Employee or Contractor
Not what you're looking for?
Aaron, a resident of Minnesota, has been a driver for Green Delivery Service for the past six years. For this purpose, he leases a truck from Green, and his compensation is based on a percentage of the income resulting from his pickup and delivery services. Green allows its drivers to choose their 10-hour shifts and does not exercise any control on how these services are carried out. Under Green's operating agreement with its drivers, Green can terminate the arrangement after 30 days' notice. In practice, however Green allows its truckers to quit immediately without giving advance notice. The agreement also labels the drivers as independent contractors. Green maintains no health or retirement plans for its drivers, and each year it reports their income by issuing Forms 1099-MISC. Green requires its drivers to maintain a commercial driver's license and be in good standing with the state highway law enforcement division.
Citing the employment tax Regulations in ss31.3121(d)-1(c)(2) and 31.3306(i)-1(b), an IRS agent contends that Aaron is an independent contractor and, therefore, is subject to the self-employment tax. Based on Peno Trucking, Inc. (93 TCM 1027, T.C Memo. 2007-66), Aaron disagrees and contends that he is an employee (not self-employed). Who is correct? Why?
200 words w/references
Purchase this Solution
Solution Summary
This solution explains the employee v independent contractor dilemma in the context of IRS. The sources used are also included in the solution.
Solution Preview
Step 1
The IRS agent is correct. The rationale is that Green allows its drivers to choose their 10-hour shifts and does not exercise any control on how these services are carried out. Green can terminate the arrangement after 30 days' notice but actually truckers quit without giving advance notice. Also, Green does not maintain health or retirement plans for drivers and each year ...
Purchase this Solution
Free BrainMass Quizzes
Evidence
Do you know your evidence objections? Find out with this quiz!
Constitutional Law Rights
How much do you know about Constitutional Law Rights? Find out with this quiz!
Criminal Defenses Review
Test your knowledge of the basics of criminal law and defenses with this quiz.
Title VII Laws
Learn the basics of the laws under Title VII.
Title VII
This Quiz pertains to the spectrum of Human Rights through Title VII