For today’s blog posting, I thought a cactus flower might be appropriate as this is certainly a prickly subject matter. ย Read on . .
I had the pleasure of attending the Georgia Government Finance Officers’ Association (GGFOA) Annual Conference at Lake Lanier last week (kudos toย Lori Sayer, Finance Director for Morgan County, Georgia, who chaired the conference committee; well done and we’re so proud that you and Morgan County are members of the OpenRDA family). One of the many sessions that I was interested in was an Employment Tax Seminar onย Independent Contractor vs Employee. It was to be presented by Cynthia Angie Sanderlin with the IRS, but because of the federal government shutdown, she couldn’t attend and the session was canceled. What I’m sharing below is based on the planned presentation materials, IRS-Guidewires, etc.
Over the weekend, I revised and republished an RDA News Article that I wrote in June, 2012, that pertained to election (poll) workers (the calendar year exclusion increased for 2013 from $1500 to $1600 and some of the links needed to be updated as well). In addition to election workers, another type of worker that you might be paying as an independent contractor (1099) instead of a common-law employee isย volunteer fireman. You can request that the IRS make a determination by filingย Formย SS-8ย (Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding), but know that a ruling/determination can take up to 6 months. Of course, if paid as common-law employee, FICA and Medicare would be withheld (along with matching amounts) and the volunteer fireman would receive a W2. If the IRS audits your organization and finds that a worker should be considered an employee and not an independent contractor, you’re subject to penalties and interest as well as retroactive payroll taxes. So, you might be interested in an IRS program,ย Voluntary Classification Settlement.ย Itย provides an organization an opportunity to voluntarily reclassify workers as employees for future tax periods with limited federal employment tax liability for past non-employee treatment.ย For more information on the VCSP, see Announcementย 2012-45 in Internalย Internal Revenue Bulletin 2012-51 (VCSP usesย Form 8952). You may also want to reviewย Publication 1779ย (Independent Contractor versus Employee).
Of course, with the federal government shutdown, audits are suspended. But, that also means delays with processing Form SS-8 and Form 8952.
Ouch!!!!
Phyllis
pdflowers@openrda.com
