Not an IRS Rule, but it is something bigger companies want to implement so they don't have to pay for benefits for the contractor. When googling it, most I come up with is that most big companies don't want to make it look like they are using temporary work in place of a permanent employ.

(I can't believe I'm linking a Yahoo! Answers post about it, but it's the best that I can find quickly: https://answers.yahoo.com/question/index?qid=20070308162652A...)