Hourly associates filing 1099

[alabama1980]

What is the name of your state (only U.S. law)? Alabama

I'll try to keep this brief...

I worked for my now former employer for 7yrs. During that time we filed as 1099 employees. The reality was that we were hourly associates. Punched a clocked, used company tools for everything, had a set time to go in and leave, and paid an hourly wage.

No one really wanted to rattle the cage on the issue because for around here the money was pretty damn good and the job market is crap. Any noise raised over this would have resulted in either the noisemaker getting fired, or him having to shut down all together if he had to pay back taxes as he was supposed to do for the past 12 years (I think that's how long he's been in business). That would have put the whole of the entire group of us job hunting in a poor market. We just rolled with it.

Fast forward to now. This is my third week out of work. Savings are not great (hours have been down for close to a year so they have already been tapped a time or two). I filed for my unemployment benefits. I explained the situation about the 1099 filings and the way we worked. In order for me to possibly get benefits I had to basically tell this guy things that will not be well for my former employer.

Something worth mentioning is that about three years ago my bosses wife took ownership of the company. Nothing changed other than the name attached to the business. He still ran it.

Question 1: What will happen with my ex boss now? The wife?

Question 2: How likely is it that my name will be brought up in this? Or will it just be treated as a random investigation?

Question 3: If he does have to pay back taxes etc. will that affect my taxes in any way?

I would prefer it remain anonymous, however, I'm fine either way. The only thing I'm guilty of is working hard and being ignorant to how his shady practice could affect me.

 

[justalayman]

Question 1: What will happen with my ex boss now? The wife?

why care?

Question 2: How likely is it that my name will be brought up in this? Or will it just be treated as a random investigation?

there is no such thing as a random investigation. The government does not have the power to demand to review a company's private books without legal justification. that would be where your name comes into play.

Question 3: If he does have to pay back taxes etc. will that affect my taxes in any way?

have you been paying taxes all these years as an independent contractor? I don't know how far back you can amend your tax filings but it should result in a refund to you if you are in fact an employee for whatever years you can file for.

I would prefer it remain anonymous, however, I'm fine either way. The only thing I'm guilty of is working hard and being ignorant to how his shady practice could affect me.

You don't sound ignorant at all, You sound like you knew very well what was going on and refused to do anything about it.

 

[TheGeekess]

IIRC, The Boyfriend had a client in 'Bama who did something similar. Client ended up having to pay for ALL the Federal back taxes (including what would have been the employee's share of those), all the FICA and penalties. Not sure what the State/County/City income tax penalties were.

Independent Contractor (Self-Employed) or Employee?

????????????????????????

 

[alabama1980]

why care?

there is no such thing as a random investigation. The government does not have the power to demand to review a company's private books without legal justification. that would be where your name comes into play.

have you been paying taxes all these years as an independent contractor? I don't know how far back you can amend your tax filings but it should result in a refund to you if you are in fact an employee for whatever years you can file for.

You don't sound ignorant at all, You sound like you knew very well what was going on and refused to do anything about it.

Not a care, just simply curiosity.

Yes...paid as an IC.

Read closer. I didn't say I was ignorant to what was going on. I said I was ignorant to how it could affect me down the road.

You have to consider the situation. Had anything been said it could have potentially put a several good people, people I call my friends, out of a job. No one wanted that on their shoulders.

 

[alabama1980]

IIRC, The Boyfriend had a client in 'Bama who did something similar. Client ended up having to pay for ALL the Federal back taxes (including what would have been the employee's share of those), all the FICA and penalties. Not sure what the State/County/City income tax penalties were.

Independent Contractor (Self-Employed) or Employee?

????????????????????????

I take it that this practice isn't really unusual with small businesses.

 

[justalayman]

Read closer. I didn't say I was ignorant to what was going on. I said I was ignorant to how it could affect me down the road.

but the fact is, you knew it was wrong and refused to do anything about it.

You can either continue your claim or drop it. If you continue the claim, the UI folks will investigate the situation and make a determination. If they determine you were in fact an employee, I suspect the employer will be hugely in debt shortly. It won't be anonymous.

 

[alabama1980]

but the fact is, you knew it was wrong and refused to do anything about it.

