What is Alternate Staffing?

The leading source for comprehensive and timely information

on federal laws governing independent contractors and other

forms of nontraditional worker relationships. Includes six

bi-monthly updates to keep you up to date on the latest federal

developments.

See the extensive list of contents below.

Alternate Staffing Binder

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Is Alternate Staffing the right resource for me?

Are you…

  • Considering engaging workers as independent contractors?
  • Concerned about whether a worker qualifies as an independent contractor under ERISA, the NLRA, the FLSA, or the Federal Tort Claims Act, or Title VII?
  • Worried about whether an independent contractor may be deemed a “leased employee” for benefits purposes?
  • Confused about whether your company might be liable for employment taxes on compensation paid workers who were engaged through a temporary-services firm?
  • Concerned about whether your company could be sued by independent contractors claiming a right to participate in your company’s employee-benefit programs?
  • Worried about whether an individual could be held personally liable for a company’s delinquent payroll taxes as a “responsible person”?
  • Seeking practical guidance on how to engage an independent contractor the correct way?

If you answered yes to any of these questions then you need the authoritative guidance of Alternate Staffing.

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Contents

Alternative Staffing Planning Guide

¶1000 Overview of Alternative Staffing Arrangements

The Independent-Contractor Option

¶1010 THE ADVANTAGES OF USING INDEPENDENT CONTRACTORS

¶1011 Tax Savings
¶1012 Nontax Reasons to Use Independent Contractors and Other Forms of Contingent Workers
¶1013 Special Application of Independent Contractor Status to Individuals Performing Services in Foreign Countries

¶1020 RISKS OF USING INDEPENDENT CONTRACTORS

¶1021 Independent-Contractor Risks Affecting Employee Benefit Plans
¶1023 Conflict with Other Federal Laws and State Laws

¶1030 OBLIGATIONS IMPOSED ON BUSINESSES THAT USE INDEPENDENT CONTRACTORS

¶1031 Control Over a Worker’s Performance
¶1032 Burden of Proof
¶1033 Section 530 Protection

¶1040 Why Independent Contractors SHOULD BE APPRISED OF THEIR TAX OBLIGATIONS

¶1050 WORKLOAD CONTINGENCIES AND SPECIAL PROJECTS

¶1051 Independent Contractors as an Alternative Workforce

The PEO and Leased-Employee Options

¶1200 WHY PEOS AND LEASED EMPLOYEES HAVE BECOME AN ATTRACTIVE OPTION TO MANY BUSINESSES

¶1210 Why Workers Have Found Satisfaction in Leasing/PEO Arrangements

¶1220 HOW TO IMPLEMENT A SUCCESSFUL LEASED-EMPLOYEE/PEO ARRANGEMENT

¶1221 Evaluating An Employee-Leasing/PEO Firm

¶1230 GUIDELINES FOR MAINTAINING A LEASING/PEO ARRANGEMENT

¶1240 SPECIAL INTERNAL REVENUE CODE CONSIDERATIONS

¶1241 LEGAL ISSUES TO CONSIDER WHEN STRUCTURING AN EMPLOYEE-LEASING/PEO ARRANGEMENT

¶1250 AVOIDING EMPLOYMENT TAXES IN EMPLOYEE-LEASING ARRANGEMENTS

Protecting Benefit Plans Against Contingent Workers

¶1400 PROTECTING BENEFIT PLANS AGAINST CONTINGENT-WORKER RISKS

¶1401 Consequences of Incorrectly Excluding Workers From Benefit Plans
¶1402 Consequences of Incorrectly Including Workers in Benefit Plans Who Are Not Eligible
¶1403 Determining Whether a Worker is Eligible or Not Eligible to Participate in a Benefit Plan
¶1404 Suggestions for Protecting Benefit Programs Against the Claims of Contingent Workers
¶1405 Miscellaneous Employee-Benefit Considerations Concerning Contingent Workers

Employment Taxes

¶2000 INTRODUCTION

¶2005 STRATEGIES FOR MINIMIZING FEDERAL EMPLOYMENT-TAX EXPOSURE

¶2010 What Is an Independent Contractor?

