The most terrifying words in the English language are: I'm from the government and I'm here to help. – Ronald Reagan
Thewants to make sure you "fulfill (your) federal tax responsibilities." The IRS's website is a great source of information designed to help you pay your taxes.
One of the resources on the website is a listing of small business workshops, phone forums, and webinars sponsored by IRS partners. For example, on March 12, 2008, starting at 10:00 a.m. ET, the Philadelphia Small Business Association in conjunction with the IRS will hold a webinar entitled, "Worker Classification: Employee vs. Independent Contractor," designed to:
avoid common errors and determine if a worker is an employee or independent contractor and what are the withholding and reporting requirements.
For many online professionals, and those that rely on contractors, the distinction between an employee and contractor is important to understand and has substantial tax consequences for the contractor and the party retaining the contractor. Chris Freeburn, writing for the Bank of America website, posted an excellent summary of the distinction between an employee and contractor. Importantly, Freeburn points out that a small business owner can have the IRS make the determination by filing form SS-8 with the IRS.