Audit Defense Log: How ReliefBooks Protects Your Independent Contractor Status
The IRS classifies workers based on behavior, financial, and relationship tests. ReliefBooks' Audit Defense Log captures proof on every shift so you're always prepared if the IRS asks questions.
Here's a scenario that keeps relief vets up at night: the IRS sends a letter asking you to prove you're an independent contractor, not an employee. You have 30 days to respond.
Can you prove it?
Most relief vets are legitimate independent contractors. But being one and being able to prove it are two different things. The Audit Defense Log was built to close that gap.
Why Misclassification Is a Real Risk
Worker misclassification isn't an abstract tax concept — it's an active enforcement priority. When the IRS reclassifies a contractor as an employee, the consequences hit hard:
Back taxes: You may owe the employer's share of FICA taxes that should have been withheld
Penalties: Failure-to-file and failure-to-pay penalties can add 25%+ to the bill
Interest: The IRS charges interest from the date taxes were originally due
Lost deductions: Employees can't deduct business expenses on Schedule C
A reclassification for just one year of relief work can result in a five-figure tax bill.
What Evidence the IRS Looks For
The IRS evaluates your contractor status using three categories of evidence. Here's what they examine and what the right answers look like for relief vets:
Behavioral Control
The IRS asks: "Does the company control or have the right to control what the worker does and how the worker does their job?"
Strong contractor evidence:
You make independent clinical decisions
You set your own protocols and treatment plans
You choose your own methods and techniques
Nobody tells you when to take breaks
You're not required to attend staff meetings or training
Financial Control
The IRS asks: "Does the company control the business aspects of the worker's job?"
Strong contractor evidence:
You use your own equipment (stethoscope, instruments, scrubs)
You have unreimbursed business expenses
You can profit or lose money on a shift (e.g., a long drive to a low-paying shift = loss)
You set or negotiate your own rates
You're free to work for competing clinics and agencies simultaneously
Type of Relationship
The IRS asks: "How do the worker and company perceive their relationship?"
Strong contractor evidence:
You have a written independent contractor agreement
The relationship is project-based (per shift), not permanent
You don't receive benefits (health insurance, retirement, paid time off)
You can hire your own assistants or substitutes
Either party can terminate without penalty
The Problem: Evidence Fades
Even if every shift you work checks all the contractor boxes, that evidence evaporates if you don't capture it:
Six months later, can you prove you used your own stethoscope on a specific Tuesday in March?
Can you show that you set your own schedule for that week?
Do you have documentation that you were simultaneously available to work for other clients?
Memory isn't evidence. Contemporaneous records are.
How the Audit Defense Log Works
The Audit Defense Log is a lightweight checklist that runs on every shift in ReliefBooks. After each work day, you spend 30 seconds confirming a handful of behavioral and financial factors:
Behavioral factors:
"I made independent clinical decisions"
"I determined my own treatment protocols"
"I set my own work schedule for this shift"
"I was not required to attend company meetings"
Financial factors:
"I used my own equipment"
"I had unreimbursed business expenses"
"I was available to work for other clients"
"I negotiated or set my own rate"
Each confirmation is timestamped and linked to the specific shift, clinic, and payer. Over the course of a year, you build a comprehensive, shift-by-shift record of your independent contractor behavior.
The Income Diversity Speedometer
The Audit Defense Log handles the behavioral and relationship tests. But one of the strongest signals the IRS uses is financial dependence — and that requires a different tool.
The Income Diversity Speedometer is a real-time visualization of your income sources. It monitors what percentage of your revenue comes from each agency and clinic, and it raises alerts at critical thresholds:
Green zone (below 40%): Healthy diversification across multiple payers
Yellow zone (40-60%): Getting concentrated — consider diversifying
Red zone (above 60%): Danger — high risk of "economic dependence" argument
The IRS has no official percentage cutoff, but court cases have shown that earning 70-80% of income from a single source is a strong indicator of an employment relationship. The Speedometer helps you stay well clear of those levels.
What Happens During an Audit
If the IRS questions your contractor status, here's how the Audit Defense Log helps:
Step 1: The IRS sends an inquiry. This could be Form SS-8 (Determination of Worker Status) or a broader audit notice.
Step 2: You export your defense report. ReliefBooks generates a comprehensive PDF showing:
A summary of all shifts for the tax year in question
Behavioral factor confirmations per shift
Financial factor confirmations per shift
Income diversity breakdown by payer
Copies of your independent contractor agreements
Your business expense summary
Step 3: Your CPA or tax attorney reviews the report. The structured format makes it easy for your tax professional to build a response. Instead of scrambling to reconstruct evidence from memory, you have a shift-by-shift record.
Step 4: Submit your response. The organized, contemporaneous documentation significantly strengthens your position.
Getting Started
The Audit Defense Log is built into every ReliefBooks account. There's nothing to configure or set up. After each shift, you'll see a brief checklist on your shift summary screen. Tap the applicable factors, and the record is saved.
It takes 30 seconds per shift to protect yourself from a potential five-figure tax liability. That's the kind of math we like.
The Income Diversity Speedometer updates automatically as you log shifts and receive payments. Check it monthly — if you see the needle drifting toward yellow, it's time to pick up shifts with new clients.
Your contractor status is the foundation of your relief career. The Audit Defense Log makes sure that foundation is rock solid.
Kal Saad