Source: https://nathansgibson.org/resources-employee-independent-contractor/
Timestamp: 2019-04-24 04:45:21+00:00

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Resources - Employee or Independent Contractor?
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It would appear that independent contractors are able to be at least as well-off financially as their employee counterparts. All employer-provided benefits are paid for by employees themselves either directly or in reduced wages. The overtime issue is similar. Employers forced to pay hourly rates plus overtime instead of salaries will adjust pay rates so that compensation is the same. Meanwhile, independent contractors enjoy the ability to exercise greater control over their work arrangements.
Continuing the trend of recent years, independent-contractor status has remained a focus of state lawmakers during the first half of 2016. This continued attention has resulted in several recently enacted bills that will have a mixed effect on independent contractors and their clients. Thus far this year, generally helpful bills have been enacted that clarify the independent contractor status of workers in the on-demand/sharing economy and define important terms. At the same time, some states are moving in the opposite direction. A potentially harmful bill was enacted that urges a study to investigate worker misclassification, and it is uncertain how other new laws will affect the determination of an individual’s status.
The information on this page is meant to assist in a general understanding of independent contractors. It is not to be regarded as legal advice or tax advice. Individuals or companies should consult with qualified tax or legal professionals.
In analyzing the facts, the court concluded that the personal service corporation’s rights to control the manner and means by which the player provided the services were “at best illusory.” The Uniform Player Contract, required by the National Basketball Association (NBA), gave the team a degree of control over the player that “transcends the control most employers have over their employees.” The contract was signed by the personal services corporation AND was guaranteed by the player. without the player’s guarantee, the team would not have signed the contract with the personal services corporation.
A fundamental principle of tax law is that income is taxed to the person who earns it. Commissioner v. Culbertson, 337 U.S. 733, 739 (1949); Lucas v. Earl, 281 U.S. 111, 114 (1930); Johnston v. Commissioner, T.C. Memo. 2000-315. The existence of a validly organized and operated corporation does not preclude taxation of income to the service provider instead of the corporation. Wilson v. United States, 530 F.2d 772, 777-778 (8th Cir. 1976); Haag v. Commissioner, 88 T.C. 604, 610-611 (1987), affd. without published opinion 855 F.2d 855 (8th Cir. 1988); see also Commissioner v. Culbertson, supra at 739-740. Deciding whether the corporation or the service provider earned the income requires that we decide whether the corporation or its service-performing agent or shareholder controls the earning of the income. Johnson v. Commissioner, 78 T.C. 882, 891 (1982) (and cases cited thereat), affd. without published opinion 734 F.2d 20 (9th Cir. 1984).
A corporation earns the income if: (a) The service provider is an employee of a corporation which has the right to direct or control that employee in some meaningful sense; and (b) there exists a contract or similar arrangement between the corporation and the person or entity using the services which recognizes the corporation’s right to direct or control the work of the service provider. Haag v. Commissioner, supra at 611; Johnson v. Commissioner, supra at 891; see also Leavell v. Commissioner, 104 T.C. 140, 151-152 (1995).
The tax court said that the corporations established by the Arnolds did not control their work.
Employment Law Briefing February/March 2012, Independent Contractor Misclassification by John C. Fox, Jay J. Wang and Alexa L. Morgan of Fox, Wang & Morgan, P.C.
How to Deal with Worker Classification Tax Audits by Edward L. Froelich and James Merritt in Morrison & Foerster Monthly news, Volume 22, No. 4 April 2010.
Employee or Independent Contractor: It’s Time to Assess by Daniel J. Aguilary in Morrison & Foerster Monthly news, Volume 22, No.3 March 2010.
WorkerClassification.com – a source for worker classification news and developments. This site provides an overview of worker classification tests and links to state and federal statutes.
Working with Independent Contractors — Stephen Fishman, J.D. (July 2014, 8th Edition) Get the legal lowdown on how to beef up your workforce without risking the ire of the IRS. Misclassifying a worker can result in serious financial penalties from your state or the IRS. Working with Independent Contractors, you’ll learn how to: determine whether you can classify workers as independent contractors, create valid contracts, avoid government penalties, handle the IRS.
Discover Business — a variety of resources for your business including copy writing resource, logo design, and crowd funding.

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