CERTIFIED PAYROLL PROFESSIONAL (CPP) LATEST 2024 -
2025 FINAL EXAM/ COMPLETE 100 QUESTIONS WITH
DETAILED VERIFIED ANSWERS (100% CORRECT ANSWERS)
ALREADY GRADED A+
What are the three parts of the ABC test? - Correct Answer - 1. (Absence Control): Free
from control via agreement and in reality.
2. (Business- unusual and/or away): performed outside the usual course of company
business or away from employers’ facility
3. (Customarily independent contractor): independent trade, occupation or business
What is the ABC test used to determine? - Correct Answer - While many states use the
Common Law Test to determine an employee relationship, more than half use the ABC
Test. ABC test is used by many states to determine a worker's employment status under
state unemployment insurance laws to see if the employee is indeed an independent
contractor.
What is Form I-9 used for? - Correct Answer - It is used to verify that an individual has
the legal right to work in the US. The Immigration Reform and Control Act of 1986
makes it illegal for an employer to hire an unauthorized worker.
When a client company hires leased employees, who is responsible for withholding
and/or paying the FIT, SS, Med and FUTA taxes? - Correct Answer - Although the client
company may have the right to hire and fire the workers, set wage levels and supervise
their work, the workers are generally employees of the leasing company, which is
responsible for withholding FIT, FICA, as well as paying the employers share of FICA
and FUTA taxes because of the leasing company’s control over the payment of wages.
pg. 1
,What factors do the courts and the DOL consider when making an employment status
determination under the FLSA? - Correct Answer - 1. How much control the employer
has over how the work is performed
2. Whiter the worker has the chance to make a profit or risks a loss based on how
skillfully the work is performed
3. Whether the worker invests in tools or materials required to perform the work or hires
helpers
4. Whether the worker requires a special skill
5. How permanent the working relationship is
6. Whether the work performed is an integral part of the employer’s business operation
Why would many employers rather use workers who are not employees to perform
services for them? - Correct Answer - Employers would rather use workers who are not
employees to perform services for them because employers must withhold income and
employment taxes from employees’ wages and pay employment taxes with their own
funds. Employers also must pay federal and state unemployment taxes based on their
employees’ wages. If a worker is an employee, most companies have their own list of
benefits and other entitlements that are provided to employees but not to independent
contractors.
What does a SS card prove in terms of an employees work authorization status under
IRCA? - Correct Answer - A SS card that does not contain language saying that the
employment is not work-authorized is proof of an employee’s authorization to work in
the US but not proof of identity.
Which factors are considered not to be important by the IRS in making a worker
classification determination because of changes in the workplace over the years? -
Correct Answer - Factors that the IRS does not consider important in making worker
classification determinations include PT/FT work, the work location and hours of work.
What are the elements that are required for New Hire Reporting? - Correct Answer -
Employer must report:
-New hire's name
-Address
pg. 2
, -SSN
-1st day of work for which compensation is paid as well as the employers name
-ER address
-ER federal employer ID number.
When must employers report newly hired employees under the federal new hire
reporting requirements? - Correct Answer - Employers must report new hires within 20
calendar days of the date of hire. Employers that report magnetically/electronically must
send 2 transmissions per calendar month which are 12-16 days apart.
What is the name of the program employers can use to verify the employment
authorization status of new hires with the US Citizenship and Immigration Services? -
Correct Answer - E-Verify Program
Section 530 (Safe Harbor) Relief Requirements - Correct Answer - • Must have a
reasonable basis for not treating the worker as an employee, based on a court case or
ruling issued to you by the IRS.
• Your business was audited by the IRS at a time when you treated a similar worker as
an independent contractor and did not re-class the employees at that time. (But NOT an
audit after December 1996, unless such audit included an examination for employment
tax purposes.)
• You treated worker as an independent contractor because you knew that was how a
significant segment of your industry treated similar workers (how you would prove that
would be impossible).
• Or you relied on some other reasonable basis such as advice of a business lawyer or
accountant who knew the facts about your business. (I would imagine that person would
then be in big trouble).
