Doesn’t matter, Mike. Until the IRS says otherwise, which is rare, very rare.
The stupid fuckers in Congress built such as complex tax code that the IRS cannot possibly sort out who is or who is not a 1099 (independent contractor) employee. A lot, and I mean a lot, of small businesses are shoving it up the federal government’s ass on this point. They’re saying, “Catch me if you can.” Few get caught, and the penalties are minimal.
Westcoaster
January 13, 2016 8:27 pm
Probably one of the most-abused tricks companies use to beat down Human capital. No matching social security, no benefits, probably no workers comp.
Your next video should be about the consequences if a business gets caught.
Back in PA Mike
January 13, 2016 9:12 pm
SSS, not sure what you call minimal. DOL fines start in the 5 figures, not to mention all the back taxes.
Old Dog
January 13, 2016 10:04 pm
I do not know why the original question of “1099 employee” was raised, but her point about “workers” being either employees or independent consultants is correct.
Her statements on how workers are “paid” is incorrect. She states that workers are either paid by W-2 or 1099.
Workers are paid usually by cash, check, or direct deposit. I am an employee of my firm and I get paid via direct deposit. Independent contractors that do work for our firm are paid by checks based on contracts and invoices presented for payment.
W-2s and 1099s are used to report these payments to the worker and the IRS at the end of the income tax year. They tell the worker and the government how much money was given to the worker in salary/wages/commission/bonuses (employee) [plus a boatload of other information] or invoiced payments (independent contractors).
Apologies for the distraction from her message, but her statement distracted me to the point that I took the time to write this.
OD
SSS
January 13, 2016 10:06 pm
Suzanna says:
“What a gorgeous smart woman!”
She’s a private shill for the IRS, Suzanna, and you, Westcoaster, and Back in PA Mike bought into her carnival barker’s pitch. “Contact us, and we’ll advise you on who is and who is not a legitimate 1099 employee. For a price, of course.”
Back in PA Mike ups the ante for 1099 “cheaters” to a scary 5-figure fine and owed back taxes by the Department of Labor. How in the fuck does the Department of Labor get access to business tax filings, Mike? Riddle me that. Oh, I bet you’ll fall back on the odd whistleblower, won’t you? BFD. Might affect a half dozen businesses versus the tens of thousands who stretch or abuse the 1099 provisions in the tax code. Pretty good odds for those companies who “beat down human capital,” eh, Westcoaster?
What a bunch of so-called “anti-government” hypocrites we have here. Fucking mantra of “Liberty good, government bad.” No, wait. Same people say, “Employee as defined by government good, 1099 private independent contractor as used by private employer bad.”
Constman54
January 13, 2016 10:49 pm
SSS it only takes one pissed off employee errrr independent contractor to bring the full force of the gov’t down on you. The penalties, fines and back taxes grow to six & seven figures very quickly.
How many businesses have you run?
Teri
January 13, 2016 11:08 pm
Well, knock me over with a feather; I thought the employer/worker relationship was a purely VOLUNTARY one, not something defined and regulated by the goobermint. What a load of BS! It’s things like this that make me completely understand why people are simply throwing in the towel.
Westcoaster, how is this an “abused trick” and a “beat down of human capital” if a worker VOLUNTARILY agrees to work as an independent contractor, knowing full well that there are no bennies, workman’s comp, matching SS, etc? Have you ever owned your own business or have you always been a wage slave?
I fully concur with SSS and Old Dog.
ottomatik
January 13, 2016 11:50 pm
What is a 1099 employee?
Technically, an oxymoron, no 1099 Independent Contractor is an employee. I have done bussiness with both for decades. It is not the IRS I fear, not in the slightest, it’s Pinnacol our States only Workers Comp Provider. They audit my books annually, and, in person this year.
Yea!! Fun!!.
Both the IRS and Workers Comp use the same working Definition for both. If Workers Comp decides any of Our 1099 Independent Contractors are in fact employee’s we get hit with the Roofing rate, about 25$ per 100$ paid, yea, that will add up fast!!!
We have done bussiness with several different ‘freelancers’ for years and always submit accurate 1099’s to the IRS, and the subs file and pay their amount. So if the IRS ruled the relationship to be employer/employee there might be some balance in FICA payments 15% or so. I never hear of this around the industry. Workers Comp on the other hand, look out. Th
Brian
January 14, 2016 12:21 am
1099 v. W2, it makes no difference. Your relationship with someone else you’re doing work for, for money is a contractual relationship. The government is not a party to that contract. However when you cash your paycheck (another contract) the government may very well be a party to that contract. As they are given total power over money (art1 section 8 clause 5).
Dependent on how you negotiate that contract determines if you are subject to the Springer/Veazie tax and the follow on SSA, Medicare and now Obamacare taxes.
