Headline:
IRS NOTICE OF
DETERMINATION OF WORKER STATUS HELD NOT FATALLY DEFECTIVE
Firm moved to dismiss Tax Court case on
ground that Notice Concerning Worker Classification was invalid.
Notice did not name the individuals determined to be employees. Court said
such a Notice was valid. Henry Randolph Consulting v. Commissioner (United
States Tax Court, October 19, 1999).
VIEW RELATED REPORT ARTICLE IN ADOBE PDF FORMAT
VIEW KEY AUTHORITIES IN FULL-TEXT IN
HTML FORMAT
Headline:
ADULT
ENTERTAINMENT FIRM MAY BE ENTITLED TO SECTION 530 SAFE-HARBOR
Firm operates an adult entertainment facility
with “fantasy booth performers." Appeals court held that if survey
shows that segment is "significant" then firm may be protected
by section 530. 303 West 42nd St. Enterprises Inc. v. IRS.
VIEW RELATED REPORT ARTICLE IN ADOBE PDF FORMAT
VIEW KEY AUTHORITIES IN FULL-TEXT IN
HTML FORMAT
Headline:
RESPONSIBLE PERSON UNDER
IRC 6672 CAN’T SUE GOVERNMENT FOR REFUND AND BRING CLAIM FOR
CONTRIBUTION AGAINST OTHERS IN SAME SUIT
Claim for contribution, fraud, breach of
contract or fiduciary duty "should not be brought in an IRC 6672
action." Such claims would hinder "efficient tax collection
proceedings."
VIEW RELATED REPORT ARTICLE IN ADOBE PDF FORMAT
VIEW KEY AUTHORITIES IN FULL-TEXT IN
HTML FORMAT
Headline:
FIRM LOSES $7 MILLION
MISCLASSIFICATION DISPUTE WITH THE IRS
Underlying matter involved the employment status of
nurses. Motion to reopen bankruptcy case for failure of first attorney to
“present certain evidence at the hearings” was denied.
VIEW RELATED REPORT ARTICLE IN ADOBE PDF FORMAT
VIEW KEY AUTHORITIES IN FULL-TEXT IN
HTML FORMAT
Headline:
FIRM OWNER FAILED TO AVOID PERSONAL LIABILITY WITH
PROPER PAYMENT DESIGNATION
Vague notation on check was not a "specific written
instruction." IRS may, without a designation, apply overpayments to any liability of
the taxpayer.
VIEW RELATED REPORT ARTICLE IN ADOBE PDF FORMAT
VIEW KEY AUTHORITIES IN FULL-TEXT IN
HTML FORMAT
Headline:
TAX ATTORNEY WAS AN ADVISOR AND NOT PERSONALLY LIABLE
FOR TRUST FUND PAYROLL TAXES
Matter was complicated by service on the board and share
ownership. IRS assessed over $3 million but Court held that attorney had no duty or
authority concerning client-firm’s tax payments.
VIEW RELATED REPORT ARTICLE IN ADOBE PDF FORMAT
VIEW KEY AUTHORITIES IN FULL-TEXT IN
HTML FORMAT
Headline:
HAWAII TRIAL ATTORNEY FOUND LIABLE BY IRS FOR TRUST
FUND PAYROLL TAXES
In
bankruptcy matter, attorney unsuccessfully argued that sums paid to him were loans and not
wages. Court agreed that payments were "remuneration for services."
VIEW RELATED REPORT ARTICLE IN ADOBE PDF FORMAT
VIEW KEY AUTHORITIES IN FULL-TEXT IN
HTML FORMAT
Headline:
COURT REPORTER WORKING FOR DISTRICT COURT RECEIVED BOTH
FORM W-2 AND FORM 1099
Court issued Form W-2 for recording and transcribing
proceedings. Form 1099 issued for fees charged to parties for transcripts and then paid to
reporter.
VIEW RELATED REPORT ARTICLE IN ADOBE PDF FORMAT
VIEW KEY AUTHORITIES IN FULL-TEXT IN
HTML FORMAT
Headline:
FOREIGN WORKERS HELD EMPLOYEES BY IRS FOR FEDERAL
EMPLOYMENT TAX PURPOSES
Some workers, however, were held independent contractors.
Service used the twenty factors listed in Revenue Ruling 87-41.
