So how bad is it if an ex employer lists someone as a 1099 when they were an actual employee?

The employer never got the employee to sign ANYTHING and didn't take taxes out.

I think this is a huge red flag and will get the company a pretty audit which will really rip the lid off this can. I would like to see this employer burn.

2/18/2009 9:25:13 AM

lets hope that ex-employee is prepared to pay taxes
what is the job description, how are you sure a 1099 isn't applicable

that ex-employee would need need to file a 3949A

[Edited on February 18, 2009 at 9:29 AM. Reason : ex-]

2/18/2009 9:27:55 AM

Stop looking for faults with every employer. There are enough people without jobs already.

2/18/2009 9:29:34 AM

good thing you put this on the internet

2/18/2009 9:30:31 AM

Quote :

"The employer never got the employee to sign ANYTHING and didn't take taxes out."

doesnt mean shit

you know that you still have to pay taxes on your income

2/18/2009 9:30:37 AM

IRS says YOU are ALWAYS responsible for your taxes no matter what.

2/18/2009 9:31:45 AM

Oh of course! There have been several conversations with the labor department and the IRS to determine this person was not a 1099 and what steps to take now, they are just hush hush on the employers punishment. This employer still owes back wages as well. He has horrible business practices and deserves to be shut down.

I was just wondering how much trouble this dude could get in.

2/18/2009 9:32:48 AM

Quote :

"The employer never got the employee to sign ANYTHING and didn't take taxes out."

In my mind, this in itself was the warning that he was going to be getting a 1099. No w4 = no taxes withheld afik.

Edit: Also there are many deductions that a independent contractor can take that a normal employee cannot.

[Edited on February 18, 2009 at 9:41 AM. Reason : ]

2/18/2009 9:36:49 AM

sounds like this employee is the one who didn't get his/her shit straight in the first place when he/she was hired.

2/18/2009 9:38:10 AM

No contract either. He followed a schedule, used the business' items, got reimbursed for travel expenses, etc. Thing is this employer has done it to most everyone who works for him and has openly boasted about not paying taxes, child support, yadd yadda for the last several years.

He's dirty.

2/18/2009 9:39:30 AM

The bottomline is that taxes have to be paid on that income. Theres no getting around that if that whats this person is trying to do.

2/18/2009 9:41:26 AM

Quote :

"There is no “magic” or set number of factors that “makes” the worker an employee or an independent contractor, and no one factor stands alone in making this determination. Also, factors which are relevant in one situation may not be relevant in another If, after reviewing the three categories of evidence, it is still unclear whether a worker is an employee or an independent contractor, Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding (PDF) can be filed with the IRS. The form may be filed by either the business or the worker. The IRS will review the facts and circumstances and officially determine the worker’s status. http://www.irs.gov/pub/irs-pdf/fss8.pdf"

http://www.irs.gov/businesses/small/article/0,,id=99921,00.html

But even if he is found to be an employee, then I don't think much, if anything, will be done to the employer other than being forced to withhold taxes. The IRS is gonna get their cut.

[Edited on February 18, 2009 at 9:47 AM. Reason : ]

2/18/2009 9:44:57 AM

Yeah but the 1099 wages earned don't even match what the dude actually made, it was actually more.
He doesn't want to be screwed into paying shit he didn't earn.

He knows he was a dumbass for not getting proper paperwork signed and shit but the situation is such a clusterfuck he wants to nail the employer.

^The people he has talked to face to face say he is not a 1099. He even got unemployment approved which verifies he is not supposed to be a 1099. So he has all the paperwork and shit.

Like I said in the OP how much shit is this guy in for??

[Edited on February 18, 2009 at 9:48 AM. Reason : ddd]

2/18/2009 9:46:44 AM

Quote :

"sounds like this employee is the one who didn't get his/her shit straight in the first place when he/she was hired."

The employee(you) are a fucking moron.
Each and every paycheck shows the amount withheld for Federal taxes, State taxes, Social Security and Medicare. If you're getting a check without that stuff...guess what, you're a contractor and you're liable for that income tax.

2/18/2009 9:54:51 AM

Holy shit, reading comprehension ftl.

