Independant contractor

I have already spoken to the IRS. I am just fine.

 

If you go to the IRS website and look up Form SS8 and 8919 you will get the picture .

You can not be considered a contractor when you drive someone elses truck and they pay all the expenses ie; fuel , ifta , permits ,tolls, etc..
Small trucking companies do this to evade paying SSI and medicare taxes. Also in some states they evade paying unemployment compensation. Any company that has atleast 2 employees is required to pay a percentage toward SSI and medicare .
The IRS looks at a contractor as a individual that owns his own equipment and pays the fees to operate such . They are cracking down on this illegal practice and making these companies pay enormous fines . If you have several people doing this for you and you are calling them contractors .. They can go back several years and take everything you own .
If you want to be a contractor ... Start by getting a EIN number ... This is what you need to pay your employees . LOL

 

H.R.3408 -- Taxpayer Responsibility, Accountability, and Consistency Act of 2009 (Introduced in House - IH)


HR 3408 IH
111th CONGRESS
1st Session
H. R. 3408
To amend the Internal Revenue Code of 1986 to modify the rules relating to the treatment of individuals as independent contractors or employees, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
July 30, 2009


Mr. MCDERMOTT (for himself, Mr. NEAL of Massachusetts, and Mr. TIERNEY) introduced the following bill; which was referred to the Committee on Ways and Means
A BILL
To amend the Internal Revenue Code of 1986 to modify the rules relating to the treatment of individuals as independent contractors or employees, and for other purposes.

• Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

• This Act may be cited as the `Taxpayer Responsibility, Accountability, and Consistency Act of 2009'.

SEC. 2. INFORMATION REPORTING FOR PAYMENTS TO CORPORATIONS.

• (a) In General- Section 6041 of the Internal Revenue Code of 1986 (relating to information at source) is amended by adding at the end the following new subsection:

• `(h) Payments to Corporations-

• • `(1) IN GENERAL- Notwithstanding any regulations prescribed by the Secretary before the date of the enactment of this subsection, subsection (a) shall apply to payments made to a corporation.

• • `(2) EXCEPTION- Paragraph (1) shall not apply to payments made to a hospital or extended care facility described in section 501(c)(3) which is exempt from taxation under section 501(a) or to a hospital or extended care facility owned and operated by the United States, a State, the District of Columbia, a possession of the United States, or a political subdivision, agency or instrumentality of any of the foregoing.'.

• (b) Effective Date- The amendment made by this section shall apply to payments made more than 1 year after the date of the enactment of this Act.

SEC. 3. DETERMINATION OF ELIGIBILITY FOR SAFE HARBOR TREATMENT OF INDIVIDUALS AS NON-EMPLOYEES FOR PURPOSES OF EMPLOYMENT TAXES.

• (a) In General- Chapter 25 of the Internal Revenue Code of 1986 (relating to general provisions relating to employment taxes) is amended by adding at the end the following new section:

`SEC. 3511. SAFE HARBOR.

• `(a) Termination of Certain Employment Tax Liability-

• • `(1) IN GENERAL- If--

• • • `(A) for purposes of employment taxes, the taxpayer did not treat an individual as an employee for any period, and

• • • `(B) in the case of periods after December 31, 1978, all Federal tax returns (including information returns) required to be filed by the taxpayer with respect to such individual for such period are filed on a basis consistent with the taxpayer's treatment of such individual as not being an employee,

• • then, for purposes of applying such taxes for such period with respect to the taxpayer, the individual shall be deemed not to be an employee unless the taxpayer had no reasonable basis for not treating such individual as an employee. This paragraph shall not apply with respect to an individual for any periods beginning after the date of notice of a determination that such individual should be treated as an employee of the taxpayer.

• • `(2) STATUTORY STANDARDS FOR SATISFYING THE REQUIREMENTS OF PARAGRAPH (1)- For purposes of paragraph (1), a taxpayer shall be treated as having a reasonable basis for not treating an individual as an employee only if--

• • • `(A) the taxpayer's treatment of such individual was in reasonable reliance on--

• • • • `(i) a written determination issued to the taxpayer addressing the employment status of such individual or another individual holding a substantially similar position with the taxpayer, or

• • • • `(ii) a concluded examination (for employment tax purposes) of whether such individual (or another individual holding a substantially similar position) should be treated as an employee of the taxpayer, with respect to which there was no determination that such individual (or another individual holding a substantially similar position) should be treated as an employee, and

• • • `(B) the taxpayer (or a predecessor) has not treated any other individual holding a substantially similar position as an employee for purposes of employment taxes for any period beginning after December 31, 1977.