VIEW RELATED REPORT ARTICLE IN ADOBE PDF FORMAT
VIEW KEY AUTHORITIES IN FULL-TEXT IN
HTML FORMAT
Headline:
COMPUTER OPERATOR / WIFE WORKING AT HOME FOR HUSBAND
HELD BY IRS TO BE STATUTORY EMPLOYEE HOMEWORKER
Form 941s were filed, but no FICA taxes were withheld.
Husband claimed payments were exempt from FICA tax.
VIEW RELATED REPORT ARTICLE IN ADOBE PDF FORMAT
VIEW KEY AUTHORITIES IN FULL-TEXT IN
HTML FORMAT
Headline:
TRUCKING FIRM MAY BE ENTITLED TO SAFE HARBOR
Firm used owner-operator drivers to haul freight
interstate. IRS determined drivers were employees. Firm disagreed and is seeking relief in
United States District Court
VIEW RELATED REPORT ARTICLE IN ADOBE PDF FORMAT
VIEW KEY AUTHORITIES IN FULL-TEXT IN
HTML FORMAT
Headline:
CAR DEALER LIABLE FOR BACKUP WITHHOLDING ON PAYMENTS TO
NON-EMPLOYEES
IRS ruled that dealer's payments to contractors were
reportable on Form 1099. Failure to obtain taxpayer identification numbers made the
payments subject to backup withholding
VIEW RELATED REPORT ARTICLE IN ADOBE PDF FORMAT
VIEW KEY AUTHORITIES IN FULL-TEXT IN
HTML FORMAT
Headline:
IN CASE OF FIRST IMPRESSION, TAX COURT HELD IT HAD
LIMITED JURISDICTION UNDER NEW SECTION 7436
IRS audited consulting firm and gave the Notice of
Determination called for by new IRC 7436. Tax Court held it had jurisdiction to determine
worker status but not the amount of firm's liability.
Randolf Consulting v Commissioner.
VIEW RELATED REPORT ARTICLE IN ADOBE PDF FORMAT
Headline:
LOW EMPLOYMENT TAX RATES UNDER IRC SECTION 3509 ARE
MANDATORY
Firm under IRS
audit does not have option to use tax abatement provisions in lieu of the section. Section
3509 applies where worker misclassification is in good faith and not willful. Source: IRS
Field Service Advice.
VIEW RELATED REPORT ARTICLE IN ADOBE PDF FORMAT
Headline:
PET GROOMERS -- INDEPENDENT CONTRACTORS OR EMPLOYEES?
Think twice before you treat groomers as independent
contractors. IRS looked at firms using groomers in five rulings. Found employee status
each time. Article by James R. Urquhart III, Editor of The Independent Contractor
Report, Tax Attorney, Irvine, California.
VIEW RELATED REPORT ARTICLE IN ADOBE PDF FORMAT
VIEW KEY AUTHORITIES IN FULL-TEXT IN HTML FORMAT
Headline:
TRAVELING SALESMAN FOR DISTRIBUTOR OF AUTOMOTIVE
PRODUCTS HELD EMPLOYEE FOR STATE UNEMPLOYMENT COMPENSATION PURPOSES
Salesperson was
covered by Unemployment Insurance Code as an employee. Employee status applied though
under common law he was an independent contractor. Metric Man, Inc. v Unemployment Ins.
Appeals Bd. (1997, 4th Dist) 59 Cal App 4th 1041, 69 Cal Rptr 2d 569, Independent
Contractor Rep. No. 791.
VIEW RELATED REPORT ARTICLE IN ADOBE PDF FORMAT
VIEW KEY AUTHORITIES IN FULL-TEXT IN HTML FORMAT
Headline:
WORKERS TRANSFERRED TO TEMPORARY AGENCIES REMAINED
COMMON-LAW EMPLOYEES OF MICROSOFT
Software testers, production editors,
proofreaders, formatters, indexers for Microsoft Corporation are employees. This is an
action for benefits against Microsoft Corp. Court granted partial summary judgment to
plaintiffs finding that workers who were transferred to temporary employment agencies
remained common-law employees of Microsoft. Employee Retirement Income Security Act, Sec.
502(a); 29 USC 1132(a); IRC 423. Vizcaino v. Microsoft Corp., Independent Contractor Rep.
No. 786 (United States District Court, Western District Of Washington, Seattle Division,
July 15, 1998).
