Rock the 2025 FPC Exam – Master Payroll Fundamentals with Confidence!

The appropriate test used to classify workers as independent contractors according to IRS rulings is the Common Law Test. This test establishes whether a worker is classified as an employee or an independent contractor based on the degree of control the employer has over the worker. It focuses on the relationship between the worker and the business, analyzing factors such as how much control the employer has over the worker's work, whether the worker has a significant investment in their tools, and the degree of independence the worker maintains in their job.

The Common Law Test examines multiple areas, including behavioral control, financial control, and the relationship of the parties. This comprehensive approach helps determine if individuals are truly independent contractors or if they should be considered employees, which carries different tax and legal implications.

In contrast, the other choices represent different concepts or tests that don’t apply to the classification of independent contractors under IRS guidelines. For instance, while the Reasonable Basis Test is related to reasonable beliefs concerning the worker's status based on past treatment, it does not specifically dictate a classification standard. The Applicable Law Test and Substantial Authority Test are also not recognized as tests for determining independent contractor status according to IRS rulings.