A valid point and excellent argument.
As I understand it, if a person is 100% a 1099 for whomever (sales, cleaning, etc), the pressure points comes down to:
1) do you supply the 1099 with any supplies? Be it office equipment, cleaning supplies, a branded shirt? and
2) do you require the person not to contract with any other entity other than yourself
3) do you require specific training, bonuses (other than listed in original agreement) and
4) do you require the "how", and I agree, it's subjective.
There is a complicated form that the IRS is now using to determine if the person hired is a 1099 or a W2. The training I received was that the 1099 had to pass the requirements of the SS8 from by the government (and the hiring company better be looking at it) or else the person hired was a W2 and all tax withholding, benefits, training, yada yada were in play.
If I, as the hiring authority, hire person X to supply services at client A, requiring set specific hours, and set specific training, and set specific behaviors, then I am the employer of record for person X, and am required to do all of those personnel paperwork issues that arise, not client A.
If I hire person Z as a 1099, and subcontract him to client B, and offer no specific training, no supplies, no support, basically I offer Z nothing other than the opening into client B, then Z is required to do his own taxes, WC, etc, and works on a "as needed" bases by client B (for whatever the project and/or contract stipulates) but could be handled somewhere between the hours of 8am to 10pm, but that is not my requirement, just that somewhere in that time frame, the work needs to be done. Person Z invoices me his time, I pay him out of A/P, and bill client B per contract.
It's a mess, I agree. I agree to your logic as well, but the government does not care for logic, they want to tax, and tax again, and unfortunately they've made it as difficult as possible for companies to chose the way they wish to conduct business.
Thanks for your reply and sorry for the delay.
I just started a new job, and in addition to being 100% commission, I will be, at least initially on a 1099.
My interest in this issue also ties into my new job as a sales/Business consultant.
There are a lot of potential holes in the IRS’s attempt to define the status all wage earners.
As an example: “Training vs someone that possesses the skill set required”. “Require exclusivity? “
I will be learning more about this issue as time goes by.
Maybe I can hit you back for further discussion.