¶2020 “EMPLOYEE” UNDER VARIOUS FEDERAL EMPLOYMENT TAXES

¶2021 Importance of CORRECT INFORMATION REPORTING OF PAYMENTS TO CONTINGENT WORKERS

¶2030 FICA TAX VS. SECA TAX

¶2031 FEDERAL INSURANCE CONTRIBUTIONS ACT (FICA) TAX
¶2032 FICA Tax Components
¶2033 Calculating FICA Tax Liability
¶2034 FICA Tax Issues
¶2035 SELF-EMPLOYMENT CONTRIBUTIONS ACT (SECA) TAX
¶2036 Self-Employment Income, for Purposes of SECA Taxes
¶2037 Exclusions and Special Rules for Determining Self-Employment Income

¶2040 FICA TAX STATUS

¶2041 Employment for FICA-Tax Purposes
¶2042 Employee Status for FICA-Tax Purposes
¶2043 Wages for FICA-Tax Purposes
¶2044 Employer for FICA-Tax Purposes
¶2045 Common Paymaster Rules for FICA-Tax Purposes

¶2050 FUTA TAX STATUS

¶2051 Exceptions to FUTA Statutory Employee Status
¶2052 Exceptions to FUTA Tax Coverage
¶2053 Wages
¶2054 “Employer” for Purposes of FUTA Tax
¶2055 Common Paymaster Rules—FUTA Tax

¶2060 FEDERAL INCOME TAX WITHHOLDING

¶2061 “Wages” Subject to Federal Income Tax Withholding
¶2062 “Employees” Subject to Federal Income Tax Withholding
¶2063 “Employer” for Purposes of Federal Income Tax Withholding
¶2064 Special Rules for Federal Income Tax Withholding
¶2065 Income Tax Withholding on Payments to Government Contractors

¶2070 RULES GOVERNING THE PAYMENT OF EMPLOYMENT TAXES

¶2071 Due Dates for Employment Tax Deposits
¶2072 Interest-Free Adjustments for Unpaid Employment Taxes Due to Misclassification
¶2073 Employment Tax Obligations Relating to Foreign Employers and Employees
¶2074 Treatment of “Disregarded Entities”
¶2075 Table 2075: Applicability of Employment Taxes to Workers

¶2100 AVOIDING PAYOR STATUS

¶2200 TAX LEGISLATIVE DEVELOPMENTS

¶2300 PERTINENT REPORTS

Common-Law Test

¶3000 GENERAL RULE

¶3020 DETERMINING THE PRESENCE OR ABSENCE OF CONTROL

¶3030 THE TWENTY COMMON-LAW FACTORS OF WORKER STATUS

¶3031 General Application of Common-Law Tests
¶3032 Comprehensive Examination of Twenty Common-Law Factors

¶3040 APPLICATION OF COMMON-LAW TEST IN SPECIAL CONTEXTS

¶3050 APPLICATION OF COMMON-LAW TEST TO SPECIFIC ARRANGEMENTS

¶3200 IRS ADMINISTRATIVE DEVELOPMENTS

¶3300 Overview of the federal circuits’ interpretation of the common-law test

Statutory Independent Contractors

¶4000 OVERVIEW OF STATUTORY INDEPENDENT CONTRACTOR PROVISIONS

¶4010 Section 530 of the Revenue Act of 1978

¶4011 Rationale for Enactment of Section 530
¶4012 Limitations on Section 530
¶4013 Section 1706 Exception for “Technical Workers”

¶4020 REQUIREMENTS OF SECTION 530—An OVERVIEW

¶4030 ESTABLISHING ‘REASONABLE BASIS’ UNDER SECTION 530

¶4031 Statutory Reasonable Basis
¶4032 Reasonable Basis Demonstrated “In Some Other Manner”
¶4033 Consistency Requirement
¶4034 Information Reporting Requirement
¶4035 SECTION 530 AND SPECIAL APPLICATIONS
¶4036 Burden of Proof

¶4050 STATUTORY CLASSIFICATION OF DIRECT SELLERS, REAL ESTATE AGENTS AND NEWSPAPER DISTRIBUTORS

¶4051 Qualified Real Estate Agents
¶4052 Direct Sellers
¶4053 Newspaper Distributors
¶4054 Exception for Qualified Retirement Plans

¶4060 The Sitter Referral Exception

Contracts, Forms and Internal Procedures

¶5000 INTRODUCTION

¶5005 GENERAL CONTRACT LANGUAGE

¶5010 SAMPLE CONTRACTS—Independent Contractor Agreements

¶5020 SAMPLE CONTRACTS—Employee Leasing Agreements

¶5050 INVOICING AND ACCOUNTING

¶5051 Sample Invoices
¶5052 Documenting “Independence”

