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IRS orders FedEx to pay $319 mln
http://www.marketwatch.com/ ^ | December 22, 2007 | Greg Morcroft,

Posted on 12/22/2007 2:49:32 PM PST by lowbridge

FedEx Corp. said late Friday that the Internal Revenue Service has ordered the company to pay back taxes and fines totaling $319 million for ground employees the firm misclassified as independent contractors.

The ruling covers 13,000 employees FedEx had in 2002, and the company said that the IRS is investigating the status of contractors hired between 2004 and 2006. That probe could lead to further penalties, the company said.

(Excerpt) Read more at marketwatch.com ...


TOPICS: Business/Economy; Culture/Society; News/Current Events
KEYWORDS: fedex; irs
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To: em2vn
Furthermore, a labor union is as collectivist as is the American Association of Manufactures, the Chamber of Commerce or the NRA.

I'm not buying that comparison. Labor unions in the United States have been formed for the purpose of collective bargaining and collective action against the businesses that employ their members. Those characteristics have been memorialized in labor law at state and federal levels. Fortunately, there are right to work states that have given individuals the freedom to work without the interference from a labor union. Absent the iron hand of government to enforce their thuggery, the labor unions don't compete particularly well in the free market.

121 posted on 12/23/2007 4:27:40 PM PST by Myrddin
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To: KoRn

I’ve fought the IRS 4 times, and won every single time. Fought the State of Wahington, too, and won there. Sure, it wasn’t cheap OR easy, and I had to live with the stress of having every asset of my company and my personal assets being lien’d against for quite an extent of time, but I won (stubborn Irish in me)...

But I’m tired of the fight, fed up with paying tens of thousands to defend myself, and have pulled out as much as possible from the whole situation.

You know, the most incredible thing that ever happened during this time? I’m sitting in my office going through an “interview” with an IRS revenue officer, and he wants to talk about the first few years of my business. Specifically one year where I lost money.

He asked “well where did the funds come to cover your losses that year?” I responded “my pocket - I sold some assets to finance my company”. He looked at me stunned, and stated - I kid you not - “Why would anyone actually use their own money to finance their company...”

At that point, I knew that the vast majority of the cogs working in government haven’t a clue about fundamental economic principles, nor do they understand that if it weren’t for business and investors willing to risk their own assets there wouldn’t BE any economy - and no taxes for them to be paid.

Government workers don’t realize that they do not pay taxes; they merely pass them through. Their income is 100% based on taxation. It would be akin to me giving you $10,000 and then saying “oh, I need $1,000 of that back”. You haven’t actually put anything into the equation - you’re still up $9,000 of my own money.

Anyway, compared to how I’ve been treated by the revenue offices in Chile and China, the US IRS is, well, I don’t want to say in case it triggers yet ANOTHER audit (trust me, beat them once and they do NOT forget...) But there’s a reason why most of my company is off-shore. And it’s not because I’m a traitor or anti-American.


122 posted on 12/23/2007 4:57:36 PM PST by PugetSoundSoldier (Complaining about the sting of truth is the defense of the indefensible.)
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To: Myrddin

You generally use Sch E for real estate rents


123 posted on 12/23/2007 6:09:45 PM PST by Raycpa
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To: PugetSoundSoldier
I’m sitting in my office going through an “interview” with an IRS revenue officer, and he wants to talk about the first few years of my business. Specifically one year where I lost money.

Never do your own audit. Fishing expeditions like this one would not take place if a professional is doing it.

He asked “well where did the funds come to cover your losses that year?” I responded “my pocket - I sold some assets to finance my company”. He looked at me stunned, and stated - I kid you not - “Why would anyone actually use their own money to finance their company...”

You have no idea how many tangential issues you raised by your answer. DIY's are there own worst enemy.

124 posted on 12/23/2007 6:14:36 PM PST by Raycpa
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To: Raycpa
You generally use Sch E for real estate rents

I suppose I'll be tripping over forms next month as I submit my first returns with rental income.