• `(b) Definitions- For purposes of this section--

• • `(1) EMPLOYMENT TAX- The term `employment tax' means any tax imposed by this subtitle.

• • `(2) EMPLOYMENT STATUS- The term `employment status' means the status of an individual, under the usual common law rules applicable in determining the employer-employee relationship, as an employee or as an independent contractor (or other individual who is not an employee).

• `(c) Special Rules for Application of Section-

• • `(1) NOTICE OF AVAILABILITY OF SECTION- An officer or employee of the Internal Revenue Service shall, before or at the commencement of any examination relating to the employment status of one or more individuals who perform services for the taxpayer, provide the taxpayer with a written notice of the provisions of this section.

• • `(2) RULES RELATING TO STATUTORY STANDARDS- For purposes of subsection (a)(2), with respect to any period beginning after the date of the enactment of this paragraph, a taxpayer may not rely on an examination commenced, or a written determination issued, if--

• • • `(A) the controlling facts and circumstances that formed the basis of a determination of employment status have changed or were misrepresented by the taxpayer, or

• • • `(B) the Secretary subsequently issues contrary guidance relating to the determination of employment status that has bearing on the facts and circumstances that formed the basis of a determination of employment status.

• • `(3) SUBSTANTIALLY SIMILAR POSITION- For purposes of this section, the determination as to whether an individual holds a position substantially similar to a position held by another individual shall be made by the Secretary in a manner consistent with the Fair Labor Standards Act of 1938.

• `(d) Burden of Proof- A taxpayer must establish entitlement to relief under this section by a preponderance of the evidence.

• `(e) Petitions for Review of Status-

• • `(1) IN GENERAL- Under procedures established by the Secretary not later than 1 year after the date of the enactment of this section, any individual who performs services for a taxpayer may petition (either personally or through a designated representative or attorney) for a determination of the individual's status for employment tax purposes.

• • `(2) ADMINISTRATIVE PROCEDURES- The procedures established under paragraph (1) shall provide for--

• • • `(A) a determination of status not later than 90 days after the filing of the petition with respect to employment in any industry (such as the construction industry) in which employment is transient, casual, or seasonal, and

• • • `(B) an administrative appeal of any determination that an individual is not an employee of the taxpayer.

• • `(3) DUTY TO SEEK SERVICE PROVIDER INFORMATION- In the case of a request by a taxpayer for a determination of an individual's status for employment tax purposes, the Secretary shall, to the extent practicable--

• • • `(A) seek to obtain from such individual information relating to the individual's performance of services for the taxpayer, and

• • • `(B) provide written notice to the individual detailing any written determination of the individual's status for employment tax purposes.

• `(f) Results of Misclassification Determinations- In any case in which the Secretary determines that a taxpayer has misclassified an individual as not an employee for employment tax purposes, the Secretary shall inform the Secretary of Labor about such misclassification and notify the individual of any eligibility for the refund of self-employment taxes under chapter 2.

• `(g) Regulations- The Secretary shall, not later than 1 year after the date of the enactment of this section, prescribe such regulations as may be necessary and appropriate to carry out the purposes of this section.'.

• (b) Conforming Amendments-

• • (1) Paragraph (2) of section 7436(a) of such Code is amendment by striking `section 530 of the Revenue Act of 1978' and inserting `section 3511'.

• • (2) The table of sections for chapter 25 of such Code is amended by adding at the end the following new item:

• • `Sec. 3511. Safe harbor.'.

• (c) Termination of Section 530 of the Revenue Act of 1978- Section 530 of the Revenue Act of 1978 shall not apply to services rendered more than 1 year after the date of the enactment of this Act.

• (d) Effective Date- The amendments made by this section shall apply to services rendered more than 1 year after the date of the enactment of this Act.

SEC. 4. ANNUAL REPORTS ON WORKER MISCLASSIFICATION .

• The Secretary of the Treasury shall issue an annual report on worker misclassification . Such report shall include the following:

• • (1) Information on the number and type of enforcement actions against, and examinations of, employers who have misclassified workers.

• • (2) Relief obtained as a result of such actions against, and examinations of, employers who have misclassified workers.

• • (3) An overall estimate of the number of employers misclassifying workers, the number of workers affected, and the industries involved.

• • (4) The impact of such misclassification on the Federal tax system.