¶5060 COMMUNICATING WITH THE IRS

¶5061 IRS Form SS-8
¶5062 Interrelationship Between Claim of Section 530 Safe Haven and IRS Form SS-8

¶5070 POLICY STATEMENT FOR PRESERVING FREELANCERS’ INDEPENDENT-CONTRACTOR
STATUS

¶5075 SELF-AUDIT OF CONTINGENT-WORKER RISKS

¶5080 GUIDELINES FOR DRAFTING AND REVIEWING EMPLOYEE LEASING AGREEMENTS

¶5085 GUIDELINES FOR MANAGING A PEO/LEASING FIRM RELATIONSHIP

¶5086 CHECKLIST FOR CONTINGENT-WORKER ISSUES WHEN ACQUIRING ANOTHER BUSINESS
¶5087 CHECKLIST FOR APPLYING SECTION 530

IRS Enforcement

¶6000 SCENARIOS: WARNING FLAGS TO THE IRS

¶6020 STATUTE OF LIMITATIONS

¶6030 CONSEQUENCES OF RECLASSIFICATION AND MISCLASSIFICATION

¶6031 EMPLOYEE BENEFIT PLAN RAMIFICATIONS
¶6032 TAX LIABILITIES
¶6033 RECOVERY OF FEES AND COSTS
¶6034 CRIMINAL SANCTIONS
¶6035 STATE LAW CLAIMS

¶6040 CLAIMS OF MISCLASSIFICATION BY INDEPENDENT CONTRACTORS

¶6050 IRS Hostility toward independent contractors

¶6051 WHAT TO DO IF THE IRS CALLS
¶6052 PRE-AUDIT PROCEDURES
¶6053 EXAMINATIONS
¶6054 PROTEST: THE IRS APPEALS PROCESS
¶6055 Early Referral of Employment Tax Issues to Appeals
¶6056 Classification Settlement Program
¶6057 Voluntary Classification Settlement Program
¶6058 Closing Agreements

¶6100 LITIGATION

Labor Law

¶7000 Introduction

¶7010 Employee Retirement Income Security Act of 1974

¶7020 The Fair Labor Standards Act of 1938

¶7030 The Family and Medical Leave Act of 1993

¶7040 The Age Discrimination in Employment Act of 1967

¶7050 The Americans With Disabilities Act of 1990

¶7060 Worker Adjustment and Retraining Act

¶7070 Title VII of the Civil Rights Act of 1964

¶7080 The National Labor Relations Act

¶7090 The Migrant and Seasonal Agricultural Worker Protection Act

Other Federal Laws

¶8010 FEDERAL TORT CLAIMS ACT

¶8020 Fair Credit Reporting Act

¶8030 ENERGY REORGANIZATION ACT

¶8040 FEDERAL OBSCENITY STATUTE

¶8050 AFFORDABLE CARE ACT

¶8060 Emergency Medical Treatment and Active Labor Act

¶8070 Sarbanes-Oxley Act of 2002

¶8080 Executive orders

APPENDIX 1: Glossary

Glossary

Acronyms

Federal Circuits

APPENDIX 2: Federal Law (and Legislative History)

H.R. 13511: SECTION 530 OF THE REVENUE ACT OF 1978

H.R. 3838: TAX REFORM ACT OF 1986

H.R. 4961: Tax Equity and Fiscal Responsibility Act of 1982—DIRECT SELLERS’ AND REALTORS’ STATUTORY INDEPENDENT-CONTRACTOR STATUS

H.R. 3448: SMALL BUSINESS JOB PROTECTION ACT OF 1996

H.R. 4297: TAX INCREASE PREVENTION AND RECONCILIATION ACT OF 2005

APPENDIX 3: Policies and Regulations

REVENUE RULINGS AND REVENUE PROCEDURES

INTERNAL REVENUE MANUAL EXCERPTS

GOVERNMENT DOCUMENTS

REGULATIONS

A. Final Regulations

B. Proposed Regulations

MISCELLANEOUS DOCUMENTS

APPENDIX 4: Legal Decisions

APPENDIX 5: IRS Information, Forms, and Documents

INDEX

INDEX

OCCUPATIONAL INDEX

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