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Hired as employee but paid as independent contractor New York

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  • Hired as employee but paid as independent contractor New York

    I am in NYC. I was hired by a mortgage banker in 2000 as a branch manager. after 2 years they switched me to a 1099 independent contractor without my consent. I was employed by them from june 2000- april 2007, I have fully executed employment agreements with them specifically describing relationship as an employee. As a result of them not maintaining me on a w2 I have ended up with a large tax liability which I have no way of paying. At the time I was not knowledgable of these matters and would like to know if I have a case here?

  • #2
    So for five years (2002 to 2007) you paid no income taxes, and you thought that was OK? And you were at a level in the type of job (i.e., mortgage bank branch manager) where it would be expected that you would know at least a little bit about stuff like income taxes?


    • #3
      The statute of limitations to file a claim with the DOL is 2 years for most claims, 3 years for willful violations. If this happened back in 2007, why are you just pursuing it now?
      I post with the full knowledge and support of my employer, though the opinions rendered are my own and not necessarily representative of their position. In other words, I'm a free agent.


      • #4
        Originally posted by sassonyc View Post
        At the time I was not knowledgable of these matters
        Originally posted by eerelations View Post
        And you were at a level in the type of job (i.e., mortgage bank branch manager) where it would be expected that you would know at least a little bit about stuff like income taxes?
        Exactly! How on earth could you not notice that all of a sudden your checks became ~25% bigger? You never questioned the extra money you received and never looked at your paystub to see the breakdown of wages/deductions? You didn't notice that you started receiving a 1099-MISC instead of a W-2? And that when you filed your taxes you'd had nothing withheld for the year?

        Your problems go beyond state and federal income tax. If you were classified as an IC then you probably didn't have any FICA withheld either. And because you were "self-employed", you'd owe the full 15.30%.


        • #5
          Well thanks for all the wise answers but I was seeking information on the legal responsibilty of the employer. I was on the insurance plan through adp and Treated as an employee in every aspect except compensation and they knew very well what they were doing. While I welcome constructive thoughts I didn't come here to get bashed for asking a legal question. If anybody can answer my question I would greatly appreciate it. And the reason I am looking at this now is because this whole matter has put me in a world of trouble with tax liens and these people played games with me after profiting millions of dollars from my efforts and I am stuck holding the bag here. I am not
          by any means claiming innocence here but these are business savvy people who know very well that they were violating tax codes and violating terms of their government licensing to make mortgage loans that clearly state that branch managers should be w2 employees


          • #6
            If you are not pursuing this until after the statute of limitations is up you do not have a case. The way the IRS looks at it, someone is responsible for paying the taxes on your pay. If it had been paid correctly, your portion would have been deducted from each pay check and your employer's portion would have been paid with each pay period as well. Since you were paid incorrectly and did not pursue this timely, you may very well be stuck paying both the employee portion and employer portion, because you were paid as an Independent Contractor and that is how ICs are taxed.

            It wasn't a free lunch, even though it might have looked that way at the time.

            You can always check with a tax attorney and see what they say.


            • #7
              OK, here's your legally accurate non-snarky answer (from someone who happens to be an expert in this particular area):

              Your taxes and your misclassification are two separate issues. While your former employer may have improperly classified you as an IC, you were always responsible for paying your own taxes - if not through payroll deductions then directly to the IRS. Your former employer is not and never has been legally responsible for this.

              And while it may be too late for you to have the DOL levy penalties on your former employer for misclassifying you as an IC, it's not too late for the IRS to get that tax money from you. You really should have paid those taxes when they were due.


              • #8
                Also, if you are talking IRS and only IRS, they will can consider both the employee and the employer 100% at fault. IRS will consider IRS to be the injured party here, not you. IRS will considered that you and your employer conspired to defraud IRS of monies due them.

                And that is the literal truth. You are certainly welcome to rat out the employer. IRS always likes it when co-conspirators turn on each other. But that it no way helps you with IRS. You personally were always 100% responsible for reporting all of your income and paying all taxes related to that income no matter what your employer did. The Internal Revenue Code is very clear on that point.
                "Reality is that which, when you stop believing in it, doesn't go away".
                Philip K. **** (1928-1982)


                • #9
                  Just curious, OP - why didn't you pay your taxes those years?


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