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IRS orders FedEx to pay $319 mln
http://www.marketwatch.com/ ^ | December 22, 2007 | Greg Morcroft,

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 ...


TOPICS: Business/Economy; Culture/Society; News/Current Events
KEYWORDS: fedex; irs
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To: Myrddin

And legally, they should not. Per the IRS’s own publication P15A, there are 20 common law factors, of which sole-customer is just one. The IRS is to consider ALL factors in determining independent contractor or employee status.

Unfortunately, the IRS doesn’t follow its own guidelines and assumes if you meet ANY of the factors you’re an employee. Which is clearly incorrect and illegal.

But you’re right, they’ll come after you anyway and force you to prove otherwise - that you’re not breaking the law. Guilty until proven innocent, in the case of the IRS.


21 posted on 12/22/2007 3:41:39 PM PST by PugetSoundSoldier (Complaining about the sting of truth is the defense of the indefensible.)
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To: Myrddin

Weren’t these the delivery guys from the RPS ground service that Fedex bought from Roadway Freight to jumpstart their Fedex Ground service? The RPS delivery guys were independent contractors.


22 posted on 12/22/2007 3:46:11 PM PST by woofer (Earth First! We'll mine the other eight later.)
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To: lowbridge

Well now at least their shorts are “Brown”.


23 posted on 12/22/2007 3:51:00 PM PST by fish hawk (The religion of Darwinism = Monkey Intellect)
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To: RAY
Then why in the hell should this make any difference - other than the fact it is a damn arbitrary law?

The difference is who pays for the other half of the social security taxes. An employee on a W4/W2 basis has income taxes , social security taxes and medicare taxes extracted and forwarded by the employer on each paycheck period. The employer has to pay a matching amount to the IRS. When an independent contractor is involved, the company sends a 1099 for the gross amount of wages paid to the contractor. That contractor is then responsible for paying income taxes, social security taxes, self employment taxes and medicare taxes. Companies like the contractor model because it saves them the administrative overhead of managing W4/W2 payroll and also lets them off the hook for their half of the social security tax burden. That's fine...unless the "contractor" is really a dedicated employee who works for no other business. That is labeled an attempt to evade the tax responsibilities on the part of the defacto employer.

Every law created by governments is an arbitrary law. You don't get to choose which ones to obey.

24 posted on 12/22/2007 3:55:00 PM PST by Myrddin
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To: proudofthesouth

I thought I was the only one who despised DHL.


25 posted on 12/22/2007 3:56:28 PM PST by BlessedBeGod
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To: PugetSoundSoldier
Guilty until proven innocent, in the case of the IRS.

No kidding. They will even freeze access to your bank accounts before you've had a shot a due process. It's pretty hard to defend yourself when the attacking party is free to seize control of the very assets you require to mount a defense.

26 posted on 12/22/2007 3:57:47 PM PST by Myrddin
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To: woofer
I don't have enough info on the RPS case to make an intelligent comment on that situation.
27 posted on 12/22/2007 3:59:36 PM PST by Myrddin
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To: aruanan
I beg to differ. The average sheep has already gotten his/her “refund” by then, and if they think about the IRS at all, they think it’s a swell savings plan they can go out and use for a new plasma TV. The founding fathers would call us what we are - gutless cowards.
28 posted on 12/22/2007 4:15:04 PM PST by Comus (10%er and proud of it.)
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To: Comus
I beg to differ. The average sheep has already gotten his/her “refund” by then, and if they think about the IRS at all, they think it’s a swell savings plan they can go out and use for a new plasma TV. The founding fathers would call us what we are - gutless cowards.

So their vibes are dampening the truly dangerous ones of a smaller group of people?
29 posted on 12/22/2007 4:17:02 PM PST by aruanan
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To: proudofthesouth

I’d like to think I am one of the nice Amazon CSR’s.


30 posted on 12/22/2007 4:19:51 PM PST by jaredt112
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To: jaredt112
I suggest you do a search go to:

www.my3cents.com
www.theconsumerist.com

and read all the complaints about Amazon. I want to order a couple of things from them but am afraid to after reading all the complaints.

31 posted on 12/22/2007 4:23:34 PM PST by proudofthesouth (Liberalism IS a mental illness.)
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To: Myrddin

How is FedEx the contractors sole customer? Who are all those people they pick up packages from and deliver them to?


32 posted on 12/22/2007 4:26:28 PM PST by purpleraine
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To: Myrddin

PS: I am a real estate bvroker and I am the sole contractor for the associates, by state regulation. Can they be on a 1099 basis?


33 posted on 12/22/2007 4:27:47 PM PST by purpleraine
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To: proudofthesouth
I have ordered CDs,books and DVDs from Amazon through the last 5 years and never had a problem. Fast shipping for me.
34 posted on 12/22/2007 4:28:00 PM PST by 4yearlurker (Thanks Vets!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!)
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To: Myrddin
It is my understanding that any self employed “independent contractor” is legally required to pay his own SS and estimated income tax based on what is reported on the 1099. If this was done, the IRS is trying to get the tax twice.

Does the IRS does not track 1099s?

I suspect the IRS does not want to deal with “independent contractors” due to the extra paperwork.

35 posted on 12/22/2007 4:30:36 PM PST by Western Phil
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To: RAY
Then why in the hell should this make any difference
It's all about withholding.
36 posted on 12/22/2007 4:31:07 PM PST by lewislynn (What does the global warming movement and the Fairtax movement have in common? Disinformation)
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To: coloradan

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.
____________________________
Sorry, but classifying ground drivers as “independent contractors” and placing all the business risk upon those drivers PLUS the ‘demand of their time’ driving around in a FedEx truck and wearing a FedEx uniform makes them EMPLOYEES.

FedEx was skirting their employer responsibility by whoring out these people who simply want to fed their families. ESPECIALLY when they have a WHOLE NEW DEPARTMENT that micromanages the mileage and state-by-state fuel purchases of these so-called “independent contractors.”

I think the IRS is out of control, but corporations pimping the poor schmuck who needs to feed his family is even worse.


37 posted on 12/22/2007 4:45:35 PM PST by Dasaji (The U.S.A. is the Land of Opportunity and you've got 50 states to do it in!)
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To: proudofthesouth

Been shopping with Amazon for 10 years and never had any issues. DHL on the other hand...just avoid them when ordering.


38 posted on 12/22/2007 4:46:45 PM PST by packrat35 (Politicians would be less worthless if they were edible, or useable for packing wheel bearings.)
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To: Myrddin
They will even freeze access to your bank accounts before you've had a shot a due process. It's pretty hard to defend yourself when the attacking party is free to seize control of the very assets you require to mount a defense.

And that is precisely the reason that the IRS should be abolished. They have placed themselves above the law and the very constitution itself. Why this is allowed to go on is beyond me.

39 posted on 12/22/2007 4:49:52 PM PST by mc5cents (Show me just what Mohammd brought that was new, and there you will find things only evil and inhuman)
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To: lowbridge
So this is why some eBayer charged me $28 to ship a simple $5 plate from Canada today...
40 posted on 12/22/2007 4:50:02 PM PST by tubebender (Lost another one to the Tag Line bandit...)
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