125 posted on 12/23/2007 6:37:24 PM PST by Myrddin
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To: Raycpa

Oh, I never did an audit without my CPA and attorney present. Sometimes they like to come by for interviews prior to an actual audit/review. I’ll gladly confirm any of the hard facts that are easily documented - income for a given year, expenses, etc. They have copies of my returns, I’ll gladly confirm those numbers - no disputes there!

Beyond that, they get nothing other than “I choose not to answer”. And IF I had to sign anything without legal representation, I always signed “Under duress as I was prohibited from legal representation during this interview”. Drove my RO nuts... ;)

I just found it interesting that the RO felt that personal, private investments into one’s own company was “a bad idea”. Where else does most financing come from for small businesses which drive this country?

Anyway, the State here is about as bad. Had an auditor who wanted a copy of our Quickbooks file. Hell no - there’s sensitive stuff in there (like CC numbers of a few thousand clients, etc). He insisted that it was his right to get a copy of the file. I insisted otherwise, as the Revised Code of Washington says I have to provide information that is specifically asked for, and a printout of a report is plenty.

Finally, after two days of me refusing to go along, he shoved his USB key at me, and said “give me your file or I will return with a State Trooper and take it from you”. So I took the key, plugged it in...

Thankfully, my AV Software (ForeFront from Microsoft) caught the 3 infections. Then I opened the key and saw 15 files from OTHER companies. All Quickbooks files.

I showed him my screen and asked “can I have these files first?” When he said that would be illegal, I said “see why I don’t want to give my file to you? Will your next audit target be as honest at me and not copy off the files? Isn’t this violating the privacy laws of the State?”

He never asked again...


126 posted on 12/23/2007 6:55:18 PM PST by PugetSoundSoldier (Complaining about the sting of truth is the defense of the indefensible.)
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To: Myrddin

“Absent the iron hand of government to enforce their thuggery, . . .”
Now we knew that would eventually have to come around, didn’t we?
I think you will find many more, one time business leaders in prison than union leaders and many more ex-cons who were business leaders than ex-cons who were former union leaders.
Evidently you don’t realize that the Chamber of Commerce is a collective who’s purpose is to lobby for and to promote the agenda of its membership at all level of political life.
Recent business history in our nation has been a kaleidoscope of theft. In the 80s we had Milkin and Boskey(sp) and the rest of the Wall Street Scandle, plus the theft of pension funds by M&A con artist. The 90s gave us the S&L scandle. The beginning of 21st century gave us the dot com bomb, and today we have the sub-prime blow up that has cost tens of billions of dollars.
Unions are amateurs as thugs when compared to business.


127 posted on 12/23/2007 6:56:39 PM PST by em2vn
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To: em2vn
Unions are amateurs as thugs when compared to business.

At least you aren't denying the thuggery. It's all relative. I have observed union thuggery and I've been the target. As such, I have no use at all for unions.

128 posted on 12/23/2007 7:28:46 PM PST by Myrddin
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To: Myrddin

I’d like to hear about your experience.


129 posted on 12/23/2007 8:09:42 PM PST by em2vn
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To: Western Phil
I suspect the IRS does not want to deal with “independent contractors” due to the extra paperwork.

What they really don't want is people deducting expenses for producing income. An independent contractor can write all kinds of things off against the gross income from the activity, while an employee rarely gets to deduct anything.

Think of the W-2 as a ring in your nose, the IRS really, really wants it there. That way, your opportunity to cheat them is greatly reduced, in their eyes.

130 posted on 12/23/2007 8:16:13 PM PST by hunter112 (Hillary Clinton - America’s Ex-Wife®)
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To: purpleraine

Those people are FedEx customers (or rather the senders are). The delivery guys get their money from FedEx for a service performed for FedEx. I think this position by the IRS is a crock. The contractors no doubt paid their 15.3% SSI tax as required, so now if the IRS can recover it from FedEx, they will be getting paid double. Anybody want to bet me whether checks will be automatically forthcoming to refund the money the drivers wouldn’t have owed if they were employees?


