The Politics of Independent Contractors

As you know I live in Nevada.  There is an article in the Las Vegas Sun today about independent contractors and political campaigns.  In part it reads: Senate Majority Leader Harry Reid’s campaign has accused his Republican rival, Sharron Angle, of attempting to skirt tax law by paying her staff as independent contractors instead of employees subject to payroll taxes. Since she filed to run, Angle has paid her staff as consultants and as such has made no payments to the Internal Revenue Service. Although not uncommon for political candidates, the practice could raise legal issues with the IRS if she doesn’t carefully follow the rules dictating when a worker can be classified as an independent contractor.

What I found most fascinating were the comments made about the story.  For example one commenter wrote:

So, what's the point?? My wife has worked as an independent contractor for years. It's not illegal. By putting this article in the paper, Harry Reid shows his ignorance of how many small businesses and individual workers handle their taxes.

As a matter of fact, it's a common practice and more convenient for some people to either hire independent contractors or to work as independent contractors.There's absolutely nothing wrong here. This is a non-story.

But whether someone is an independent contractor or an employee is not a matter of "convenience" or "common practice" it is suppose to be a matter of IRS regulations.  Right now the GAO is guesstimating that over 30 million workers are misclassified.  States are passing legislation right and left to make it more "costly" to misclassify workers and millions of dollars are lost in revenue for SUI etc due to this type of misclassification.

My question here is three-fold.  First, If our political candidates don't think enough of our tax laws to follow them when they are not holding an elected office can they still create, and vote on legislation that will help keep the country moving in the right direction which ever direction that may be?

Second, why is it that no one seems to understand the basic rules of independent contractors?

And third, should people who deliberately break tax laws for their own financial gain (remember she doesn't have to pay FICA or SUI or FUTA so the campaign saves thousands of dollars which can be spent on ads and such) be given a chance to run our country?  I include all those who hold appointed offices as well.  Like paying for Nanny taxes or back income taxes.

Let us know what you think.

Minnesota Providing Guidance on 2010 Withholding Requirements

Not many states have had time to react to the Affordable Care Act.  So they are beginning to advise payroll professionals on how to handle reporting and taxation for 2010.  Minnesota is the latest to give us some guidance.

The 2010 Minnesota State Legislature did not enact legislation incorporating into state law any of the changes to the IRC contained in the Affordable Care Act.  So for the definition of wages payroll departments will have to include the fair market value of insurance benefits provided to nondependent adult children as taxable wages for 2010.

It appears that this will be a growing trend for the rest of the states with income taxes.  And I think it will also be a trend for the SUI taxable wages as well. 

It would be a great idea if payroll departments get out in front of this by informing employees of the tax consequences of this now before the employee gets hit with a big state income tax bill next year.  Employees may want to adjust state withholding to compensate while they still have some time left.

How are you handling the state taxation of adult children insurance coverage in your department?  Let us hear from you.

Military Spouses in Ohio Just the Latest

Since the 2009 change in tax law under the Military Spouses Residency Relief Act that permits military spouses to be able to determine their residence for taxation while on assignment with the military spouse more and more states have weighed in.  The latest is Ohio.

This act basically states that a civilian spouse of an active duty military service member is not subject to income tax of the state in which the spouse is present if the service member and the spouse have the same state of residency and that state is in another state other than the one in which the service member is stationed.

Ohio's Department of Taxation is now making the IT-MIL-SP form available for spouses of active duty military.  This form allows the spouse to exempt themselves from Ohio taxation for wages earned in Ohio if that is the duty station of the military spouse but not the actual resident state of the spouse.

Payroll professionals need to research this area carefully as many of the states are now using this type of form to allow the spouses to opt out of taxation on their payroll check.

Will Be Back on Monday

Sorry it's been a while since I have done my blog.  I am still working on my website.  The tech side is very complicated but will be well worth the wait. 

Unfortunately I had a personal tragedy as my old dog, Lady had to be put to sleep this week.  So I am taking a little time to grieve.  I thank you for your patience.  I will be back on Monday come hell or high water, website up or not!

Have a great weekend.

I Am TWEETING or is that TWITING???

Eventually we all have to catch up with technology.  Now I love my tech toys such as my old HTC phone or my new i-phone.  I used VCRs the day they came out with my bootleg copy of Star Wars (Chapter 4)--hey okay so I am old!  I was on the "internet" when it was still bulletin boards with modems.  So I have no fear of technology.  But for some reason I just never got around to Facebook and Twitter--until today!

As of today I am tweeting (I still think it is twiting if properly done).  My name is Payadvisor.  Someone in OC had payrolladvisor so I had to abbreviate.  That's what you get for coming late to the game.  I am using Twitter to send out bulletins to my followers to keep everybody up to date. 

I also set up Payroll Advisor on Facebook.  I tied the two together so when I post an update on Facebook it will send out the Tweet.  Today we covered New Mexico changing EFT requirements for withholding deposits.

I want to get discussions going on my Facebook page as well.  So when my new website is up and I am able to post news daily there, I will start posting discussions of payroll issues that I find elsewhere but thought were interesting.  Until my new site is up I will be posting news on my Facebook page under discussions or notes.

Hope you can come by for a visit and "be my friend".

Website Update

Well here it is mid-July and I am working diligently on my new website.  It has been interesting to say the least.  I may be an expert on payroll matters but this programming website stuff is making my eyes spin.  But my programmer is doing a great job.  Just remember we will have a free payroll news bulletin for you to sign up for to keep up on the latest from the federal and all 50 states. 

So to keep the website on track I will not be blogging full time again this week. But should be back to my regular Monday-Thursday schedule next week.

So remember they may only be 214,000 payroll clerks in the U.S. but every last employee gets a paycheck!

Should the United States Celebrate the 4th of July?

The title sounds like I am advocating not celebrating our independence and that is not the case.  What I am saying is that if we do celebrate the founding of our country why is it not a national holiday under wage and hour law?  In other words, if the day is so important that we have parades and concerts on the National Mall, then why don't workers get the day off with pay to celebrate?

The United States is basically the only industrialized nation that does not have mandated holidays.  I can understand not having a nationalized holiday based on one religion, for example Christmas.  Or a holiday that celebrates the changing of a calendar--New Year's Day.  But days in which we celebrate our national heritage and history workers should be able to do so without loss of pay.

Just a thought, what do you think?

Website update:  we are in the final stages for our new website.  But still working on content. So my blogs will be intermittent at best.  With over 900 pages of my Complete Guide to Federal and State Payroll Compliance to load it is taking time.  In addition, we will have lectures, powerpoint presentations and white papers.  But when it is complete it will be one of the most comprehensive sources for payroll information and research.