The
Independent Contractor Report |
The
Independent Contractor Report |
List of
2005 Articles
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2005
Tax court and IRS agree fishing boat crew member was self-employed. Proceeds from sale of fish (after operating expenses) depended on amount of catch. Crew member did not report self-employment tax contending he was an employee.
January 2005 Report --->Veterinarians working shifts of twelve or more hours claimed right to overtime. District court concluded veterinarians are doctors of medicine. They have advanced degrees, and they are licensed. Subject veterinarians not entitled to overtime pay.
January 2005 Report --->Owner of automobile parts business attempted delegation of payroll tax duties (reporting and paying). Agent failed to timely file return and pay employment taxes. Judge found firm did not show reasonable cause to avoid the tax penalty. Criminal conduct (not present here) by an employee may be sufficient to avoid a failure to file or pay penalty.
February 2005 Report --->Truck dispatcher for long-haul trucking company claimed he was an employee and never received Form 1099-Misc for more than $12,300. His job duties as dispatcher did not change significantly when he was changed from employee to independent contractor. Court concluded he performed services as independent contractor.
February 2005 Report --->Money paid to employee constituted wages and not reimbursement. Petitioner argued payments were reimbursements under qualified accountable plan. Tax Court held amounts were includable in income as compensation..
March 2005 Report --->Are payments to worker, for cancellation of employment contract, wages? One issue is whether such payment is related to employment. IRS held that payment constituted taxable wages subject to FICA, FUTA, and FITW.
March 2005 Report --->IRS disallowed deduction for payments to children. Husband and wife took Form 1040, Schedule C, business expense deductions for payments to their kids. Children were ages 10 and 5. Tax Court agreed with IRS that taxpayers failed to show amounts paid were reasonable compensation for services.
April 2005 Report --->IRS found “temporary” physical and speech therapists are not independent contractors and assessed over $22 million. Subject firms sued claiming safe harbor under section 530 of the Revenue Act of 1978. District denied summary judgment motions. Case will go to trial.
April 2005 Report --->IRS determined payments were taxable bonuses and not gifts. U.S. Court of Appeals affirmed Tax Court and IRS decision. Sums paid to admitted employee were taxable bonuses.
May 2005 Report --->IRS held that personal credit card use constituted taxable constructive dividend. Taxpayer / shareholder owned 40 percent of the payer corporation. Court disagreed with IRS and found transactions were true loans.
May 2005 Report --->Undocumented alien workers paid by four shell companies. Federal indictments filed. Neither federal nor state employment taxes were paid and no returns were filed. Though illegal, conduct was not money laundering. Tax savings does not constitute “proceeds” from an illegal activity.
June 2005 Report --->Despite boss’ orders, IRS found individual personally liable for missed payroll taxes. District Court jury agreed that he was responsible person under Code. Boss told him to pay other creditors over the IRS.
June 2005 Report --->IRS and court agree, LLC check the box regulations are lawful. Individual was sole member of LLC during tax periods in question. To avoid payroll tax liability, individual argued unsuccessfully that his LLC should be treated like corporation.
July 2005 Report --->IRS said corporation officer was personally liable for payroll taxes. The court disagreed. Officer had no effective way to pay. Court overturned attempt by IRS to assess section 6672 responsible person liability.
July 2005 Report --->Government review says S corporation profits may be employment taxable salary to owner. Regulations and Revenue Rulings did not anticipate that most S corporations would be one-shareholder corporations. Proposed law to tax all S corporation profits under Social Security tax.
August 2005 Report --->Accountant for restaurant not liable for payroll taxes. Accountant had authority only to sign checks. IRS found him liable but court disagreed finding he was not responsible for restaurant's unpaid payroll taxes.
August 2005 Report --->IRS has new guide to help its auditors examine direct sellers. Section 3508 provides a statutory independent contractor category for qualifying direct sellers. Section 3508 qualified direct sellers must use Schedule C and Schedule SE.
September 2005 Report --->IRS memo considered employment status of prison inmates. Prison inmates were determined to be employees of private firm but not of government. Section 530 safe harbor may apply.
September 2005 Report --->Court voids $109,000 IRS employment tax assessment. IRS assessed bankrupt debtor as responsible person under IRC 6672. Court held assessment was void as made in violation of the automatic stay.
October 2005 Report --->IRS Federal, State and Local Government unit to increase focus on examination function. In recent years, focus of FSLG has been on education. FSLG auditors will look for issues including worker misclassification
October 2005 Report --->Manicurists and cosmetologists in nail salon held independent contractors and not employees. California Employment Development Department (EDD) determined that workers were employees and not renters or independent contractors. EDD assessed $75,000 against shop owner. After five day trial, administrative law judge overturned assessment and upheld non-employee status.
November 2005 Report --->New IRS publication clarifies differences between compliance check and audit. Only an audit can help the taxpayer / employer qualify for section 530 safe haven. Sometimes a compliance check can cross the line.
November 2005 Report --->Royalty payments were actually wages. As wages, they were subject to employment taxes. IRS failed in attempt to confer Tax Court jurisdiction with section 7436 notice of determination and then make jurisdiction vanish with an admission.
December 2005 Report --->IRS publishes new revenue procedure for administrative appeal of IRC 6672 trust fund recovery penalty. Twenty-one year old revenue procedure superseded. Before assessment, IRS must send a notice of proposed assessment.
December 2005 Report --->
[ Page updated: Tuesday, April 29, 2008 ]
