| Art Alexion on 8 Dec 2005 14:26:27 -0000 |
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William H. Magill wrote: > > This 1099 ploy has been used by shyster organizations -- both profit > and non-profit for many years to avoid paying Social Security and > other Wage related taxes (as well as minimum wage, and other wage > hour issues). > Falsely categorizing employees as independent contractors is a step up from paying employees "under the table". The for the employer are the same; better actually. The company who employs independent contractors can deduct their "fees" as expenses, employers who pay employees "under the table" cannot. (Employees getting paid "under the table" generally do not report their wages. This illegal practice allows the employer to pay about 1/3 less than prevailing wages, while the employee takes home the same amount. While the employer must forgo the deduction, he generally makes up for that by avoiding employment taxes, workers compensation, unemployment compensation, and the required bookkeeping. The employee generally benefits, not only in getting the same "take home" pay, but is usually hiding the income from the payer of some other source, like unemployment compensation or disability.) Employers on independent contractors not only get the deductions, but also get to avoid those same employment taxes and expenses. The independent contractors themselves, though, get fewer benefits from the arrangement. The expenses avoided by the employer are usually borne by the employee: higher employment taxes, layoffs without the ability to collect unemployment compensation, expensive personal health and disability policies covering job-related injuries instead of workers compensation. (It is amazing how many employers of independent contractors, on a small scale, are willing to admit the categorization "error" when faced by a personal injury claim from a contractor injured on the job -- under workers compensation laws, employees give up the right to sue employers in exchange for the no-fault workers comp.) Sorry for this long, OT drivel, but after getting so much help on computer issues through this list, it feels good being able to provide info on something I know, and which may be of help to others on the list. -- _______________________________________ Art Alexion Arthur S. Alexion LLC PGP fingerprint: 52A4 B10C AA73 096F A661 92D2 3B65 8EAC ACC5 BA7A The attachment -- signature.asc -- is my electronic signature; no need for alarm. Info @ http://mysite.verizon.net/art.alexion/encryption/signature.asc.what.html Key for signed PDFs available at http://mysite.verizon.net/art.alexion/encryption/ArthurSAlexion.p7c The validation string is TTJY-ZILJ-BJJG. ________________________________________ Attachment:
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