You can either continue your claim or drop it. If you continue the claim, the UI folks will investigate the situation and make a determination. If they determine you were in fact an employee, I suspect the employer will be hugely in debt shortly. It won't be anonymous.

Your point is well made and valid. I just wish you would look past the black and white of it. Saying anything could have potentially put a group of hard working people out into a poor job market. That's not my decision to make for all of them, nor was it any of theirs to make for me. I realize that legally it's all spelled out. In a real world scenario it's not as clear cut. There are other considerations besides ink on paper.

I sincerely thank both of you for the prompt responses. It's helped a lot! Good evening to you both!

 

[justalayman]

Fine, I'll look beyond the black and white of it.



If the guy is still in business, you will cause the same problems for the current employees. So, it's ok to accept an illegal situation when you or your friends would be affected by the report yet now, when you are out of work, and presumably have no friends there, it's ok to turn the guy in.

Your justifications for your actions are obvious.

 

[davew128]

there is no such thing as a random investigation. The government does not have the power to demand to review a company's private books without legal justification. that would be where your name comes into play.

Gonna disagree with you here. Any state I've ever defended an audit against has statutes on the books that allow full access to whatever is necessary to prove filings for income and/or in this case PAYROLL audits. Most audits are SOMEWHAT random, insomuch as nobody is deliberately picking names from a list. There is usually a weighted criteria involved in the random computer selection.

OP, your problem here is that it would be a long time before you proved your were an employee and not an IC. I don't know specifically about Alabama, but some states have criminalized misclassifications of employees as its not only UI funds that the state doesn't get, it's worker's compensation funds.

Specifically to YOU: Had you gotten hurt on the job, whatever it is that you do, you're SOL when it comes to WC benefits because you weren't an employee.

Justalyaman summed it up perfectly. You didn't rock the boat when YOU had nothing to lose. Now you lost it, so you don't give a damn if you screw your "friends" over. Dollars to doughnuts says the owner isn't reporting his income just like he's cheating on the payroll taxes. It wouldn't surprise me to find out the only copies of the 1099s being filed are YOURS.

 

[alabama1980]

Fine, I'll look beyond the black and white of it.



If the guy is still in business, you will cause the same problems for the current employees. So, it's ok to accept an illegal situation when you or your friends would be affected by the report yet now, when you are out of work, and presumably have no friends there, it's ok to turn the guy in.

Your justifications for your actions are obvious.

With all due respect, your condescending attitude isn't necessary. I have been respectful to you. I would appreciate the same respect from you in that you stop trying to flip this around where I'm the bad guy and using thinly veiled verbal jabs to imply that I'm doing this out of spite. You should know full well that isn't the case by what I've said previously.

First point is that the guys is not in business. It's going on a month with no work. I feel that it's a safe conclusion that every employee he had is looking for or has found employment elsewhere.

Second point, I never said "it's ok to turn the guy in". Until now that was a situation between him and the federal government. Now I'm in the mix of it and stuck in a situation where I need financial help. To get that help I HAVE NO CHOICE but to do this. I don't like it, and I wish there was another way. The fact is that there isn't. I hope I can find a job before I have to take a penny of unemployment. I prefer to earn my living through work. I've done it that way for 15 years. It's an insult to me to have to even get UC.

 

[alabama1980]

Gonna disagree with you here. Any state I've ever defended an audit against has statutes on the books that allow full access to whatever is necessary to prove filings for income and/or in this case PAYROLL audits. Most audits are SOMEWHAT random, insomuch as nobody is deliberately picking names from a list. There is usually a weighted criteria involved in the random computer selection.

OP, your problem here is that it would be a long time before you proved your were an employee and not an IC. I don't know specifically about Alabama, but some states have criminalized misclassifications of employees as its not only UI funds that the state doesn't get, it's worker's compensation funds.

Specifically to YOU: Had you gotten hurt on the job, whatever it is that you do, you're SOL when it comes to WC benefits because you weren't an employee.

Justalyaman summed it up perfectly. You didn't rock the boat when YOU had nothing to lose. Now you lost it, so you don't give a damn if you screw your "friends" over. Dollars to doughnuts says the owner isn't reporting his income just like he's cheating on the payroll taxes. It wouldn't surprise me to find out the only copies of the 1099s being filed are YOURS.