• • (5) Information on the outcomes of the petitions filed under section 3511(e) of the Internal Revenue Code of 1986.

SEC. 5. INCREASE IN INFORMATION RETURN PENALTIES.

• (a) Failure To File Correct Information Returns-

• • (1) IN GENERAL- Section 6721(a)(1) of the Internal Revenue Code of 1986 is amended--

• • • (A) by striking `$50' and inserting `$250', and

• • • (B) by striking `$250,000' and inserting `$3,000,000'.

• • (2) REDUCTION WHERE CORRECTION IN SPECIFIED PERIOD-

• • • (A) CORRECTION WITHIN 30 DAYS- Section 6721(b)(1) of such Code is amended--

• • • • (i) by striking `$15' and inserting `$50',

• • • • (ii) by striking `$50' and inserting `$250', and

• • • • (iii) by striking `$75,000' and inserting `$500,000'.

• • • (B) FAILURES CORRECTED ON OR BEFORE AUGUST 1- Section 6721(b)(2) of such Code is amended--

• • • • (i) by striking `$30' and inserting `$100',

• • • • (ii) by striking `$50' and inserting `$250', and

• • • • (iii) by striking `$150,000' and inserting `$1,500,000'.

• • (3) LOWER LIMITATION FOR PERSONS WITH GROSS RECEIPTS OF NOT MORE THAN $5,000,000- Section 6721(d)(1) of such Code is amended--

• • • (A) in subparagraph (A)--

• • • • (i) by striking `$100,000' and inserting `$1,000,000', and

• • • • (ii) by striking `$250,000' and inserting `$3,000,000',

• • • (B) in subparagraph (B)--

• • • • (i) by striking `$25,000' and inserting `$175,000', and

• • • • (ii) by striking `$75,000' and inserting `$500,000', and

• • • (C) in subparagraph (C)--

• • • • (i) by striking `$50,000' and inserting `$500,000', and

• • • • (ii) by striking `$150,000' and inserting `$1,500,000'.

• • (4) PENALTY IN CASE OF INTENTIONAL DISREGARD- Section 6721(e) of such Code is amended--

• • • (A) by striking `$100' in paragraph (2) and inserting `$500', and

• • • (B) by striking `$250,000' in paragraph (3)(A) and inserting `$3,000,000'.

• (b) Failure To Furnish Correct Payee Statements-

• • (1) IN GENERAL- Section 6722(a) of such Code is amended--

• • • (A) by striking `$50' and inserting `$250', and

• • • (B) by striking `$100,000' and inserting `$1,000,000'.

• • (2) PENALTY IN CASE OF INTENTIONAL DISREGARD- Section 6722(c) of such Code is amended--

• • • (A) by striking `$100' in paragraph (1) and inserting `$500', and

• • • (B) by striking `$100,000' in paragraph (2)(A) and inserting `$1,000,000'.

• (c) Failure To Comply With Other Information Reporting Requirements- Section 6723 of such Code is amended--

• • (1) by striking `$50' and inserting `$250', and

• • (2) by striking `$100,000' and inserting `$1,000,000'.

• (d) Effective Date- The amendments made by this section shall apply with respect to information returns required to be filed after December 31, 2009.

 

How To Avoid Liability - Get the Independent Contractor Classification Correct

There are hundreds of requirements that employers must be weary of when managing their employees. One area often overlooked by employers is the misclassification of employees as independent contractors. Misclassification of independent contractors implicates federal and state tax issues, unemployment benefits, workers' compensation, participation rights in employee benefits plans and potential wage and hour violations under state and federal law.
There are numerous tests regarding independent contractor status depending upon the law which is implicated, including the California Labor Code, the federal Fair Labor Standards Act, the Internal Revenue Code and similar California Tax law, unemployment insurance, workers compensation, etc. The majority of these tests focus on the degree of control exerted by the employer.
Understand Your Risk: Conduct an Independent Contractor Audit:
Many employers are not proactive in dealing with potential misclassification issues. Don't be an employer reacting to a demand letter, employee wage claim or lawsuit. Rather, take affirmative steps to identify and understand any potential misclassification risks. To accomplish this, we suggest conducting an independent contractor audit.
One way to begin this process is to ask your accounting department to provide you with a list of individuals or entities paid by Form 1099 in 2009. Review this list and identify any payments made by Form 1099 to individuals, especially where the individual only provided their social security number. Review the individual names on the list who provided federal tax identification numbers. Also, review the businesses or vendors with federal tax identification numbers on the list. We recommend constructing such an audit with the advice of counsel and within the protections of the attorney-client privilege.
Factors to Consider When Reviewing Independent Contractor Status:
For purposes of enforcing California's wage and hour laws, the Division of Labor Standards Enforcement ("DLSE") applies the "Economic Realities" test where the primary factor considered is whether the person to whom service is rendered has control or the right to control the worker as to the work done and the manner and means in which it is performed. Here are some questions to ask:
Does the company register its independent contactors with EDD where the employer enters into a contract or pays the independent contractor more than $600?
Is the person performing services engaged in an occupation or business distinct from that of the principal?

