Pulling IRS Into Your Business Dispute Might Not Be Such A Good Idea
According to the decision, Mr. Turnoy and Mr. Shiner had an agreement to equally divide the commissions on the sale of certain life insurance policies. The policies were issued in November 2012. Mr. Turnoy claimed that the commissions totaled $298,119.81. Mr. Shiner believed that there was more. Mr. Turnoy issued a check in the amount of $149,059.91 to Mr. Shiner in December of 2012. It doesn’t seem that rounding the half cent in his favor made Mr. Shiner happy. He was upset about something else.
The check bore a restrictive endorsement that indicated that acceptance of it would constitute full satisfaction of the disputed debt. Mr. Shiner was not going for that. Mr. Shiner started a lawsuit and returned the check. By that time Mr. Turnoy had already issued him a 1099.
Failure To Withhold Does Not Excuse Failure To Pay
The main disadvantage to the “independent contractor” that is a clear benefit to the “not an employer” concerns FICA/Self-employment tax. An employer has to match FICA, but the self-employed have to pay both the employee and employer share. There is something that disgruntled former “independent contractors” can do about the matter if they are not afraid of burning bridges. They can file Form 8919 to claim the FICA match your “employer” should have paid. I have this sneaking suspicion that the IRS might not actually have the resources to chase most of the former employers, so it might not even turn out to be a bridge burner. Still, it is not something to be done lightly
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Over and over again courts have said that there is nothing sinister in so arranging one’s affairs as to keep taxes as low as possible. Everybody does so, rich or poor; and all do right, for nobody owes any public duty to pay more than the law demands: taxes are enforced exactions, not voluntary contributions. To demand more in the name of morals is mere cant.