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Where Section 530 of the Revenue Act of 1978 applies, reclassification of a worker from independent contractor to employee for tax purposes can only have prospective effect. There is no legal basis for assessing employment tax, penalties, or interest with respect to such worker for a prior period.
Why, then, would an employer voluntarily agree to pay any employment tax with respect to a worker classified as an independent contractor for a prior period for which the worker was classified as an independent contractor? Why, too, would the employer voluntarily agree to extend the assessment period for employment taxes with respect to such worker for each of the next three years?
Yet given the fact that the Labor Department has teamed up with the IRS and a growing number of states in a renewed effort to penalize businesses for wage theft, employers should weigh their options carefully. According to the Associated Press, the IRS collected $4 million in back wages on behalf of about 6,500 employees who were misclassified in 2010. With 300 new investigators in the agency this year – all of whom will focus exclusively on probing wage theft complaints – we will likely see a significant increase in those numbers, along with the fees and penalties that accompany them.
What percentage of the time is still quite obscure, because we don't have good stats. Although the Law School Transparency people are doing fantastic work with the data available to them, that data is quite bad. We don't know the answer within a tolerable degree of accuracy to such basic questions as "what percentage of graduates of ABA-accredited law schools, and of particular schools, have full-time salaried (aka. real) jobs that require a law degree (i.e., law jobs) nine months after graduation, and what do these jobs pay?" We have even less information about people further down the line, which is actually even more crucial.
Where employers provide cell phones to their employees or where employers reimburse employees for business use of their personal cell phones in accordance with these new IRS guidelines, tax-free treatment is available without burdensome record-keeping requirements.
The focus of the court’s analysis seemed to be on the “off-the-shelf” nature of the FLP. They apparently believed that if the FLP were intended for a business or other nontax purpose, more care would have been put into drafting it. Although the Turners provided a laundry list of nontax reasons for forming and funding the FLP, the structure of the partnership and the Clyde Sr.’s relationship with the FLP did not bear out those purposes.
The Mortgage Relief Act , which effects debts discharged on or after Jan 1, 2007 and before Jan. 1, 2013, generally allows taxpayers to exclude up to $2 million per married couple of mortgage debt forgiveness on their principal residence (does not include second homes or income property).