What are Statutory employees? - Correct Answer - -Agree all services performed
personally by worker (NO subcontracting)
-No substantial investment in equipment or facilities other than transportation costs
pg. 3
2025 FINAL EXAM/ COMPLETE 100 QUESTIONS WITH
DETAILED VERIFIED ANSWERS (100% CORRECT ANSWERS)
ALREADY GRADED A+
What are the three parts of the ABC test? - Correct Answer - 1. (Absence Control): Free
from control via agreement and in reality.
2. (Business- unusual and/or away): performed outside the usual course of company
business or away from employers’ facility
3. (Customarily independent contractor): independent trade, occupation or business
What is the ABC test used to determine? - Correct Answer - While many states use the
Common Law Test to determine an employee relationship, more than half use the ABC
Test. ABC test is used by many states to determine a worker's employment status under
state unemployment insurance laws to see if the employee is indeed an independent
contractor.
What is Form I-9 used for? - Correct Answer - It is used to verify that an individual has
the legal right to work in the US. The Immigration Reform and Control Act of 1986
makes it illegal for an employer to hire an unauthorized worker.
When a client company hires leased employees, who is responsible for withholding
and/or paying the FIT, SS, Med and FUTA taxes? - Correct Answer - Although the client
company may have the right to hire and fire the workers, set wage levels and supervise
their work, the workers are generally employees of the leasing company, which is
responsible for withholding FIT, FICA, as well as paying the employers share of FICA
and FUTA taxes because of the leasing company’s control over the payment of wages.
pg. 1
,What factors do the courts and the DOL consider when making an employment status
determination under the FLSA? - Correct Answer - 1. How much control the employer
has over how the work is performed
2. Whiter the worker has the chance to make a profit or risks a loss based on how
skillfully the work is performed
3. Whether the worker invests in tools or materials required to perform the work or hires
helpers
4. Whether the worker requires a special skill
5. How permanent the working relationship is
6. Whether the work performed is an integral part of the employer’s business operation
Why would many employers rather use workers who are not employees to perform
services for them? - Correct Answer - Employers would rather use workers who are not
employees to perform services for them because employers must withhold income and
employment taxes from employees’ wages and pay employment taxes with their own
funds. Employers also must pay federal and state unemployment taxes based on their
employees’ wages. If a worker is an employee, most companies have their own list of
benefits and other entitlements that are provided to employees but not to independent
contractors.
What does a SS card prove in terms of an employees work authorization status under
IRCA? - Correct Answer - A SS card that does not contain language saying that the
employment is not work-authorized is proof of an employee’s authorization to work in
the US but not proof of identity.
Which factors are considered not to be important by the IRS in making a worker
classification determination because of changes in the workplace over the years? -
Correct Answer - Factors that the IRS does not consider important in making worker
classification determinations include PT/FT work, the work location and hours of work.
What are the elements that are required for New Hire Reporting? - Correct Answer -
Employer must report:
-New hire's name
-Address
pg. 2
, -SSN
-1st day of work for which compensation is paid as well as the employers name
-ER address
-ER federal employer ID number.
When must employers report newly hired employees under the federal new hire
reporting requirements? - Correct Answer - Employers must report new hires within 20
calendar days of the date of hire. Employers that report magnetically/electronically must
send 2 transmissions per calendar month which are 12-16 days apart.
What is the name of the program employers can use to verify the employment
authorization status of new hires with the US Citizenship and Immigration Services? -
Correct Answer - E-Verify Program
Section 530 (Safe Harbor) Relief Requirements - Correct Answer - • Must have a
reasonable basis for not treating the worker as an employee, based on a court case or
ruling issued to you by the IRS.
• Your business was audited by the IRS at a time when you treated a similar worker as
an independent contractor and did not re-class the employees at that time. (But NOT an
audit after December 1996, unless such audit included an examination for employment
tax purposes.)
• You treated worker as an independent contractor because you knew that was how a
significant segment of your industry treated similar workers (how you would prove that
would be impossible).
• Or you relied on some other reasonable basis such as advice of a business lawyer or
accountant who knew the facts about your business. (I would imagine that person would
then be in big trouble).
What are Statutory employees? - Correct Answer - -Agree all services performed
personally by worker (NO subcontracting)
-No substantial investment in equipment or facilities other than transportation costs
pg. 3