• Is the work part of the regular business of the principal or the worker?
• Does the principal or the worker supply the instrumentalities, tools, and the place for the person doing the work?
• Does the worker invest in the required equipment or materials or employ helpers to carry out the required task?
• Do the services rendered require a special skill?
• Is the work, with regard to locality, usually performed under the direction of the principal or by a specialist without supervision?
• What is the workers' opportunity for profit or loss depending on his or her managerial skill?
• What is the length of time for which the services are to be performed?
• What is the degree of permanence of the working relationship?
• What is the method of payment, whether by time or by the job?
• Do the parties believe they are creating an employer-employee relationship?

What's The Big Deal ? President Obama Says it is a Big Deal.
President Obama has put employers on notice to be prepared to pay if they are found to have misclassified individuals as independent contractors. The Obama Administration has released details of its proposed budget for the fiscal year 2011 which reads:
The 2011 Budget for [the Department of Labor] includes an additional $25 million to target misclassification with 100 additional enforcement personnel and competitive grants to boost States' incentives and capacity to address this problem.
While full details of this proposal have yet to be released, it is clear the Obama Administration is determined to make proper classification of workers a top priority. Maybe it should also be a priority for your company.

 

Oh and you definitely don't want one of you so called contractors to get injured or killed and you have them misclassiified . You will definited be sued and end up incarcerated .

 

Why would you be incarcerated? I can understand being sued, but jail?

Now I didn't read all that you posted above, but like I've said before. If the 1099 was illegal there would be no Lease Purchase deals! I know your all gonna say they aren't the same, but they are.

Just sitting here typing this I came up with a way around it. Here it is.......

Your drive my truck and lease it from me for 70%. Now that gives you 30% for your pay and I take care of the truck and all expenses. Your an I/C now.......

 

It doesn't make any difference whether a driver is an independent contractor, owner operator or an employee. If there is a serious accident you can count on everyone getting sued. Lawyers go after the deep pockets, which is usually the carrier. It isn't beyond the realm of possibility for them to sue the tire manufacturer, truck manufacturer, trailer manufacturer, etc., etc., And contrary to what you may think, you cannot be jailed for issuing a 1099.

 

And once again, it is NOT illegal to pay contractors with a 1099. You have yet to produce any law which states otherwise. And a contractor does NOT need to own his own equipment to be classified as an independent contractor. Once again, it has to do with control, not what one owns.

 

The truth is when IRS wants this to stop, they will get away from guidance and rules that allow interpretation and go with clear-cut regulations.

As long as this matter is open to interpretation there will be varies ideas of what is correct and what is not. Obviously some are closer to the gray area than others.

IMHO the stand on this, up to this point in time, has been somewhat loose in order to not stiffle free enterprise. Will it change? It is bound to as our government continues to dictate more and more what we can, can't and must do.

Until it changes, it is beyond me to understand why some feel the need to preach their interpretations to others. This matter is clearly left to interpretation by the IRS at the present time. Why do you think they call it guidelines? Why do they offer examples?

 

Maybe imcarcerated doesn't apply to you... however , there is a company here in Texas that owns all the equipment ,pays all the expenses and pays the drivers 25% on their loads . The problem being is that they don't pay SSI and Medicare . Now if a driver gets hurt driving and becomes disabled . Well then how is he going to get SSI benefits if nothing is being payed in . This is when the law steps in because they will want to know why it wasn't paid when the driver was in fact a employee . I have in fact filed the forms 8919 and SS8 against this company and I surely hope when they get audited they have to pay the IRS everything they owe .
You know these laws are in place for a reason and mostly it's for the protection of the worker and the tax payers .
It's different if the driver in actually leasing the truck from you and he is in fact a contractor . But for the company that doesn't do this and just say the driver dies on the road in a accident ... Who is liable ?