IndenturedServant
January 14, 2016 6:53 am
I hardly think that Mike’s wife is a “private shill for the IRS”. I could be wrong though. It happened once before.
She may not have been perfectly clear but I took it to mean that the Federal DOL sets the rules/guidlines/regulations that all the other govt agencies use (as she said) to make the determination. Round these parts, wages are reported to the State DOL because both the employee and employer pay “premiums” to the State DOL for unemployment insurance. At the State level the DOL is very much involved. The State has no intention of being left out of their graft. I’m sure that when the State sees games being played they have no qualms about sharing with Big Brother
When I had my own business in the UK (early 90’s) I had a number of contract workers I filed 1099’s on. All of my income was reported by 1099 as well. We were all exempt from Federal taxes but had to file tax forms to determine SE tax for Social Security purposes. An AF lawyer showed me what had to be done and that’s what I did. IRS never questioned any of it. Walk into any grocery store and imagine how many food companies have products in the store……..that’s how many 1099’s I received every year!
starfcker
January 14, 2016 7:57 am
Mike’s wife is telling it the way it is. Sure, people work around it. But knowing the facts helps a lot, part of assessing your risks. Most small businesses start one of two ways, fake it till you make it, and then catch up on all the legal stuff once you are playing with the houses money (profits), or super tight ship, crossing all ‘I’s and dotting all ‘T’s. Depends on your appetite for risk, and your profitability timeline. I’ve seen it done both ways.
avalon
January 14, 2016 8:10 am
Marianne! I agree with Suzanna – a beautiful, smart woman!
Anonymous
January 14, 2016 8:53 am
Believe it or not, if you have doubts about contractor vs employee status for yourself or someone doing work for you, you can call the IRS and explain the situation to the and ask.
IF the answer you get is not what you wanted because of the way you are going about it you can also ask how to establish that status and they will tell you what to do and how to structure your business to achieve it.
Although it’s a bit hard to get through to the right person at the IRS, especially during tax season, I’ve always found them quite willing to explain their rules and how to comply with them in a manner they approve of.
This is for small businesses and sole proprietors, larger businesses usually have tax accountants and such to figure this out since it really isn’t something simple enough to handle in a phone conversation for them.
Anonymous
January 14, 2016 8:57 am
Brian,
The government has and uses the power to be a party of contracts between individuals. They have the right to define what is and is not a legal contract and what conditions can be legally covered by it. Contract law is a legal specialty in itself.
Consider: Making a “contract” between yourself and a street walker doesn’t exclude government from interfering with or being party to it. Yet it is a contract in every sense of the word.
Dutchman
January 14, 2016 9:28 am
The 1099 worker is the loser.
The IRS has a list of 20 questions – to determine if you are a contractor or employee. It has been decided by the courts (back in the 1980’s) that one cannot be a contractor – with the same company – full time – for years. You are considered an employee.
Anonymous
January 14, 2016 9:44 am
Dutchman,
Not exactly.
If you contract is up for bid or renewal on a regular basis and you offer your services to the general public following the common practices of being a business (such as providing your own equipment and establishing your own standards) as well you can easily maintain long term contractual relationships with a company without becoming an employee.
Janitorial workers, Grounds keepers, and many other service related workers do this on a regular basis. The big key is that you have actually structured yourself as a business (whether you fill out a legitimate Schedule C for profit and loss).
If you know the tax laws and structure your business activities right you can make this work to your advantage.
BUCKHED
January 14, 2016 11:57 am
Anon says : Believe it or not, if you have doubts about contractor vs employee status for yourself or someone doing work for you, you can call the IRS and explain the situation to the and ask.
Anon…I believe the GAO said that the IRS was wrong on about 55% of the advice they give you . Something like 20% of the time they couldn’t answer your question.
The sad thing is, if they give you advice, you use that advice to file your taxes, another IRS agent can say that the advice you were given is wrong and you’ll be on the hook for the added taxes and penalties .
Lulu
January 14, 2016 12:51 pm
FEDEX had al their package delivery drivers as this for years and they kept losing lawsuits as it is illegal –so they made all their package delivery drivers incorporate themselves so they can say all their drivers are small businesses — total scam
Mahtomedi
January 14, 2016 3:34 pm
@Lulu FedEx Ground (the Ex is green) are contractors. FedEx Express (the Ex is orange) are employees of FedEx.
Brian
January 14, 2016 8:41 pm
Anonymous, If a stipulation in a contract crosses an explicit power of Congress then yes they would be able to step in and meddle in it.
A paycheck is a negotiable instrument which under UCC law IS a contract. When money is involved the government has a say in that contract. However if I demand money produced directly by the government, they are then obligated to pay it as such. If I demand or don’t say (blank endorsement) what I want to be paid in and I receive bank credit or some other medium of exchange not issued under Congresses money issuing power…..THAT is the taxable event per Veazie Bank v. Fenno.
