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 ...
And legally, they should not. Per the IRS’s own publication P15A, there are 20 common law factors, of which sole-customer is just one. The IRS is to consider ALL factors in determining independent contractor or employee status.
Unfortunately, the IRS doesn’t follow its own guidelines and assumes if you meet ANY of the factors you’re an employee. Which is clearly incorrect and illegal.
But you’re right, they’ll come after you anyway and force you to prove otherwise - that you’re not breaking the law. Guilty until proven innocent, in the case of the IRS.
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.
Well now at least their shorts are “Brown”.
The difference is who pays for the other half of the social security taxes. An employee on a W4/W2 basis has income taxes , social security taxes and medicare taxes extracted and forwarded by the employer on each paycheck period. The employer has to pay a matching amount to the IRS. When an independent contractor is involved, the company sends a 1099 for the gross amount of wages paid to the contractor. That contractor is then responsible for paying income taxes, social security taxes, self employment taxes and medicare taxes. Companies like the contractor model because it saves them the administrative overhead of managing W4/W2 payroll and also lets them off the hook for their half of the social security tax burden. That's fine...unless the "contractor" is really a dedicated employee who works for no other business. That is labeled an attempt to evade the tax responsibilities on the part of the defacto employer.
Every law created by governments is an arbitrary law. You don't get to choose which ones to obey.
I thought I was the only one who despised DHL.
No kidding. They will even freeze access to your bank accounts before you've had a shot a due process. It's pretty hard to defend yourself when the attacking party is free to seize control of the very assets you require to mount a defense.
I’d like to think I am one of the nice Amazon CSR’s.
www.my3cents.com
www.theconsumerist.com
and read all the complaints about Amazon. I want to order a couple of things from them but am afraid to after reading all the complaints.
How is FedEx the contractors sole customer? Who are all those people they pick up packages from and deliver them to?
PS: I am a real estate bvroker and I am the sole contractor for the associates, by state regulation. Can they be on a 1099 basis?
Does the IRS does not track 1099s?
I suspect the IRS does not want to deal with “independent contractors” due to the extra paperwork.
Then why in the hell should this make any differenceIt's all about withholding.
Taxing the same job differently for different workers is social-micro-engineering. Only the most arrogant or the most clueless think they know how to create utopia by such engineering.
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Sorry, but classifying ground drivers as “independent contractors” and placing all the business risk upon those drivers PLUS the ‘demand of their time’ driving around in a FedEx truck and wearing a FedEx uniform makes them EMPLOYEES.
FedEx was skirting their employer responsibility by whoring out these people who simply want to fed their families. ESPECIALLY when they have a WHOLE NEW DEPARTMENT that micromanages the mileage and state-by-state fuel purchases of these so-called “independent contractors.”
I think the IRS is out of control, but corporations pimping the poor schmuck who needs to feed his family is even worse.
Been shopping with Amazon for 10 years and never had any issues. DHL on the other hand...just avoid them when ordering.
And that is precisely the reason that the IRS should be abolished. They have placed themselves above the law and the very constitution itself. Why this is allowed to go on is beyond me.
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