1099 Job

He is not evading his taxes when such agreements are really not legal.

The person who is really evading taxes is the owner who is paying the driver by 1099. This owner is evading the additional taxes required for the employer share.

In addition,they are avoiding workmen's compensation insurance and unemployment taxes.

 

Actually, they are evading workmen's comp and unemployment. To avoid paying taxes, is legal, to evade paying taxes, is not.

 

The OP doesn't seem to care what people are trying to advise here. I've worked as a 1099. Did that for 10 years. It can work but there are many pitfalls. Too many headaches for me and way too many what if's.

An enlightenment though. You won't be working for Rush Trucking. You'll be working for someone who has equipment leased to them. Any problems you encounter along the way will be his puppy to handle.

 

If he takes a position where he knows that he will be responsible for his own taxes and does so with the intention of calling the IRS to go after the company when he doesn't want to pay his taxes, then he is evading taxes. The IRS should go after the driver for tax evasion.

No one forces anyone to work on a 1099. If you don't want to work on a 1099, then DON'T go to work for the company. If you sign a contract with the intentions of breaking or not adhering to the terms, then that is reason for the other party to go after them in court. When you sign a contract all terms should be spelled out in the agreement. I guarantee that if the company failed to keep their side of the contract the driver would find his lawyer and take them to court. Contractors can get their own occupational accident policy rather than workers comp and there is little reason most drivers will ever need to file for unemployment. A driver with a decent mvr and work history should NEVER be out of work for very long. I know that there could be exceptions, but it is time that people start taking responsibility for their own welfare and life. Stop looking for the government to bail you out. This country survived very well before government got so involved.

 

That is entirely a matter of opinion as to it being tax evasion. The IRS wants such things reported to them and it falls under the whistle blower rules.

If he found this and signed a contract that is not legitimate, then there is no evasion. He is simply bringing the issue to light and the IRS would then step forward and demand compliance.


You are stuck on the idea that a driver is an independent contractor. You have evidently not read the documentation that others have posted concerning the issue in addition to what I have posted in the past.

First. Is the driver a independent contractor?
Do you allow this driver to come and go as the driver wants? Answer No.
Do you allow this driver to choose the freight he wants and to go where they want? Answer is no.
Do you allow this driver to choose the route no matter where he wants to drive, even if way out of route? Answer is no.
Do you tell the driver where he will go and what he will be paid? Answer is yes.

At this point, these questions alone show you to be in total control of the driver and he is not indepedent.

Does the driver have a financial risk? Answer is no.

You are also stuck on the area of the country you live in and past experience. I have tried to explain this to you many times. I have had contact with the IRS on audits in the following states: Oregon, Washington, Minnesota, Missouri, Illinois, Indiana, Ohio, Delaware, Rhode Island, Virginia and Texas. These are just the ones that I specifically went out on and did on site audits with them. This shows that I am not just speaking of local rules and agents with the past experience.

I have had issues where a company has engaged the services of "contractors" to do work for them with contracts. These were lost during audits even though they had contracts drawn and signed. The agents realized that the company provided the equipment, where to work, the rate of pay, the hours and etc. This was not a truck company, but even you should see some of the same issues. The end result, the company was found to be in error. The state loved him as well for back taxes and then additional things popped up. They found that the "contractor" was nothing more than an employee.

Another company engaged the services of a specialized person to come in and do digging on a regular basis. Many times of the week. They provided the equipment that was used and when the work was performed and how. Again, this was lost during the audit for the same reasons as the above.

Contractors are independent and can come and go as they please. They can decide if they want to work or not.

Control is the factor.

Review some of the previous posts in this thread. I am not alone in this. Many have dealings as to this.

If someone is offering to pay a driver 1099, they are a questionable outfit.

 

According to my conversations with the IRS concerning this issue, it can be a fine line in this business. You are correct about control being the deciding factor, if you go by IRS guidelines. Some carriers do offer contractors much more control than your post demonstrates. The IRS wants everyone to be considered an employee, even owner operators who lease to a carrier. I have a problem with people who make an agreement, receive the benefits of that agreement and then betray their word by trying to avoid their responsibility and profit by betraying the one who provided them the means to earn a comfortable living. I don't see anything that is better or worse in a company that pays by W2 or 1099. Maybe it is because I believe in personal responsibility and when you give your word or sign an agreement, that you should honor your word. It is a matter of character. Perhaps we tend to be more independent thinking in the south. I may look at things differently since I grew up in business and have owned companies almost my entire life. I beleve that unless you plan on honoring an agreement and keeping your word, you don't sign the agreement. I think that everyone should work on a 1099. It would be much cleaner for the one doing payroll and the employee would not be giving the government an interest free loan for up to a year. Everyone should pay their own taxes. Everyone who earns money should have to sit down and write a check every time they receive a paycheck rather than having the company deduct the money from their check and then write the check to the IRS.

 

Good luck with the new position, BoyWander. It sounds like you have thought out what you need to do with your taxes, etc., You may check to see if you can set up your own retirement, as well. It might reduce your tax bite and would give you more money when the time comes to retire.

 

This is wrong. Your self employment tax will take the place of social security. I would insist on him paying occ. ins.

 

13% self-employment tax in lieu of Social Security
10% (typical Federal)
MN is costing me 5% (check your specific state if may vary.)