My wife was working full time but being paid as a 1099 instead of W-2

[LdiJ]

Evidently not.

No, I was not aware of what you do for a living, but I still stand by the fact that I am seeing it on the increase rather than decease. Maybe its just in my area, but my practice has a lot more people who are misclassified or who are misclassifying than we have had in the past.

 

[LdiJ]

Firstly, I want to thank all of you for taking out time and responding to this important matter to myself and my wife. You already have helped out a great deal and yes, I will be pursuing the matter. Your feedback matters and DOES make a difference. I hate the infighting so please try to stay focused on the issue at hand and not the experience of the contributors.

There is one issue I asked about originally that was finally addressed by davew128 – criminal vs. civil offense. CBG you highlighted probably the key issue in this matter – knowingly. Here is where it gets really interesting (and I will explain why) and your combined expertise and feedback would be invaluable. I am not sure what you mean by “knowingly”. The doctor probably did not know (and would certainly state his ignorance) that it is illegal to misclassify a worker BUT he deliberately did so to avoid having to pay social security tax and other benefits my wife would have been entitled to. This is by no means the end of the “story” though. Here is where it really gets interesting. While the doctor may not have known about the illegality of misclassifying workers, he had (and still has) a CPA who handles his taxes. His CPA without question knew my wife was full time (although he may not have known about the overtime) and classified as a 1099. So now tell me, is it excusable that a CPA licensed in Massachusetts, practicing for years and years would not know that it is illegal to misclassify a worker this way? Assuming it is not excusable, we now have a classic case of the head not knowing or not wanting to know about illegal activities carried out by their subordinate. Can the doctor “get off the hook” by pointing his finger at his CPA and saying it was his responsibility (when he, the doctor probably did not want to know the truth)? Surly there must be case law pertaining to this type of a situation. Excuse me but I just cannot resist reminding you of how many times in the recent past a head of state or director has ducked responsibility by claiming ignorance if illegal activities of subordinates. Most recently Loretta Lynch former head of the IRS in trying to duck responsibility said she was only “generally aware” of the IRS targeting of conservative groups. The examples go on and on. But what about my case - Can the doctor “get off the hook” by pointing his finger at his CPA????? And then, how much responsibility does the CPA bear?

Well, I can tell you that I lecture my clients expansively on the issue...and you do not know that his CPA doesn't do the same. A tax professional cannot force their client to not misclassify workers. They can and often do fire them as clients if the situation is bad enough to warrant it, but they cannot force them to do it right.

Its a situation that truly infuriates me...because most of these workers are barely making enough money to make ends meet, and then they end up with a huge and unexpected tax bite. They also rarely have any valid expenses, because they are not self employed.

The ones that infuriate me the most however, are the employers who actually withhold taxes from their employee's wages, but never pay the tax in, and then turn around and issue 1099's at the end of the year.

 

[TinkerBelleLuvr]

I'm going to chime in on a question asked by the OP about the CPA knowing whether the employee was an employee or a contractor - they know number but not necessarily payroll nuances. A former employer of my daughter got nailed for something that they did that flew right through the book - it was DOL that caught them. Each professional has different expertise in different areas.

 

[Dynamo2000]

Not true. In Massachusetts it is a criminal offense to knowingly misclassify an employee as an independent contractor.

... A tax professional cannot force their client to not misclassify workers. ...

LdiJ, the point I am trying to make is that the doctor should be held accountable for KNOWLINGLY misclassifying my wife as an independent contractor. I recently spoke to a CPA friend of mine who told me it is a virtual certainty that a licensed CPA in Mass. knows that it is illegal to misclassify an employee as an independent contractor. CPA's are hired to make sure that accounting is done right or at the very least to advise their clients of what is right (legal) and what is not. You may be correct that they cannot force an employer to classify an employee as a W-2, but they do have the professional responsibility of advising their client that what they are doing in this situation is illegal. This being the case the doctor or at the very least his CPA and probably both should be held accountable for KNOWLINGLY misclassifying my wife.
Based on the earlier comments of how common this is, surely there must be ample case law for this. How have the courts come down on employers in this type of situation?

 

[LdiJ]

LdiJ, the point I am trying to make is that the doctor should be held accountable for KNOWLINGLY misclassifying my wife as an independent contractor. I recently spoke to a CPA friend of mine who told me it is a virtual certainty that a licensed CPA in Mass. knows that it is illegal to misclassify an employee as an independent contractor. CPA's are hired to make sure that accounting is done right or at the very least to advise their clients of what is right (legal) and what is not. You may be correct that they cannot force an employer to classify an employee as a W-2, but they do have the professional responsibility of advising their client that what they are doing in this situation is illegal. This being the case the doctor or at the very least his CPA and probably both should be held accountable for KNOWLINGLY misclassifying my wife.
Based on the earlier comments of how common this is, surely there must be ample case law for this. How have the courts come down on employers in this type of situation?

No, the CPA would not be held responsible for it because the CPA has no control over it. I agree that the doctor should and likely did know better. I agree that the doctor should be held accountable.

 

[cbg]

And believe it or not, I'm not saying differently. I'm saying that PROVING it was knowingly is not the job of the OP; it's the job of the regulatory agencies, and if they decide not to try to prove it, or if they don't find what they consider sufficient proof, the OP is not going to get to see the doctor criminally charged. It's not his call.

 

[commentator]

The thing I think is real interesting is that your wife has been working this way for 6 years without making a protest. Now you're going to turn him over to the Army, Navy and the Marines and demand he be punished for knowingly misclassifying her? My question is still the same. She knew she wasn't a contractor, or should have known, and yet she's been cooperating up to now. Why has she continued to work this way?

I agree that it is one sorry way to treat your employees, usually done on purpose and for meanness (in the sense of cheapness) and we saw so much of it. If your wife was laid off, let go, fired, by this doctor, she would hopefully file for unemployment insurance even though they'd first tell her she wasn't eligible as a contract employee, she'd have to appeal, and the unemployment system would do a fact finding.

And if she was indeed misclassified, they'd approve her monetarily for benefits anyhow and come down on the doctor. But there's only liability in the form of back taxes and penalties, not prosecution for criminal negligence. If they criminally prosecuted everyone who did this particular trick, it'd be like prosecuting every unemployment fraud, there'd be no time to prosecute more serious criminals.