1099 Status BUT:

A friend of mine runs a few trucks and always pays on a 1099. The drivers are in agreeance at the time they accept the job and he also has them sign a waiver so they can not hold him liable for their taxes and other benefits as workers comp since they are contractors. He recently went thru an audit of 3 years and passed. The auditor stated as long as the contractors were made aware they pay their own taxes and he keeps records of such then he is not breaking any laws.

I am currently in the process of paperwork and will be having a 3 year audit within 2 weeks. My tax accountant of 16 years stated the same thing and we should have NO problems.

This is just my personal expeirence and a buddies. Don't turn down a good job just because some say its bad.

 

Like I have stated before to others.

Your experience is with your local area. I have done returns across the country. They are in the process of examining this issue more.

During my audit, where I OWN the truck, Have a VALID lease and am an O/O, they tried to make me an employee.

I have done taxes professionally since 1984 and used to make a living fighting IRS audits.

 

Of course they tried it. Thats the play book, go for the most then work back from there. It is completely legal, just L/O. Lease the truck to person, then lease them onto your authority. Done every day to swindle the unknowing into indentured servitude for the mega carriers.

 

The answer is very simple: If YOU are not paying for fuel, maintenance, and other truck expenses; nor do you have complete control over when and where you haul to/from, you are an employee.

Before all of the Monday morning QB's and truckstop lawyers get their panties in a wad, let me establish some bonafides:

1. My dad is an enrolled agent with the IRS;
2. I have gone through the audit with the IRS on this EXACT issue;

SOOOOO... before ya'll go nuts about ME being full of it, call the IRS and tell them I'm full of it... when (really, IF), they quit laughing, come back on here with their answer...

 

The problem with the "waiver" theory is it holds no weight with the IRS... here's why: ALL parties can agree to violate the law, by virtue of a waiver... it's STILL a violation of the law... all the waiver establishes is a criminal conspiracy to engage in fraud... We can all sign a waiver saying it's O.K. to rob banks... don't think that will hold much water in front of the jury... do you???

 

It is NOT against the law to pay on a 1099. Paying on a 1099 does not constitute a conspiracy or fraud.

 

I am looking to going back to my old boss and doing the 1099 thing. I was wondering if anyone has a contract sample that I could go off of or should I see a tax attorney.

 

The contract should list the legal names of both parties to the agreement. It should also list the responsibilities of both parties which should include something about the driver being responsible for paying all of his own taxes. It could also include language about what will happen if the driver fails to pay his taxes.

 

Ahhhh... but it IS against the law to pay an EMPLOYEE on a 1099... that's the point here... the IRS is quite clear on that, and: CRACKING DOWN on the trucking industry, specifically... I know this for a FACT. Uhhh... Been in the crosshairs on this one. Have YOU???