via magnetic media. If you report on magnetic

media, you do not need to send a DE 542. For details, contact the Magnetic Media Unit at (916) 651-6945.

Q9.

How do I obtain the Report of Independent Contractor(s) (DE 542) and/or whom do I contact if I have questions?

A9.

For assistance or to order forms, please call our hotline number (916) 657-0529, Monday through Friday from

8 a.m. to 5 p.m. (PT). You may also call our toll-free number 1-888-745-3886, visit your local Employment Tax

Customer Service Office, order forms on-line at , or download them at

DE 542FAQ Rev. 2 (8-03) (INTERNET)

Page 1 of 3

Instructions For Form De 542 - Completing The Report Of Independent Contractor(S) Page 2

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