Relay-Version: version B 2.10 5/3/83; site utzoo.UUCP
Path: utzoo!mnetor!seismo!lll-lcc!ames!ucbcad!ucbvax!decvax!decwrl!labrea!Shasta!kaufman
From: kaufman@Shasta.STANFORD.EDU (Marc Kaufman)
Newsgroups: misc.legal,comp.edu
Subject: Re: Sorry - Independent contractors and the law
Message-ID: <1085@Shasta.STANFORD.EDU>
Date: Sat, 3-Jan-87 12:09:14 EST
Article-I.D.: Shasta.1085
Posted: Sat Jan  3 12:09:14 1987
Date-Received: Sat, 3-Jan-87 21:51:05 EST
References: <2352@mtuxo.UUCP> <488@unc.unc.UUCP> <795@maynard.BSW.COM> <492@unc.unc.UUCP>
Reply-To: kaufman@Shasta.UUCP (Marc Kaufman)
Organization: Stanford University
Lines: 16
Xref: mnetor misc.legal:518 comp.edu:29



I don't think we can get a *DEFINITIVE* ruling on this until the IRS makes
up its operating rules.  The purpose, evidently, is to get withholding tax
from "consultants", many of whom are on very long term contracts via
"body shops", who broker such workers.  I think it is sufficient, in the
body shop case, that the worker be an Employee of the body shop, and that
the body shop (which collects the consulting fee from the ultimate employer)
deduct Federal Income Tax on the way to paying the "consultant".

While many consultant brokerages tend to read the ruling as being very broad,
perhaps that is mostly to try to sweep in true independents and increase
the complaint base. If you organize your business so that you are an
Employee of a consulting firm, AND if you pay withholding taxes (as opposed
to quarterly estimates) the IRS gains nothing by trying to reclassify you,
so (possibly) won't.