28 THE QUEENS COURIER • OCTOBER 19, 2017 FOR BREAKING NEWS VISIT WWW.QNS.COM
YOUR PARTNER IN THE
STRUGGLE FOR JUSTICE
JOHN J.
CIAFONE, ESQ.
MILLION DOLLAR ADVOCATES FORUM
THE TOP TRIAL LAWYERS IN AMERICA TM
Admitted in NY NJ
and Washington DC
Attorney At Law
25-59 Steinway Street
Astoria, NY 11103
718-278-3900
johnjciafone@yahoo.com
NYS Certifified EMT/EMS
Voted Best Attorney from
Call Now & End Your Tax Nightmare!
Co-Author of the
best selling book
“Breaking the Tax Code”
Salvatore P. Candela, EA, ATA, ABA
Enrolled Agent - Tax Advisor
Worker Classification
BY JOHN SAVIGNANO, CPA
Worker classification remains a priority.
The Service continues to seek
back taxes and penalties from firms
that wrongly treat workers as contractors.
Unreported or underreported
employment taxes make up a big
chunk of the overall federal tax gap.
The Labor and Justice departments
and the states also have vital roles
to play in ensuring that workers are
properly classified by the businesses
they work for.
The stakes have always been high…
lost taxes for federal and state governments
and fewer benefits for
workers who are improperly treated
as contractors. And their importance
is magnified with the growth
in freelance service gigs…much of it
through the sharing economy with
Uber, Rover, Grubhub and the like.
To classify workers, IRS uses three
tests, each made up of multiple factors.
The behavioral test focuses on
whether the company controls or
has the right to control what the
worker does and how to do the job.
The financial test looks at who controls
the economics of the workers
job. Being able to work for multiple
firms and providing your own tools
needed for the job are indicative of
independent contractor status. Some
factors favoring employee status are
eligibility for reimbursement of travel
costs and payment based on hours
worked.
The type of relationship test examines
how the parties perceive each
other. Providing paid vacation and
retirement benefits indicates a worker
is an employee, as does hiring
to provide services indefinitely rather
than for a specific time period.
Written language stating the worker
is an independent contractor isn’t
determinative.
A Senate proposal on worker classification
is drawing praise from business.
The bill would provide a new
safe harbor based on three criteria
that, if met, would qualify workers
as independent contractors: The relationship
between the respective parties,
the existence of a written contract,
and the location of the services
or the means by which the services
are provided. The measure lists objective
factors that would satisfy each of
these categories.
Additionally, the proposal makes
changes to the Form 1099 reporting
rules. Currently the 1099-MISC
is required when payments to a nonemployee
exceed $600. Third party
networks must send a 1099-K to payees
who have over 200 transactions
and were paid more than $20,000.
Compliance with these rules are haphazard
at best. Many third-party networks
in the gig economy use the
1099-Ks. Others use the 1099-MISC.
Some send both. The new Senate proposal
would have third-party networks
in the gig economy use the
1099-K, while payers in traditional
independent contractor relationships
would file the MISC. Reporting
on the 1099-K would be required on
annual payments over $1,000 to contractors.
This idea would raise boatloads
of money, something that tax
writers will look on favorably as they
eye revenue-raisers to offset lower tax
rates in tax reform. And the threshold
for filing the 1099-MISC would
increase to $1,000.
John Savignano is a partner with
Savignano Accountants & Advisors
located at 47-46 Vernon Blvd.,
Second Floor, in Long Island City.
If you have any questions or require
additional information, please call
John at 718-707-0955.
TAX TIPS