131 posted on 12/23/2007 9:20:47 PM PST by Still Thinking (Quis custodiet ipsos custodes?)
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To: Myrddin

And besides, those guys have to provide their own vehicles, fuel, and are free to subcontract to additional drivers. They’re paid piece rate for work done outside FedEx’s immediate supervision. How can even people stupid enough to work at the IRS believe they’re employees?


132 posted on 12/23/2007 9:23:01 PM PST by Still Thinking (Quis custodiet ipsos custodes?)
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To: Diana in Wisconsin

Oh, gee, now who will I get to work on my confuser? Snorkle, snorkle. As if I would have let those chuckleheads touch anything with a cord. Might as well trust the Dork Squad at Worst Buy.


133 posted on 12/23/2007 9:34:38 PM PST by Still Thinking (Quis custodiet ipsos custodes?)
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To: Halgr

That’s only true if you pay them the same per hour as a contractor without bene’s as you would as an employee with them. If you pay them a rate that includes the bene’s, as you should, it actually vests them with more options, more power, and more choices, and less paperwork and risk for you. I think everyone in the land except mamby pamby wussy pussy Democrats should be contractors.


134 posted on 12/23/2007 9:47:30 PM PST by Still Thinking (Quis custodiet ipsos custodes?)
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To: Still Thinking
During the 1996-1998 time frame, I switched from full time to "consulting employee" status at my current company. My full time employer offered me a much better salary, benefits, stock options and fairly interesting work. The status change resulted in a payout of my accrued vacation time and a loss of benefits. My compensation was changed from salaried to "hours worked". No hours were scheduled. I could work zero to as much as requested. The hourly rate was increased by about 50% over the equivalent pay for salaried staff. That was to compensate for dropping medical benefits, vacation and sick pay. When I returned to full time status in 1998, my compensation package was restored with full benefits. Just having a private office again was reason enough to return. Working at an internet startup isn't all it's cracked up to be. The 16 hour days, 7 days a week were just not worth the probability of a life long handicap from repetitive stress injuries.
135 posted on 12/23/2007 10:11:40 PM PST by Myrddin
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To: PugetSoundSoldier

I would not let my client talk as much as you do.


136 posted on 12/24/2007 6:02:52 AM PST by Raycpa
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To: woofer
Weren’t these the delivery guys from the RPS ground service that Fedex bought from Roadway Freight to jumpstart their Fedex Ground service? The RPS delivery guys were independent contractors.

RPS was purchased by FedEx, and as far as I know the employees went with the deal. DHL Express purchased Airborne, and the reason service is spotty is because they have fewer physical assets and employees than their two much larger competitors. That said, DHL Express' parent company is Deutsche Post, the second largest employer in the world. They're pumping cash into the US DHL Express operation, so one would have to figure that within the next five years DHL Express' service should improve within the US market (they're already dominant in most large ex-US markets).

137 posted on 12/24/2007 6:08:35 AM PST by NittanyLion
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To: proudofthesouth

I’ve ordered from Amazon many a time and have had not one problem.


138 posted on 12/24/2007 6:14:58 AM PST by Xenalyte (Dennis, we want you back. We know you can do it.)
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To: lowbridge

Teamsters President Jim Hoffa said: “”What a great Christmas gift to FedEx Ground workers who have suffered under FedEx’s illegal independent contractor scam.”

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

This statement is so blatantly absurd it makes me shake my head in wonder that someone could be shameless enough to say it! These people signed up to work as independent contractors, nobody pulled a scam on them! What about all the independent truckers who drive their own big rigs for just one trucking company? Are they going to be reclassified as employees? This level of insanity leaves me sputtering!


139 posted on 12/24/2007 7:21:37 AM PST by RipSawyer (Does anyone still believe this is a free country?)
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To: reagan_fanatic
I use FedEx as my main shipper at work. Last week I got a letter stating rates are going up an average of 8%. I wonder how much of that increase is to cover FedEx’s ass regarding these fines.

Sounds like your company negoatiated a bad contract with FedEx. The 2008 standard increase is 6.9% less a 2% reduction in their fuel surcharge tariff, for a net average increase of 4.9%.

140 posted on 12/24/2007 7:25:20 AM PST by NittanyLion
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