
Originally Posted by
NVJosh link=board=6;threadid=5704;start=msg65860#msg65860 date=1074897207
In some extreme circumstance, the IRS could also say that you were an employee, subjecting the club to serious payroll tax penalties. And, again, if you hadn't reported the income, you'd probably be next on the IRS hit list.
NVJosh, we've been through the whole employee/independent contractor debate until it's a thoroughly beaten dead horse. Just look back over The Dollar Den. If you look at the IRS own rules it is clear that person who is treated mistakenly by her employer as an IC, will not be penalized by the IRS.
The penalty falls on the employer. The only problem for the IC is that she did not report the income or under reported. In the former case she is in trouble for non-reporting, but she can still claim all the IC deductions when filing an amended return.
In some instances, it might be beneficial for her to be subsequently determined to be an employee. For example, she would then be covered by workers compensation. If she had an on the job injury during the time that the IRS determined she was in fact an employee, she would have a much better claim for workers comp benefits. Further, there are substantial penalties for employers who do not accurately report their employee numbers for comp and unemployment insurance. Again, this is something that the mistakenly identified IC can benefit from.
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