# Heads Up regarding Independent Contractors



## Deershack (Feb 19, 2009)

A recent article in the local paper detailed the Federal and State's investigation of the mis-use of classifying workers as ICs rather then employees. It states that both the Fed's and several States are looking closely at businesses that use ICs.

One of the big things about if someone is truly a IC appears to be the amount of direction they receive, if they get paid by the hour or by the job and if there is an expectation that the work relationship will continue indefinitely(not defined). Apparently that would show intent to create a employee-employer relationship.

It might be good to review your relationship with your crews.


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## grandview (Oct 9, 2005)

And how many guys on here try and past their workers off as IC's?


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## Mr.Markus (Jan 7, 2010)

I do...........!


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## Deershack (Feb 19, 2009)

The States and the Feds will apparently share info on those claiming to use ICs. The intent seems to be to stop people from avoiding unemployment insurance taxes, workers comp and other taxes because it puts those who do pay those taxes at a disadvantage and of course the BIG reason, the States and Feds don't get their tax revenue. Apparently the cooperation includes the Labor Dept., IRS and the various States, to do "many more" investigations and " educational outreach to employers will be beefed up".


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## zackman (Jan 11, 2009)

Is that online anywhere? I would like to read it..


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## Deershack (Feb 19, 2009)

You will find it in the St.Paul Pioneer Press. It was on page 11A of the 9-20-11 edition. There was another article in the same paper today about the IRS offering amnesty to those who clear up their records.


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## zackman (Jan 11, 2009)

thanks for info deershack


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## zackman (Jan 11, 2009)

http://www.twincities.com/ci_189280...=Search-www.twincities.com-www.twincities.com

I found the link


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## 04ram1500 (Nov 10, 2010)

I heard about this plan on my local news the other day. Apparently PA is in on it also.


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## bieriewk (Dec 2, 2009)

My employees are all IC, I pay them by the job, not hourly, and have them sign a contract that states explicitly that they are independent contractors.


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## grandview (Oct 9, 2005)

bieriewk;1311543 said:


> My employees are all IC, I pay them by the job, not hourly, and have them sign a contract that states explicitly that they are independent contractors.


what they sign and what they do are 2 different things. At the beginning of the season do you have a mandatory meeting to discuss what is expected of them and their duties?


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## bieriewk (Dec 2, 2009)

I spend time with each one individually going over the areas they will be handling and any others they might do, I leave it up to each team driver and shoveler to determine who is picking who up, I do a wide variety of types of properties with different levels of service, each team knows what to do. Maybe I'm just blessed with good guys who work for me :shrug:


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## grandview (Oct 9, 2005)

Independent Contractor Defined


People such as doctors, dentists, veterinarians, lawyers, accountants, contractors, subcontractors, public stenographers, or auctioneers who are in an independent trade, business, or profession in which they offer their services to the general public are generally independent contractors. However, whether these people are independent contractors or employees depends on the facts in each case. The general rule is that an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done. The earnings of a person who is working as an independent contractor are subject to Self-Employment Tax.

If you are an independent contractor, you are self-employed. To find out what your tax obligations are, visit the Self-Employed Tax Center.

You are not an independent contractor if you perform services that can be controlled by an employer (what will be done and how it will be done). This applies even if you are given freedom of action. What matters is that the employer has the legal right to control the details of how the services are performed.

If an employer-employee relationship exists (regardless of what the relationship is called), you are not an independent contractor and your earnings are generally not subject to Medicare and Social Security Taxes for Self-Employed.

However, your earnings as an employee may be subject to Self-Employment Tax.

For more information on determining whether you are an independent contractor or an employee, refer to the section on Independent Contractors or Employees


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## csi.northcoast (Aug 7, 2010)

I have posted the same thing on the ohio links on this forum. there is a 20 question list that is used by the state and Fed to find out who is an IC. proper paperwork is also a key. according to my state tax people this is ALL they are doing this year and in the future. (remeber most state and FEd are trying to find more money)

be careful....


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## grandview (Oct 9, 2005)

If you were to compare apples to apples on this how much are you really saving? And if they do audit you ,you'll spend more on lawyers and accounts then what you saved.


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## csi.northcoast (Aug 7, 2010)

that depend on what you call and IC, someone with their own truck or someone you put in your truck, 

folks you put in your trucks to me are employees, but if they have their own truck should be and IC, some state tax people want to classify them as employees, which to me is BS, 

According to my accountant there has to be an element of loss to the IC, such as breakdown, if an IC plows per job rather than per hour etc..


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## dfd9 (Aug 18, 2010)

bieriewk;1311543 said:


> My employees are all IC, I pay them by the job, not hourly, and have them sign a contract that states explicitly that they are independent contractors.


Great, I'm sure the IRS gives a flying rip about what your employees sign.

Funny too, you call your employees ICs. You just admitted they were employees. On the 'net, where anybody can see it.

Do they use their equipment or yours?



bieriewk;1311607 said:


> I spend time with each one individually going over the areas they will be handling and any others they might do, I leave it up to each team driver and shoveler to determine who is picking who up, I do a wide variety of types of properties with different levels of service, each team knows what to do. Maybe I'm just blessed with good guys who work for me :shrug:


It isn't the employees who care how they are paid or classified, it's the government. I hope you have a CPA and a lawyer who OK'ed your setup and on retainer.


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## Charles (Dec 21, 1999)

Many FedEx Ground contractors have been going at it in court with FedEx over the definition of IC. If I understand it correctly, they think FedEx treats them like employees? I don't think the Contractors have won a court case yet. Just one big example of how the courts are treating this business relationship.


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## zackman (Jan 11, 2009)

How many of you guys have employees or IC ??


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## Deershack (Feb 19, 2009)

When I sign a contract to service a property with salt, I obligate myself, by contract, to do so within a certain period of time or in some cases before a certain time. If I hire someone to do this work and instruct them to honor the contract language, I don't see how they can be considered an IC, since I am directing them when and how do complete the service. It's not open ended, for example - sometime in the next week- or before the next snow-. I and the client expect the contract to be followed.


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## csi.northcoast (Aug 7, 2010)

Actually the way it was explained to me you should not direct them but "advise them of the customers expectations.... Example if a customer gives you a site plan and you give it to the IC, then that is fine... Also if you pay the IC a fixed percentage of the job, there is a risk of loss ( somedays it might take them 2 hours other days 6 hours) you should really consult you accountant though....

most of this crap is just that crap.... 

typical gov't stuff no common sense


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## wizardsr (Aug 8, 2006)

This has been going on for a while here in MN, primarily with construction workers. Now that they've pretty well shut down all the construction hacks, they're moving on to other industries. 

There's a lot of gray area, but anyone that's been at it for a while has already figured out their insurance companies are scrutinizing employees vs subcontractors long before the state is. I have to break it down and provide copies of the sub's insurance certificate every year at audit time. Workers comp also drills you for proof of your subs having their own workers comp or you get to pay for workers comp on them as though they are employees.

Most of the guys who are "employing sub-contractors" are either grossly misinformed or are knowingly trying to exploit loop holes to avoid paying work comp, employment taxes, increased GL rates, etc. These people are hard to compete with because their costs are so much lower as a result. I personally think it's a good thing that the states are cracking down on this. Thumbs Up


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