Which condition is necessary for a salesperson to be considered an independent contractor under the Tax Equity and Fiscal Responsibility Act?

For a salesperson to be classified as an independent contractor under the Tax Equity and Fiscal Responsibility Act (TEFRA), it is essential that they sign a written contract that clearly states that they are not an employee. This written agreement helps establish the nature of the relationship between the salesperson and the broker, distinguishing them as independent contractors rather than employees.

This distinction is critical in determining tax obligations and liability for the broker and the salesperson. By evidencing that the salesperson operates independently, the contract aligns with TEFRA's definition and requirements for independent contractor status. Such a contractual relationship allows the salesperson to enjoy the tax benefits associated with independent contractor status, such as the ability to deduct certain business expenses.

The other conditions presented either do not meet the legal requirements for independent contractor classification or do not provide sufficient clarity on the employment relationship. Having a verbal agreement or not signing a contract does not provide the necessary documentation to support the independent contractor status. Working exclusively for one broker would generally suggest employee status, as independent contractors usually have the freedom to work for multiple clients or brokers.