List of 2004 Articles
from
The Independent Contractor Report

 

2004

Longshore worker claiming sexual harassment won jury verdict. Verdict was against two firms. One was an employer and the other was, allegedly, a joint employer. Held: Trial court should have granted the alleged joint employer’s motion for judgment as a matter of law. [January 2004 Report] Auto mechanic is independent contractor for federal income tax purposes. He used his own tools to rebuild cars and do auto bodywork. Tax Court agreed with IRS that mechanic was independent contractor and not an employee. [January 2004 Report] Worker receiving Form 1099 filed return as if he had Form W-2. IRS advised worker he had to file a request for a ruling as to his employment status. IRS ruled, in response to request, that worker was not an employee.  [February 2004 Report] District court held that IRS had failed to file suit within ten year statute of limitations. On appeal, that decision was reversed and a suit brought on the old tax assessment, which had grown to more than $450,000, was allowed to proceed against the individual taxpayer. A key timing error may have been made. The taxpayer should have waited for the 10-year period to run before considering an offer in compromise. Old underlying assessment was based on failure to pay employment taxes.  [February 2004 Report] Courier and messenger firm’s motor vehicle expense reimbursement payments should be part of qualified accountable plan. If qualified, such payments are not reportable on IRS Form W-2 and are not subject to federal employment taxation. Tax issue is not the status of the worker but the status of the payments to an admitted employee. [March 2004 Report] Janitorial firm using independent contractors passed IRS audit but agency later cried foul. Firm paid a third party corporation which paid the subject workers. After the audit concluded, in second look IRS contends firm engaged in fraudulent scheme to evade employment taxes. [March 2004 Report] Firm that treated workers as employees changed to independent contractor status. In U.S. District Court employment tax litigation, the firm refused all IRS discovery requests by asserting the Fifth Amendment privilege against self incrimination. Invoking the Fifth Amendment has adverse legal consequences for the asserting party. The party’s later use of evidence that was the subject of the assertion is barred. [April 2004 Report] A general dentist was held employee and not independent contractor for federal employment tax purposes. Professional worker did not hold services out to the public. Services were rendered on the firm’s premises and the worker was paid on “an hourly rate basis.”[April 2004 Report] IRS assessment of employment tax against partnership invokes ten year period for collection against partners. General partners were not assessed separately. Ten year statute of limitations to collect employment tax in a judicial proceeding from the general partners held to apply. In California general partners are jointly and severally liable for the payment partnership's debts.[May 2004 Report] State of Tennessee is not bound by section 530 federal safe harbor provision. Tennessee Claims Commission determined that company using stage hands was not liable for Tennessee employment tax by virtue of section 530. State Court of Appeals reversed holding that section 530 is a federal law not binding on Tennessee.[May 2004 Report] Inspector general found IRS Form SS-8 worker status ruling program does not ensure compliance. Both firms and workers can submit Form SS-8 to obtain a private ruling on the status of subject workers. Report says there should be more compliance checks or audits following determinations that workers were misclassified. [June 2004 Report] Van driver is employee and not independent contractor for Federal employment tax purposes. Firm provided transportation to wheelchair bound passengers. Driver paid Firm a fixed daily or weekly fee to use the Firm’s van, painted with the Firm's colors, trademark, and logo. In response to a Form SS-8 request for ruling by the Firm, the National Office found employee status. [June 2004 Report] IRS says firm may owe unpaid employment taxes other company agreed to pay. Several theories were advanced including usual common law rules, co-employment, and conduit theory. Section 530 employment tax safe harbor might apply but IRS did not say how.  [July 2004 Report] IRS issues new publication for owners of beauty and nail salons. Use of booth renters is acknowledged. Qualified booth renters may be treated as non-employees. [July 2004 Report] IRS technical advice says past audit of firm triggered sec. 530 safe harbor relief. Firm used volunteers to run therapeutic residential community. Classification Settlement Program is available if certain conditions are met. Where the safe harbor applies, CSP program is moot. [August 2004 Report] IRS assessed over $60,000 in employment taxes against individual who was not the employer. He was a responsible person in corporation that failed to pay employment tax. His suit to challenge assessment was late. The statute of limitations on refund suits is two years “from the date of mailing” of notice of disallowance. [August 2004 Report] IRS says services of accounting technician for Federal agency were those of employee and not IC. Services were the same as those provided by admitted employees. Sums paid were wages subject to Federal employment taxes and income tax withholding. [September 2004 Report] Cable television installers may be treated as independent contractors by installation firm. IRS audited firm, found installers were employees. Firm took IRS to court and won based on safe-harbor provision. [September 2004 Report] Sales representative was common law employee and not statutory employee. As such, she is not liable for self-employment (Schedule SE) tax. Sadly, her employee expense deductions were also denied. She received Form W-2s with the statutory employee box NOT checked.[October 2004 Report] IRS determined employee leasing firm owed nearly $2 million in payroll taxes. Bankruptcy Court held it was not liable and IRS appealed. On appeal, U.S. District Court agreed with IRS, reversed and remanded. [October 2004 Report] Small company president liable for wages reported by his corporation that he says he gave back. He incorporated in 1998 and was the sole shareholder. He received a large year end salary check and the next year gave it back. The IRS performed a 1998 Form 1040 audit, prepared a substitute return, and issued a deficiency notice. [November 2004 Report] IRS holds that those behind pure trust are liable for Federal employment tax. Small business owners attempted to drop out of the tax system through the use of a so-called pure sovereign trust. That was a big mistake. Their Federal employment tax bill now exceeds $1 million. [November 2004 Report] IRS assessed corporation officer – personally – for unpaid employment taxes. One element of IRC 6672 was satisfied: he was a “responsible person.” Court denied IRS summary judgment motion as to the other element: nonpayment may not have been “willful.”. [December 2004 Report] Tax court has jurisdiction over penalties for failure to file employment tax returns. Court has jurisdiction under IRC section 6651. Employment tax returns (Forms 941 and 940) are tax returns and not merely information returns.. [December 2004 Report]

[ Page updated: April 29, 2008 ]