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List of 2007 Articles
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The Independent Contractor Report

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2007

  1. Corporate officer can have personal employment tax liability - for ever. Person liable under IRC 6672 is subject to same assessment period as the employer. Same rule for unlimited periods under IRC 6501(c) for failure to file Form 941s.
    January 2007 Report ---> click here to view --->  Click here to get this issue in PDF format.

  2. Trust fund recovery penalty not erased in bankruptcy. Bankruptcy court held debtor is IRC 6672 responsible person who willfully failed to pay over trust fund employment tax. Trust fund penalty assessment against individual is not dischargeable in his bankruptcy.
    January 2007 Report ---> click here to view --->  Click here to get this issue in PDF format.

  3. IRS chief counsel comments on section 530 safe harbor application. Reply to U.S. Senator who wrote letter for constituent needing guidance. Treatment of workers as Form W-2 employees will end any Section 530 safe harbor as to that class.
    February 2007 Report ---> click here to view --->  Click here to get this issue in PDF format.

  4. IRS to do more S corporation audits. S corporations play a big role in tax gap. Service needs to do more taxpayer education and examinations.
    February 2007 Report ---> click here to view --->  Click here to get this issue in PDF format.

  5. Non-wage payments to firm owner were dividends, not loan repayment. IRS determined that payment of personal expenses of the president were constructive dividends. President failed to prove the payments were to payoff a loan or that the expenses were for the company.
    March 2007 Report ---> click here to view --->  Click here to get this issue in PDF format.

  6. IRS says payments individual claimed were not taxable are indeed taxable. Tax Court agreed and held that nonemployee compensation must be included in taxable income. Accuracy-related penalty for underpayment of taxes based on negligence also upheld.
    March 2007 Report ---> click here to view --->  Click here to get this issue in PDF format.

  7. District court says company founder may not be liable for unpaid federal employment taxes. Internet start-up founder may not be liable under section 6672. Court denied IRS motion for summary judgment in this refund suit..
    April 2007 Report ---> click here to view --->  Click here to get this issue in PDF format.

  8. IRS publishes new household employer tax guide. Publication 926 is for wages paid in 2007. The social security and Medicare wage threshold remains at $1,500. Caregivers and housekeepers paid by the day or week are likely employees and not independent contractors.
    April 2007 Report ---> click here to view --->  Click here to get this issue in PDF format.

  9. IRS operations chief warns his own to respect right to Notice of Determination of Worker Classification. In the alternative, the Service can obtain a waiver. IRC section 7436 mandates Notice when worker classification case involves an actual controversy.
    May 2007 Report ---> click here to view --->  Click here to get this issue in PDF format.

  10. Tax court held truck drivers were employees. Trucks were neither owned nor leased by the drivers. Section 530 safe harbor held not applicable.
    May 2007 Report ---> click here to view --->  Click here to get this issue in PDF format.

  11. Firm still liable though payroll agent stole over $800,000 in payroll taxes. Payroll agent was prosecuted by government and was sent to jail. Government then moved against the firm for the unpaid employment tax.
    June 2007 Report ---> click here to view --->  Click here to get this issue in PDF format.

  12. LLC failed to pay $1 million in employment taxes. LLC also failed to elect corporation status under check the box regulations. As a disregarded entity, the owner / member was liable for back employment taxes.
    June 2007 Report ---> click here to view --->  Click here to get this issue in PDF format.

  13. IRS Publication 3953 answers questions about tax court proceedings for determination of employment status under IRC 7436. Pay attention to the deadline for filing a Tax Court petition. The IRS makes three determinations before issuing Notice of Determination.
    July 2007 Report ---> click here to view --->  Click here to get this issue in PDF format.

  14. Firm failed to timely file Form 1099s yet claimed the section 530 safe-harbor. IRS and Court agreed that timely filing was required. Interpreting a late filing as satisfying the filing requirement would negate the requirement.
    July 2007 Report ---> click here to view --->  Click here to get this issue in PDF format.

  15. U.S. Government Accountability Office testifies on misclassification. Employee Misclassification impacts workers in many ways. Federal and state benefits may be lost.
    August 2007 Report ---> click here to view --->  Click here to get this issue in PDF format.

  16. IRS audited seamstress treated as independent contractor. IRS and Court agreed on deficiency against her for payments she received while classified as an independent contractor. Additions upheld for failure to file an income tax return and failure to timely pay her taxes.
    August 2007 Report ---> click here to view --->  Click here to get this issue in PDF format.

  17. Computer hardware salesperson is not statutory employee. Tax Court held he was common law employee. Deductions denied for vehicle mileage, loan interest, and accounting and legal fees.
    September 2007 Report ---> click here to view --->  Click here to get this issue in PDF format.

  18. Form 1099-MISC rules not sufficiently followed by governments. Government report shares results of review looking at information return reporting and backup withholding compliance. FSLG office to determine if more compliance activities are warranted.
    September 2007 Report ---> click here to view --->  Click here to get this issue in PDF format.

  19. Nursing home owner convicted of criminal failure to pay payroll taxes. Judge ruled owner was properly convicted of 107 counts. Jury instruction held proper.
    October 2007 Report ---> click here to view --->  Click here to get this issue in PDF format.

  20. Drivers for courier company are employees and not independent contractors. Both the California Employment Development Department and an administrative law judge after trial found employee status. On appeal, the California Unemployment Insurance Appeals Board, in lengthy precedent tax decision, affirmed employee status.
    October 2007 Report ---> click here to view --->  Click here to get this issue in PDF format.

  21. Package couriers and messengers are employees and not independent contractors. Courier firm paid California EDD tax assessment for more than $600,000 and sued for refund. After non-jury trial, judge found employee status for employment tax purposes and court of appeal agreed.
    November 2007 Report ---> click here to view --->  Click here to get this issue in PDF format.

  22. Firm paying domestic workers may not need workers’ compensation insurance. Firm was “referral agency” for domestic workers for elderly and infirm. Appeals Court held qualified referral agencies are deemed not employers for purposes of workers' compensation.
    November 2007 Report ---> click here to view --->      Click here to get this issue in PDF format.

  23. Water proofers are employees, not independent contractors. Waterproofing firm treated workers (all relatives) as non-employees. IRS, Tax Court agree on employee status, that firm failed to file Forms 940, 941 and to make employment tax deposits.
    December 2007 Report ---> click here to view --->      Click here to get this issue in PDF format.

  24. Marble and tile installer is independent contractor. Worker supplied tools, materials like grout, cork, cork glue, and sound proofing material. IRS, Tax Court agreed that installer owed Form 1040 / Schedule SE self employment tax.
    December 2007 Report ---> click here to view --->      Click here to get this issue in PDF format.

[ Page updated: Tuesday, April 29, 2008 ]