Why the instant negative character judgment? I grant you there are some people in this world that look out for no one but themselves, but that isn't me. I wouldn't do that to my friends...no quotations....they are my friends. I wouldn't sell out my friends to cover my ass. If they were still employed then I wouldn't HAVE to worry about it because they would help me.

I know all the employees filed that way. As for him I have no idea. It wouldn't surprise me either if he did something shady there.

EDIT: I realize now that in my initial post I didn't include the fact that EVERYONE is out of work. If that is what painted me as an ******* then that's my fault. I can see where that would make me look kind of like a tool.

 

[justalayman]

.

First point is that the guys is not in business.

Gee, ya think my perspective would have been a bit different if I was aware of that?.
All I was told before was that you are now unemployed. You knew of the illegal situation and you didn't report it because you feared losing your job. Based on that, there was no reason to believe the guy is no longer in business.


well, if this guys business was incorporated, forget about getting anything corrected. The business harmed you, not the owner. If it wasn't incorporated, unless this guy has tons of cash, forget about getting anything from him.



Bottom line; you did not take action to correct the illegal situation when you should have. You might very well have to live with the repercussions of that decision.

all you can do is wait to see what the UI folks do. If the guy never paid into UI, you may just not be getting any UI benefits. I don't know Alabama well enough to say but in the 2 states I deal with, that is what would happen.

. Until now that was a situation between him and the federal government

No, it was't ever just between him and the fed government. You were in the mix all along.

EDIT: I realize now that in my initial post I didn't include the fact that EVERYONE is out of work. If that is what painted me as an ******* then that's my fault. I can see where that would make me look kind of like a tool.

Um, ya, it did.

 

[alabama1980]

.

Gee, ya think my perspective would have been a bit different if I was aware of that?.
All I was told before was that you are now unemployed. You knew of the illegal situation and you didn't report it because you feared losing your job. Based on that, there was no reason to believe the guy is no longer in business.


well, if this guys business was incorporated, forget about getting anything corrected. The business harmed you, not the owner. If it wasn't incorporated, unless this guy has tons of cash, forget about getting anything from him.



Bottom line; you did not take action to correct the illegal situation when you should have. You might very well have to live with the repercussions of that decision.

all you can do is wait to see what the UI folks do. If the guy never paid into UI, you may just not be getting any UI benefits. I don't know Alabama well enough to say but in the 2 states I deal with, that is what would happen.


No, it was't ever just between him and the fed government. You were in the mix all along.

Um, ya, it did.

Yeh yeh....one missing detail and I get my cods busted....

How about one more answer?

I read something (I know reading legal stuff on the internet should be taken with a grain of salt) that said that I could get in trouble for tax fraud. Any truth to that? I posted this on another QA style forum and was told that "It was all lies" and "people like you make our job easy" and that I may get off easy with 25 years.....

I don't want anything from him, however, I do want the FedGov to recognize me as an employee rather than sub so that I may be able to get some help if that is in fact needed before I can find work.

 

[justalayman]

=alabama1980;2617388]
I posted this on another QA style forum and was told that "It was all lies" and "people like you make our job easy" and that I may get off easy with 25 years.....

Unless there was an intention attempt to deceive, you should be fine. You actually pay more taxes as an IC than you do as an employee so I cannot see where you gained by this.

I don't want anything from him, however, I do want the FedGov to recognize me as an employee rather than sub so that I may be able to get some help if that is in fact needed before I can find work.

If his business is shut down, it might be a problem. I would continue with what you are doing.


There is an IRS form that you file to request a determination of status. SS-8

www.irs.gov/pub/irs-pdf/fss8.pdf

due to the status of his business, I don't know if it will do you any good but you can try. It won't change the UI situation though but it might make things easier on you at tax time. You should also look into amending any previous tax years you can. As to the UI; that is where it is and depending on the status of his business, they may be able to get the payments he was supposed to be making to the UI system.

and like all things; the government does things in their own time.

 

[TheGeekess]

It's not the Fed that determines UI; it's the state. And believe me, if you see more than $200/wk from unemployment in this state, you're extremely lucky.