John in California
January 15, 2016 4:46 pm
I work for a fortune 500 company in California (for 30+ years)
All as an Independent Contractor (no business License or other employees)
I have to pay for my own Health and Liability Insurance (but no Workers Comp)
And get zero benefits (no paid holidays, sick or vacation (don’t work don’t get paid)
I pay quarterly taxes and both sides of the FICA tax
and I work more than 40 hours a week and am told what to do
The pay is good even with all I have to pay and don’t receive
What a gorgeous smart woman!
“What is a 1099 employee?”
Doesn’t matter, Mike. Until the IRS says otherwise, which is rare, very rare.
The stupid fuckers in Congress built such as complex tax code that the IRS cannot possibly sort out who is or who is not a 1099 (independent contractor) employee. A lot, and I mean a lot, of small businesses are shoving it up the federal government’s ass on this point. They’re saying, “Catch me if you can.” Few get caught, and the penalties are minimal.
Probably one of the most-abused tricks companies use to beat down Human capital. No matching social security, no benefits, probably no workers comp.
Your next video should be about the consequences if a business gets caught.
SSS, not sure what you call minimal. DOL fines start in the 5 figures, not to mention all the back taxes.
I do not know why the original question of “1099 employee” was raised, but her point about “workers” being either employees or independent consultants is correct.
Her statements on how workers are “paid” is incorrect. She states that workers are either paid by W-2 or 1099.
Workers are paid usually by cash, check, or direct deposit. I am an employee of my firm and I get paid via direct deposit. Independent contractors that do work for our firm are paid by checks based on contracts and invoices presented for payment.
W-2s and 1099s are used to report these payments to the worker and the IRS at the end of the income tax year. They tell the worker and the government how much money was given to the worker in salary/wages/commission/bonuses (employee) [plus a boatload of other information] or invoiced payments (independent contractors).
Apologies for the distraction from her message, but her statement distracted me to the point that I took the time to write this.
OD
Suzanna says:
“What a gorgeous smart woman!”
She’s a private shill for the IRS, Suzanna, and you, Westcoaster, and Back in PA Mike bought into her carnival barker’s pitch. “Contact us, and we’ll advise you on who is and who is not a legitimate 1099 employee. For a price, of course.”
Back in PA Mike ups the ante for 1099 “cheaters” to a scary 5-figure fine and owed back taxes by the Department of Labor. How in the fuck does the Department of Labor get access to business tax filings, Mike? Riddle me that. Oh, I bet you’ll fall back on the odd whistleblower, won’t you? BFD. Might affect a half dozen businesses versus the tens of thousands who stretch or abuse the 1099 provisions in the tax code. Pretty good odds for those companies who “beat down human capital,” eh, Westcoaster?
What a bunch of so-called “anti-government” hypocrites we have here. Fucking mantra of “Liberty good, government bad.” No, wait. Same people say, “Employee as defined by government good, 1099 private independent contractor as used by private employer bad.”
SSS it only takes one pissed off employee errrr independent contractor to bring the full force of the gov’t down on you. The penalties, fines and back taxes grow to six & seven figures very quickly.
How many businesses have you run?
Well, knock me over with a feather; I thought the employer/worker relationship was a purely VOLUNTARY one, not something defined and regulated by the goobermint. What a load of BS! It’s things like this that make me completely understand why people are simply throwing in the towel.
Westcoaster, how is this an “abused trick” and a “beat down of human capital” if a worker VOLUNTARILY agrees to work as an independent contractor, knowing full well that there are no bennies, workman’s comp, matching SS, etc? Have you ever owned your own business or have you always been a wage slave?
I fully concur with SSS and Old Dog.
What is a 1099 employee?
Technically, an oxymoron, no 1099 Independent Contractor is an employee. I have done bussiness with both for decades. It is not the IRS I fear, not in the slightest, it’s Pinnacol our States only Workers Comp Provider. They audit my books annually, and, in person this year.
Yea!! Fun!!.
Both the IRS and Workers Comp use the same working Definition for both. If Workers Comp decides any of Our 1099 Independent Contractors are in fact employee’s we get hit with the Roofing rate, about 25$ per 100$ paid, yea, that will add up fast!!!
We have done bussiness with several different ‘freelancers’ for years and always submit accurate 1099’s to the IRS, and the subs file and pay their amount. So if the IRS ruled the relationship to be employer/employee there might be some balance in FICA payments 15% or so. I never hear of this around the industry. Workers Comp on the other hand, look out. Th
1099 v. W2, it makes no difference. Your relationship with someone else you’re doing work for, for money is a contractual relationship. The government is not a party to that contract. However when you cash your paycheck (another contract) the government may very well be a party to that contract. As they are given total power over money (art1 section 8 clause 5).
Dependent on how you negotiate that contract determines if you are subject to the Springer/Veazie tax and the follow on SSA, Medicare and now Obamacare taxes.