VIEW RELATED REPORT ARTICLE IN ADOBE PDF FORMAT
VIEW KEY AUTHORITIES IN FULL-TEXT IN HTML FORMAT
Headline:
IRS RULES AGAINST OFFICERS AND OWNERS OF FAMILY
CORPORATION
Matter involves officers and owners of family corporation. IRS found,
and Tax Court agreed with, deficiencies and accuracy related penalties against a family
that controlled a corp. which failed to keep adequate records. Members received
"loans" for wages and used company funds for personal expenses. Federal income
tax, IRC 3121(d)(1), 3121(d)(2). Joly v. Commissioner, Independent Contractor Report No.
784 (U.S. Tax Court, October 5, 1998).
VIEW RELATED REPORT ARTICLE IN ADOBE PDF
FORMAT
VIEW KEY AUTHORITIES IN FULL-TEXT IN HTML FORMAT
Headline:
GARMENT INDUSTRY PRACTICES ARE SUBJECT OF REVISED IRS GUIDE
Guide, first printed in 1989, was based on audits of 25 different contractors.
Revised guide draws from recent findings to update the original document. Training
3147-105 (6/97); TPDS No. 83127Q06-15-97; Independent Contractor Rep. No. 775 (IRS
training material, June 1997).
VIEW RELATED REPORT ARTICLE IN ADOBE PDF FORMAT
VIEW KEY AUTHORITIES IN FULL-TEXT IN HTML FORMAT
Headline:
RESEARCH STUDY COORDINATOR FOR FEDERAL AGENCY IS EMPLOYEE
In a private ruling the IRS determined that
Federal employment taxes were due, except FUTA. The worker provided service as "a
research study coordinator / biofeedback therapist" pursuant to a written personal
service contract. IRS Private Letter Ruling 984301210-23-98; Independent Contractor Rep.
777 (July 20, 1998).
VIEW RELATED REPORT ARTICLE IN ADOBE PDF FORMAT
VIEW KEY AUTHORITIES IN FULL-TEXT
Headline:
Firm Paying Personal Attendants, Companions And Household Care Workers Through An
Agent Is Employer For Federal Employment Tax Purposes
When services were covered by health
insurance, firm had insurer pay sister entity. Section 3506 of the Internal Revenue Code,
protecting certain placement firms, held NOT to apply. IRS Field Service Advice 1998-210.
Original FSA dated October 14, 1993, first published 1998.
VIEW RELATED REPORT ARTICLE IN ADOBE PDF FORMAT
VIEW KEY AUTHORITIES IN FULL-TEXT
Headline:
Past Owner "Failed To Meet His Burden" Of Showing That He Was Not A
Responsible Person
He was held liable for trust fund
employment taxes under Section 6672 of the Internal Revenue Code. He failed to show that
his acts or omissions were not willful. DeVoll v. Internal Revenue Service.
Opinion dated September 19, 1998.
VIEW RELATED REPORT ARTICLE IN ADOBE PDF FORMAT
VIEW KEY AUTHORITIES IN FULL-TEXT
Headline:
INSURANCE SALES DISTRICT MANAGER HELD
INDEPENDENT CONTRACTOR AND NOT STATUTORY EMPLOYEE
His job was to recruit, hire, train and
supervise insurance agents. After he filed an amended return to deduct business expense on
Schedule C, IRS determined that he was a common-law employee. The Tax Court disagreed. Wickum
v. Commissioner. Opinion dated July 27, 1998.
VIEW RELATED REPORT ARTICLE IN ADOBE PDF FORMAT
VIEW KEY AUTHORITIES IN FULL-TEXT
Headline:
Firm Using Home Aides For Elderly Entitled To
Safe-Harbor For Federal Employment Tax
Firm was a Maryland "Residential Service Agency". IRS reclassified the
aides and assessed nearly one million dollars in employment taxes. Court granted firm's
summary judgment motion. Options for Senior America Corp. v. United States.
Opinion dated July 14, 1998.
VIEW RELATED REPORT ARTICLE IN ADOBE PDF FORMAT
VIEW KEY AUTHORITIES IN FULL-TEXT
Headline:
Nightclub Engaging Exotic Dancers is Entitled to Safe Harbor
Relief For Federal Employment Tax Purposes
Club used a so-called "Dancer Performance Lease
Agreement." Dancers "lease space" and earn income from tips from nightclub
patrons. Taylor Blvd. Theatre Inc. vs. United States. Opinion dated May
13, 1998.
VIEW RELATED REPORT ARTICLE IN ADOBE PDF FORMAT
VIEW KEY AUTHORITIES IN FULL-TEXT
Headline:
Trucking Firm (Lessor) is Liable for Federal Employment Taxes
for Drivers it Leased to Other Trucking Company
Lessor owns tractors and trailers that it leases with
drivers. IRS held lessor liable as a "statutory" employer. Jury found that
lessee was the employer -- not the lessor. IRS prevailed by changing its theory against
lessor to "control of the payment." Cynthia L. Dains vs. Internal
Revenue Service. Opinion dated June 29, 1998.
