Does an Arkansas community college instructor have to report overload pay separately, and should it be on a 1099?
Plain-English summary
State Representative Rick McClure asked the AG two questions on behalf of a constituent who teaches at the University of Arkansas at Pulaski Technical College. The constituent had been told by Pulaski Tech that he must report his "overload" classes (extra classes taught for additional pay beyond his regular load) as "extra income" under A.C.A. § 21-8-201 et seq. The constituent was confused: Pulaski Tech already issues a W-2 lumping the salary and overload pay together; why does the state need a separate disclosure?
Question 1: Why the separate disclosure? The annual extra-income disclosure form serves a different purpose from the employment paperwork. The disclosure form is part of Arkansas's ethics framework: state employees must disclose every source of additional income over $500 from any public agency. The employing institution knows about its own overload classes, but the state ethics framework needs the employee to confirm whether there is income from other public agencies (consulting work, side gigs at other state institutions, contract work). The disclosure form is the comprehensive listing.
The legislature put the burden on the employee specifically to gather and disclose all extra income, not on the employer to investigate. Failure to file (or filing falsely) is a criminal offense punishable by fine. So the personal sign-and-submit nature of the form is intentional.
Question 2: 1099 or W-2? This is a tax question, not a state-ethics question. The 1099 form reports payments to independent contractors. The classification turns on the level of control the payer exerts over the work:
- High control over how work is done = employee = W-2.
- Limited control over the result only = independent contractor = 1099.
Adjunct professors are typically W-2 employees, even when teaching course-by-course at multiple institutions. The U.S. Tax Court has consistently upheld this classification (Schramm v. Commissioner (2011), Beitel v. Commissioner (2001)). One outlier case, Robinson v. Commissioner (2011), found a full-time professor who developed a curriculum for a different university and taught non-credit training courses to state employees was an independent contractor. The differentiator was the lack of control by the second university.
For a Pulaski Tech instructor teaching overload classes at Pulaski Tech itself, the school is the same employer with extensive control. The instructor would be W-2 for both regular and overload classes. A 1099 is not required and would generally not be appropriate.
No connection between the two questions. Whether someone must report extra income on the disclosure statement is independent of whether they should receive a W-2 or 1099 for tax purposes. The disclosure rule is about ethics transparency. The W-2 vs. 1099 rule is about tax characterization.
The deeper takeaway: state employees navigating Arkansas's ethics-disclosure framework should not conflate it with their tax reporting. The annual disclosure under § 21-8-204(a) is a comprehensive personal listing of all extra income from public agencies. It runs alongside the standard tax reporting through W-2 (or 1099 where appropriate).
What this means for you
State higher education faculty in Arkansas
If you teach overload classes at your home institution (extra classes beyond your regular load), the pay is "extra income" for purposes of § 21-8-204(a) reporting. Yes, even though your employer already knows. The annual disclosure form requires a comprehensive listing.
If you also teach adjunct at another state institution, that's a separate "extra income" source from another public agency, also reportable.
If you do consulting for another state agency or board, that's a third potentially reportable source.
Practical compliance:
- Keep a running log of extra-income sources and amounts during the year.
- Submit the annual form before the deadline.
- Sign and certify accurately. Filing falsely is a criminal offense.
State employees outside higher education
The same disclosure framework applies broadly to state employees. If you have any side income from a state agency over $500 in a year, it is reportable. Common scenarios:
- Consulting for another state agency.
- Boards and commissions appointments with stipends.
- Speaker fees from state-funded events.
- Honoraria from state-affiliated organizations.
HR administrators at state institutions
The annual disclosure forms run on a calendar-year cycle. Build reminders into your annual HR calendar:
- Distribute disclosure forms to all eligible employees.
- Provide guidance on what counts as "extra income from a public agency."
- Track filings (your institution must collect them; the president's office is the filing point for higher education employees).
- Train employees on the disclosure standards.
The forms themselves are part of the public record framework. They become accessible in some scenarios (FOIA, ethics investigations).
Tax preparers and CPAs serving state employee clients
Be aware of the parallel disclosure framework. If your client has overload teaching, multi-institution adjunct work, or other extra income, ask whether they have filed the Arkansas extra-income disclosure. The disclosure deadline is annual; missing it is a criminal violation.
For the W-2/1099 question, the standard IRS analysis applies. Most academic adjunct work is W-2. Robinson-style fact patterns (curriculum development for a different institution, no traditional academic relationship) can support 1099 treatment, but those are unusual.
State legislators considering ethics reforms
The current framework requires personal disclosure even when the institution has the information. That is intentional design (criminal penalty, personal certification). If you wanted to consolidate or simplify the framework, options include:
- Allow institutional reporting in lieu of personal disclosure for in-institution overload pay.