I hardly think that Mike’s wife is a “private shill for the IRS”. I could be wrong though. It happened once before.
She may not have been perfectly clear but I took it to mean that the Federal DOL sets the rules/guidlines/regulations that all the other govt agencies use (as she said) to make the determination. Round these parts, wages are reported to the State DOL because both the employee and employer pay “premiums” to the State DOL for unemployment insurance. At the State level the DOL is very much involved. The State has no intention of being left out of their graft. I’m sure that when the State sees games being played they have no qualms about sharing with Big Brother
When I had my own business in the UK (early 90’s) I had a number of contract workers I filed 1099’s on. All of my income was reported by 1099 as well. We were all exempt from Federal taxes but had to file tax forms to determine SE tax for Social Security purposes. An AF lawyer showed me what had to be done and that’s what I did. IRS never questioned any of it. Walk into any grocery store and imagine how many food companies have products in the store……..that’s how many 1099’s I received every year!
Mike’s wife is telling it the way it is. Sure, people work around it. But knowing the facts helps a lot, part of assessing your risks. Most small businesses start one of two ways, fake it till you make it, and then catch up on all the legal stuff once you are playing with the houses money (profits), or super tight ship, crossing all ‘I’s and dotting all ‘T’s. Depends on your appetite for risk, and your profitability timeline. I’ve seen it done both ways.
Marianne! I agree with Suzanna – a beautiful, smart woman!
Believe it or not, if you have doubts about contractor vs employee status for yourself or someone doing work for you, you can call the IRS and explain the situation to the and ask.
IF the answer you get is not what you wanted because of the way you are going about it you can also ask how to establish that status and they will tell you what to do and how to structure your business to achieve it.
Although it’s a bit hard to get through to the right person at the IRS, especially during tax season, I’ve always found them quite willing to explain their rules and how to comply with them in a manner they approve of.
This is for small businesses and sole proprietors, larger businesses usually have tax accountants and such to figure this out since it really isn’t something simple enough to handle in a phone conversation for them.
Brian,
The government has and uses the power to be a party of contracts between individuals. They have the right to define what is and is not a legal contract and what conditions can be legally covered by it. Contract law is a legal specialty in itself.
Consider: Making a “contract” between yourself and a street walker doesn’t exclude government from interfering with or being party to it. Yet it is a contract in every sense of the word.
The 1099 worker is the loser.
The IRS has a list of 20 questions – to determine if you are a contractor or employee. It has been decided by the courts (back in the 1980’s) that one cannot be a contractor – with the same company – full time – for years. You are considered an employee.
Dutchman,
Not exactly.
If you contract is up for bid or renewal on a regular basis and you offer your services to the general public following the common practices of being a business (such as providing your own equipment and establishing your own standards) as well you can easily maintain long term contractual relationships with a company without becoming an employee.
Janitorial workers, Grounds keepers, and many other service related workers do this on a regular basis. The big key is that you have actually structured yourself as a business (whether you fill out a legitimate Schedule C for profit and loss).
If you know the tax laws and structure your business activities right you can make this work to your advantage.
Anon says : Believe it or not, if you have doubts about contractor vs employee status for yourself or someone doing work for you, you can call the IRS and explain the situation to the and ask.
Anon…I believe the GAO said that the IRS was wrong on about 55% of the advice they give you . Something like 20% of the time they couldn’t answer your question.
The sad thing is, if they give you advice, you use that advice to file your taxes, another IRS agent can say that the advice you were given is wrong and you’ll be on the hook for the added taxes and penalties .
FEDEX had al their package delivery drivers as this for years and they kept losing lawsuits as it is illegal –so they made all their package delivery drivers incorporate themselves so they can say all their drivers are small businesses — total scam
@Lulu FedEx Ground (the Ex is green) are contractors. FedEx Express (the Ex is orange) are employees of FedEx.
Anonymous, If a stipulation in a contract crosses an explicit power of Congress then yes they would be able to step in and meddle in it.
A paycheck is a negotiable instrument which under UCC law IS a contract. When money is involved the government has a say in that contract. However if I demand money produced directly by the government, they are then obligated to pay it as such. If I demand or don’t say (blank endorsement) what I want to be paid in and I receive bank credit or some other medium of exchange not issued under Congresses money issuing power…..THAT is the taxable event per Veazie Bank v. Fenno.
I work for a fortune 500 company in California (for 30+ years)
All as an Independent Contractor (no business License or other employees)
I have to pay for my own Health and Liability Insurance (but no Workers Comp)
And get zero benefits (no paid holidays, sick or vacation (don’t work don’t get paid)
I pay quarterly taxes and both sides of the FICA tax
and I work more than 40 hours a week and am told what to do
The pay is good even with all I have to pay and don’t receive
Would I or my employer be in trouble?