Skip to comments.IRS orders FedEx to pay $319 mln
Posted on 12/22/2007 2:49:32 PM PST by lowbridge
FedEx Corp. said late Friday that the Internal Revenue Service has ordered the company to pay back taxes and fines totaling $319 million for ground employees the firm misclassified as independent contractors.
The ruling covers 13,000 employees FedEx had in 2002, and the company said that the IRS is investigating the status of contractors hired between 2004 and 2006. That probe could lead to further penalties, the company said.
(Excerpt) Read more at marketwatch.com ...
Fed-Ex should tell them “MOLON LABE!”
Reason #45873459 that the IRS should be abolished. What difference does it make who did what, as long as it was done? Taxing the same job differently for different workers is social-micro-engineering. Only the most arrogant or the most clueless think they know how to create utopia by such engineering. Neither class should be in charge of America.
Don't get me started on how crummy DHL's service is. Took them 5 days to deliver a guaranteed 2 day delivery. Cost me a bundle of money.
From the postings that I’ve read at a couple of consumer websites, I don’t understand how DHL is still in business (along with Best Buy, Amazon, Ebay, Circuit City, etc, etc).
A similar level of vigilance is required on the part of people who feature themselves as independent contractors, but only work for one customer. The IRS is going to come after you and your customer.
Just tell the IRS those 13,000 employees were chinese dishwashers.
I've purchased Russian kettlebells form a supplier down in Texas. He uses UPS exclusively because they will reimburse his losses if they screw up the delivery or lose the package. Not so with FedEx. He stopped using FedEx because they kept losing the packages and not covering the losses. The "independent contractors" didn't have any liability or accountability.
Then why in the hell should this make any difference - other than the fact it is a damn arbitrary law?
It's a law written at the behest of labor unions, who live in terror that their employers are going to reclassify them all as independent contractors to avoid paying health benefits and to allow them to stop doing business with the deadwood among their numbers...most of whom are union officers. ;)
It doesn't matter to them that independent contractor status might be a huge advantage to their members, as the most talented among them could command much higher rates.
It goes beyond that... There are 20 common law factors that are supposed to be used to weigh whether or not a worker is a contractor or employee - case law shows that if the worker meets just 4-5 of the factors, they are found to not be an employee. Of course, the IRS takes the stance that if you meet ANY of the 20, it’s an employee. Of course, States consider otherwise (and rightly so).
Try to justify to a State why a contractor is NOT given a 1099, but a W-2. And try to explain to the IRS why an “employee” is given a 1099 and not a W-2. And try not to get both sides upset at you.
If you’re tagged/audited by the IRS and you have ANY contractors on staff, you best not meet ANY of the 20 criteria or they will consider it willful misrepresentation of classification and immediately hit you for at least twice the taxes that should have been due (income and FICA and SS). And you have to fight to not only show it was NOT willful, but that the worker was in fact a contractor.
I know, it happened to me 3 times in 7 years. Even pointing out to the “revenue officer” (yes, that’s their title) the LAW and the IRS’ own guidelines that it is to be a WEIGHTED evaluation of the 20 factors, I was still found to be committing willful misrepresentation and hit with literally hundreds of thousands of dollars of fines and levies. Which are applied immediately - you know what an IRS levy does to your credit lines?
In each case, after 6 months and tens of thousands of dollars in legal fees to fight them I got the IRS to “forgive” the infraction and accept my classification. Yes, “forgive” me for doing nothing wrong to start. In each time, they even tried to attach my personal assets even though that is clearly illegal (corporate veil).
Just another example of the IRS taking a guilty-until-proven-innocent attitude. And even when PROVEN innocent in a judicial pre-trial review or court they still consider you’re doing something wrong, they just haven’t found it yet... I’m convinced that beating them in the first audit was the reason I got two more in the space of 3 years.
The IRS is one of the largest drags on the economy; I know that much of the offshoring of companies and assets is strictly to avoid their own contradictory and unilateral means of dealing with the tax payer. If the asset is outside their reach, there’s a lot less to worry about...
That’s what they get for trying to work within the law.
If they had just hired illegals they would be getting a subsidy from congress instead of having to pay fines to the IRS.
Can add only one word: FairTax.
Send treats to the troops...
Great because you did it!
Seriously, the IRS has some of the craziest rules when it comes to determining who's an employee VS who's a contractor... There are actually companies who do nothing but "certify" contractors. I know this because a company I worked for had a very hard time with the IRS a while back...
I worked as a full time employee of a company... A large software company wanted me to come on to their site, using their equipment, to teach a 5 day class. So they attempted to hire my company to send me to teach the class. But because I was going to the software company's offices, and using their equipment, I was being classified as an employee of that software company by the certification company. We tried to explain to them that I wasn't being hired, but my company was being contracted to send me. It was a real nightmare, and it involved all sorts of letters, a tax lawyer, and a waiver over a period of about 3 weeks. Eventually things were straightened out and I jetted off to teach the class, but it was a real nightmare.
See my #18 post...