- Centralize disclosures with the State Ethics Commission.
- Set higher thresholds (currently $500).
State Ethics Commission and Secretary of State (filing offices)
The current framework places filings with the institution's president for higher education employees and with the Secretary of State for other state employees. Maintaining the comprehensive disclosure record is the operational task. Public access to the records (as a transparency mechanism) is the policy goal.
Common questions
Do I have to disclose private-sector consulting income?
The disclosure under § 21-8-204(a) is for income from "public agencies." Private-sector income is not within this specific framework. (Other ethics rules may apply to certain officials.)
My overload pay is in the same paycheck as my regular salary. Why is it "extra income"?
"Extra income" in this context means income beyond your base salaried position. Overload pay is for work outside your regular contracted load, even when paid through the same payroll. The disclosure rule treats it as a separate income source.
What if my extra income is from my home institution but for unrelated work (e.g., serving on a search committee that pays a stipend)?
That is also from a "public agency" (your institution). It should be reported.
What if I'm paid through a foundation associated with my institution?
The classification depends on whether the foundation is itself a public agency or a private 501(c)(3) supporting the institution. If the foundation is a private entity, payments from it may not fall under the public-agency disclosure framework. Consult your institution's compliance officer.
What is the criminal penalty for failing to disclose?
A.C.A. § 21-8-202 makes failure to file or filing a false disclosure a criminal violation, punishable by fine. Specific penalty amounts depend on the violation.
Should adjunct teachers at private schools file the Arkansas state disclosure?
The disclosure is for state employees regarding public agency income. Adjuncting at a private school does not trigger the disclosure if you are not a state employee. If you are a state employee with private-school adjunct work, that's private-sector income outside the framework.
How does this interact with federal taxes?
The Arkansas state disclosure runs parallel to federal tax reporting. They are independent. Your W-2 and 1099 forms go to the IRS for tax purposes. Your annual disclosure goes to the institution president (or Secretary of State) for ethics-transparency purposes.
Background and statutory framework
Arkansas's extra-income disclosure framework for state employees is at A.C.A. § 21-8-201 et seq. Key provisions:
- § 21-8-203: Legislative intent. The framework is meant to help government operate efficiently and minimize conflicts of interest.
- § 21-8-204(a): Salaried state employees must disclose each source of additional income over $500 received during the preceding calendar year for services rendered to any public agency of the state.
- § 21-8-204: Filing point: the president of the institution for higher education employees; the Secretary of State for other state employees.
- § 21-8-202: Criminal penalty for failure to file or filing falsely.
The W-2 vs. 1099 federal tax framework:
- I.R.C. § 6041A(a) requires payments aggregating $600 or more for non-employee services to be reported on Form 1099 (since 2020, Form 1099-NEC).
- IRS guidance: independent contractor when the payer controls the result but not the means. Employee when the payer controls the means.
- Tax Court cases on adjunct professors: typically W-2 (Schramm, Beitel); occasional 1099 in unusual fact patterns (Robinson).
Citations
- A.C.A. § 21-8-201 et seq. (extra-income disclosure for state employees)
- A.C.A. § 21-8-202 (criminal penalty)
- A.C.A. § 21-8-203 (legislative intent)
- A.C.A. § 21-8-204(a) (disclosure threshold and content)
- A.C.A. § 21-8-204 (filing offices)
- I.R.C. § 6041A(a) (1099 reporting threshold)
- Schramm v. Commissioner, 102 T.C.M. (CCH) 233 (2011) (adjunct as W-2 employee)
- Beitel v. Commissioner, T.C. Summ. Op. 2001-101 (adjunct as W-2 employee)
- Robinson v. Commissioner, 101 T.C.M. (CCH) 1473 (2011) (curriculum-development outlier as 1099 contractor)
- IRS, Independent Contractor Defined, https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-defined
Source
Original opinion text
Opinion No. 2023-014
April 27, 2023
The Honorable Rick McClure
State Representative
2424 Sulphur Springs Road
Malvern, Arkansas 72104-6081
Dear Representative McClure:
You have requested my opinion on an issue faced by your constituent who is an instructor at the University of Arkansas, Pulaski Technical College. You state that Pulaski Tech has recently informed its instructors that they must report "extra income," as required by A.C.A. § 21-8-201 et seq., not only if they teach adjunct classes for other institutions of higher education but also if they teach "overload" classes at Pulaski Tech. An "overload" class is a class taught by an instructor for extra compensation in addition to the instructor's regular course load for which he or she receives salaried pay. You also report that Pulaski Tech lumps all compensation together on a W-2 form and does not issue a separate 1099 form to instructors for teaching overload classes.
