Final answer:
The IRC's Right to Control test (option D) is used by companies to determine the employment status of individuals as either employees or independent contractors, considering who controls the work, the financial stakes, and the relationship between the worker and the company.
Step-by-step explanation:
Companies must use the Internal Revenue Code (IRC)'s Right to Control test to determine whether individuals are employees or independent contractors. This test involves several factors to assess the degree of control a company has over a worker. For instance, if a company has the right to direct and control the work performed by an individual, including details of how the work is done, that individual may be an employee. Conversely, if the individual has a high level of autonomy and freedom in how they complete their work, they might be considered an independent contractor.
Additional considerations in the Right to Control test include the financial control over the aspects of the job and the relationship between parties. Essentially, this test looks at who controls the work process, who has financial stakes in the job outcome, and how the parties perceive their interaction. This is crucial as it determines important tax implications for both the worker and the company.