[Myrddin]

The IRS makes this kind of check on all "independent contractors". If the contractor has only one customer i.e. FedEx, then FedEx is the contractor's sole employer. FedEx was trying to skirt the social security and benefits burdens by just shipping a 1099 to the contractor. As an employer, you have to be very careful about using "contractors" in that fashion. FedEx got caught.

A similar level of vigilance is required on the part of people who feature themselves as independent contractors, but only work for one customer. The IRS is going to come after you and your customer.

[RAY]

"then FedEx is the contractor's sole employer"

Then why in the hell should this make any difference - other than the fact it is a damn arbitrary law?

[PugetSoundSoldier]

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.

[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.

[purpleraine]

How is FedEx the contractors sole customer? Who are all those people they pick up packages from and deliver them to?

[purpleraine]

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?

[Western Phil]

It is my understanding that any self employed “independent contractor” is legally required to pay his own SS and estimated income tax based on what is reported on the 1099. If this was done, the IRS is trying to get the tax twice.

Does the IRS does not track 1099s?

I suspect the IRS does not want to deal with “independent contractors” due to the extra paperwork.

[Hostage]

I think most people understand that the mean old IRS will come after ‘you’ on any number of issues.

But you are missing the point.

Why should the ‘free’ American people put up with this KGB IRS crap???

Read and Heed:

http://www.fairtax.org

[moehoward]

I have been on the receiving end of this as well. Worked for a small company, in house, as an independent, at their request. Got a letter from the IRS after two years saying I was not “independent” because they were my only ‘customer’.

In this situation the IRS is going after FedEX to avoid going after each “independent”.

FedEx knew they were getting into this. Fact is these guys aren’t “independent” any more than I was. Our employers did this to cut costs.

UPS has been wanting to do this as well.

In their perfect world they’d have Illegals delivering freight.

[Still Thinking]

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?

[HungarianGypsy]

Every Ground contractor actually buys and owns their routes.The guy who pressed for this lawsuit in the first place was an embittered ex-contractor who had already lost his contract. It takes a bit of doing before one loses a contract.