Given the foregoing, you have asked the following two questions:
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Why does the State require an employee to produce documentation of "extra income" if said employee executed the necessary documentation including an overload contract with the institution?
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If extra income is to be reported separately, should Pulaski Tech issue 1099 forms to its instructors that report such extra income?
RESPONSE
In response to your first question, the employment documentation that an employing state institution of higher education has in its possession differs from the annual income disclosure statements that state employees must file. In response to your second question, there is no connection between whether an instructor's income must be disclosed on the annual income disclosure statement and whether the instructor should be issued a 1099 form. The 1099 tax form is used to report payments to independent contractors, whose status as such depends on the amount of control exercised by the payer. Whether an instructor should be issued a W-2 or a 1099 tax form will depend on the facts of each case, but adjunct professors are usually considered W-2 employees for tax purposes.
DISCUSSION
Question 1: Why does the State require an employee to produce documentation of "extra income" if said employee executed the necessary documentation including an overload contract with the institution?
The overload contract and the general reporting requirements serve different purposes.
Arkansas's general reporting rules require salaried state employees to disclose each additional source of income over $500 they receive during the preceding calendar year for services "rendered to any public agency of this state." The General Assembly has determined that such income disclosures help government operate more efficiently and minimize opportunities for conflicts of interest. Employees of state institutions of higher education file the annual income-disclosure statements with the president of their institution, and all other state employees must file the statements with the Secretary of State.
In the factual scenario you relate, the employer already knows about the employee's additional source of income, so one might question why the employee must report the additional income in that situation. But even in that situation, the employer cannot know whether this is the only extra income earned by the employee or whether the employee performs additional services for other state agencies, such as consulting work. That is why current Arkansas law puts the burden on employees to list each source of income in excess of $500 for wages, salary, or fees for services rendered to any public agency of the state. Thus, the employee must inform the employing institution of all extra income in excess of $500 earned from a public agency of the state, which is the purpose of the reporting form.
Furthermore, failure to file the required disclosure or filing a false disclosure is a criminal violation that, upon conviction, is punishable by a fine. Given the potential criminal penalties, it makes sense that the state has placed the onus on the employee to list all sources and amounts of extra income and to verify the accuracy of the information provided before signing and submitting the form.
Question 2: If extra income is to be reported separately, should Pulaski Tech issue 1099 forms to its instructors that report such extra income?
Questions about whether someone should receive a 1099 or a W-2 are highly factual. And since I am not a factfinder when issuing opinions, I cannot definitively opine on which tax form Pulaski Tech should provide to your constituent or to any other instructor. These sorts of questions about specific employment arrangements should be directed to local counsel or to taxing authorities, including the Revenue Division of the Arkansas Department of Finance and Administration and the federal Internal Revenue Service.
I can, however, generally discuss the relevant law. Your question appears to be based on the erroneous assumption that when a person earns "extra income" as described in A.C.A. § 21-8-201 et seq., the person must also be classified as an independent contractor for purposes of that income. But the law does not support this inference. There is no inherent link between whether someone must report "extra income" and whether that person is an independent contractor.
The payer's ability to control the details of the work is the key factor that distinguishes an independent-contract relationship from an employer/employee relationship. As a general rule, an individual is an independent contractor when the payer has the right to control or direct the result of the work but not what will be done or how the result will be achieved. But when the payer has the right to control the details of how the services are performed, an employer/employee relationship likely exists, which means the individual is an employee, not an independent contractor. The result of this analysis determines whether the person being paid is an independent contractor and, therefore, must receive a 1099.
The foregoing analysis, the type and degree of control over the work, is neither dispositive on nor relevant to the question of whether someone received income over $500 in addition to the person's regular salary. Accordingly, both state employees who perform additional work as independent contractors and those who perform additional work as employees might have to report their additional earnings on income disclosure statements, depending on the circumstances.
With respect to the situation you have described, adjunct professors are typically considered W-2 employees, even if they teach on a course-by-course basis at different institutions. This classification has been challenged in U.S. Tax Court, which has generally upheld the classification, finding that adjunct professors are common-law employees of the universities at which they teach. As a result, I think it unlikely that an instructor who teaches an overload class would be considered an independent contractor and issued a 1099 for income earned from teaching that class. But, as explained above, a specific employee's classification heavily depends on all the attendant facts, so I cannot definitively state which tax form Pulaski Tech should issue to your constituent or any other similarly situated instructor.
Senior Assistant Attorney General Kelly Summerside prepared this opinion, which I hereby approve.
Sincerely,
TIM GRIFFIN
Attorney General