VIEW RELATED REPORT ARTICLE IN ADOBE PDF FORMAT
VIEW KEY AUTHORITIES IN FULL-TEXT
Headline:
Salon Manicurists Held Employees For Federal Employment Tax
Purposes
"Core question" was whether the manicurists were
employees or independent contractors. Court found employee status and granted government's
motion for summary judgment. LA Nails Inc. v. United States. Opinion
dated May 4, 1998.
VIEW REPORT ARTICLE IN ADOBE PDF FORMAT
VIEW KEY AUTHORITIES IN FULL-TEXT
Headline:
Status of Cable Television Installers Not Clear According to Federal Judge
Cable TV companies contract with firm to install home cable
connections. Firm "subcontracts" with individuals to perform installation
services. Prince Cable Inc. v. United States. Opinion dated: April
9, 1998
VIEW REPORT ARTICLE IN ADOBE PDF FORMAT
VIEW KEY AUTHORITIES IN FULL-TEXT
Headline:
After years of struggle with the IRS, Taxi Cab firm received over $109,000 for
litigation fees and costs under IRC section 7430
The conflict lasted five-years. Early
on, a huge employment tax assessment resulted when IRS reclassified taxi cab drivers.
J&J Cab Service, Inc. v. United States. Opinion dated March 29, 1998.
VIEW REPORT ARTICLE IN ADOBE PDF FORMAT
VIEW KEY AUTHORITIES IN FULL-TEXT
Headline:
The Independent Contractor Tax Simplification Act of 1998 would add a new statutory
independent contractor section
On April 23, 1998, House Ways and Means Committee member
Jon Christensen (R-Neb.), introduced The Independent Contractor Tax Simplification Act of
1998 (H.R. 3722). Christensen said, "Clarifying the tangled federal tax provisions
with respect to distinction between full-time employee and independent contractor status
has emerged as the top priority of the nation's small business community. This problem has
wreaked havoc on businesses across the country and once the distinction is made, the
problem should all but disappear." The bill proposes a "three-part test."
VIEW REPORT ARTICLE IN ADOBE PDF FORMAT
VIEW KEY AUTHORITIES IN FULL-TEXT
Headline:
Owner-operator drivers delivering freight locally held independent contractors for Federal
employment tax purposes
The IRS ruled that these owner-operators were not employees
of the carrier for Federal employment tax purposes. The carrier delivered freight from
wholesale distributors to retail outlets. Employees picked up and sorted the freight.
Thereafter owner-operators would load their trucks and deliver the freight. By agreement,
the operators were paid a specified rate and not by the hour. They used their own vehicles
and equipment, bore all costs associated with maintenance and upkeep, acquired liability
insurance, and were instructed where to deliver the freight, but not when or how.
VIEW KEY AUTHORITIES IN FULL-TEXT
Headline:
IRS classification settlement program (CSP) has been extended
-- indefinitely
The Internal Revenue Service
is extending the Classification Settlement Program or
"CSP" until further notice. The CSP is an optional settlement program that
allows businesses and tax examiners to resolve worker classification cases early in the
administrative process. In the CSP, examiners can offer a business under audit a worker
classification settlement using a standard closing agreement developed for this purpose.
The CSP procedures are designed to properly apply the taxpayer relief provisions under
section 530 of the Revenue Act of 1978. The Service implemented the CSP in March 1996 on a
two-year trial basis. Taxpayer participation in the CSP is entirely
voluntary. A taxpayer declining to accept a settlement offer retains all rights to
administrative appeal that exist under the Service's current procedures and all existing
rights to judicial review.
VIEW KEY AUTHORITIES IN FULL-TEXT
Headline:
Registered nurse assisting homebound clients held employee for Unincorporated
Business Tax purposes (UBT)
The RN filed a refund request for New York City UBT --
going back three years. The RN served as a community health nurse for a Jewish Geriatric
Center's homebound clients. After an extensive review of the facts, the City tribunal
found that the RN was an employee. It granted the refund request notwithstanding that the
RN filed her IRS Form 1040 as an independent contractor (i.e., a Schedule C was attached).
Headline:
HR 2642 -- Bill Would "Tighten and Simplify" Definition of Independent
Contractor -- Full Text