2/18/2009 9:56:53 AM

Quote :

"Safe-Harbor Protection Under the safe-harbor law, an employer cannot be held liable for employment taxes arising from an employment relationship if the recipient of the services: * Had a "reasonable basis" for treating the worker as an independent contractor. (A reasonable basis can be a judicial precedent, such as an IRS letter ruling that the worker is an independent contractor; an IRS audit, not necessarily directed to employment taxes, that did not result in an assessment for taxes; or a long-standing industry practice of classifying certain workers as independent contractors.) * Filed required returns with the federal government. * Has not classified as an employee any worker performing duties similar to those of the independent contractor."

http://findarticles.com/p/articles/mi_m1154/is_n12_v83/ai_17753838

I don't know how accurate this is now, the article was written in 1995. Quite interesting though, as it shows how an employer was initially charged $200k in back taxes, ended up getting out of it, but still lost his business due to having to have employees and not contractors. So basically the IRS did nothing but make every contractor a employee. I seem to recall the same thing happening to Fedex or UPS a while back, where all the drivers were considered contractors until the IRS came in.

Also http://www.irs.gov/pub/irs-pdf/p1976.pdf

2/18/2009 10:22:04 AM

A lot of construction workers cannot be contractors either because they don't use their own equipment. I never knew that til my friend's issue arose.

2/18/2009 10:26:45 AM

Quote :

"There have been several conversations with the labor department and the IRS to determine this person was not a 1099 and what steps to take now"

in those conversations they never mentioned a 3949A?

what information are you looking for here that you cant get from conversations with the labor department and IRS?

attention?

2/18/2009 12:09:50 PM

nah - kiwi never seeks attention - that can't be it

2/18/2009 12:11:19 PM

Speaking of IRS fraud, sure wish my home that I closed on Feb 29th, 2008 couldn't be bumped to have closed on April 10th, 2008 so I can qualify for the 2008 tax credit.

Because apparently January, February, and March weren't in 2008.

2/18/2009 12:13:23 PM

sounds like you are just trying to pin your problems on someone else...oh i mean 'your friend'

word of advice: be more responsible next time.

2/18/2009 12:21:16 PM

^^ no shit, I closed at the end of March

2/18/2009 12:30:20 PM

lol this isn't my problem sillies.

I was hoping someone would maybe know what kind of fucked up shit the employer is in for. It just made me super mad some of the things my friend was telling me about this guy, he's a real tooldouche and doesn't deserve to get away with the shit.

2/18/2009 1:26:33 PM

Here's the thing.

If your "friend" worked for this guy for less than a year and never signed a W-4 to begin with, then he's an independent contractor.

Here are the defining bits of being an "actual employee" for most states (NC has a few wiggles about the 1yr rule):

Continuously employed in a full time capacity for more than 365 days (40hrs+ a week)
and or
Receiving benefits through the employer (medical, dental, 401k, et al)
and or
Signing a W-4 for withholding

That's pretty much it. Being reimbursed for travel has nothing to do with being an employee. Following a schedule has nothing to do with being an employee. Using the business' equipment has nothing to do with being an employee, UNLESS the company covers the person under a workers comp umbrella policy.

Pretty much the only way this guy can get into any serious trouble is if he is avoiding workers comp and unemployment/payroll taxes by 1099'ing all his contractors WITHOUT verifying they have their own coverage. Even then, that is a State issue, not a federal one.

2/18/2009 1:44:10 PM

there are actually quite a few other things that make you an employee and not a contractor, at least according to Investigator Barnes with the NC Department of Labor.

2/18/2009 2:37:36 PM

Yeah according to the TN department of labor and the IRS division in TN he is not a 1099. I'll repeat it again, this isn't an argument about whether he is or isn't an employee, fuckhead, it's about what kind of trouble this employer could get in, especially since he's a serial tax evader.

2/18/2009 3:49:13 PM

Look, dipshit.

You posted a completely hypothetical situation, then followed with bits and pieces of a story. I can't read your mind. Based on WHAT YOU POSTED, there's nothing there that falls outside of a contractor role (being that I've been a contractor in different capacities for nearly 10 years).

Don't be mad at me for not telling the whole story up front.

"Serial tax evader" is another completely worthless description. What kind of taxes? Personal? Payroll? Federal? State? All of the above?

I'll give you an answer that fits your description:

He could get a slap on the wrist with a minimal fine, or he could go to jail for 20+ years and be ordered to pay restitution. Or anything in between. There, go shut the hell up.

2/18/2009 9:14:41 PM

^Or Obama could appoint him to his cabinet

2/18/2009 9:45:44 PM

No matter the outcome, I think the use of fraud in the thread title is a little overzealous

shock and awe ftw

2/18/2009 10:45:32 PM