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Getting 1099'd by my company. Nevada

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  • Getting 1099'd by my company. Nevada

    I used to work for a company in Las Vegas but was let go in February because it was shutting down. Now the company has decided to stay open and a few of us have been talking with them about coming back on in our old positions. We wer on salary before we closed, but now they want to pay us at our old hourly rate and 1099 us at the end of the year. I was told that they cannot 1099 somebody that is in their line of work. For example, if their business is home automation, they cannot 1099 somebody that does home automation but they can 1099 a cabinetmaker that they work with. Was I misinformed? Can they bring me back and 1099 me for essentially the same job?

    Thanks in advance for any help

  • #2
    What you desribe is probably not legal, but not for the reasons you are mentioning. Basically all workers are either employees or independant contractors (IC). Any worker can legally be an employee. However, a worker can only be an IC if the law permits the classification. This is an oversimplification, but basically an IC is someone who has many customers and is looking for more customers. Some one who works for a single "customer" almost certain fails the legal requirements for IC.
    http://www.dol.gov/whd/regs/compliance/whdfs13.pdf
    http://www.irs.gov/businesses/small/...=99921,00.html

    The problem with issuing both a W2 and 1099 to the same worker from the same company is that this is an audit flag being waved to IRS. It is not the dual issuance that is illegal. It is the very likely failure of the audit being called down on one's head that is the problem. I have legally done this in the past, HOWEVER, the worker in question had a legimate arm's length business on the side (wedding and other pictures) that had many legitimate customers, and in addition to her normal job (buyer) we contracted with her one person company to take pictures of the Board of Directors for our financial statements. We paid her a flat fee. She used her own equipment and supplies. IRS did indeed audit us, and they were indeed ok with the handling. But that was very different then what you were talking about.
    "Reality is that which, when you stop believing in it, doesn't go away".
    Philip K. **** (1928-1982)

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    • #3
      Thanks for getting back to me so quickly. I guess I will have to look into this more. Essentially I will be doing the same job as before, but they will be scheduling the jobs and passing them onto me. I will have to go to their place of business and pick up supplies/equipment needed for the jobs and report back to them about any further problems or requests from their clients. All jobs at this point will be billed to the client as time and materials. They are basically giving me an hourly wage for time spent at the clients (minus travel time), regardless of how long it takes to get done. It just seems to me that I am more an employee than an independent contractor. Does this mean I will have to get a business license also to continue working for/with them?

      I'm pretty sure they are doing this to save money because they even wanted to make the person holding the Contractors License get 1099'd at the end of the year.

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      • #4
        Originally posted by RS232 Guy View Post
        It just seems to me that I am more an employee than an independent contractor.
        I seems that way to me also.

        Originally posted by RS232 Guy View Post
        Does this mean I will have to get a business license also to continue working for/with them?
        Not exactly. If you mean does you getting a business license make you closer to being classified as IC, sure, why not. If you are saying that without a business license that you are an employee, but that by getting a business license that action by itself will make an IC, I would say "heck no".

        Read the sources I cited. The government considers this to be a preponderance of evidence. If you are working for a single "customer", using their equipment, being paid hourly wages and basically failing most of the IC tests, then getting a business license just makes you an employee with a business license, not an IC.

        Contrary to popular opinion, IRS is not a complete idiot. If you really are an IC, then you are in the yellow pages, the internet, have many customers, and control your future. On the other hand, if it looks like a duck and quacks, it is a duck. Even if the duck gets a business license.
        "Reality is that which, when you stop believing in it, doesn't go away".
        Philip K. **** (1928-1982)

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