What To Do In This Situation???

Question

Where I'm employed I work As a Salesman and office help. I work a designated schedule and get an hourly wage and should be considered an employee, however i am treated as a subcontractor when i get paid and she has me file a 1099 tax form. To make matters worse I don't get paid overtime or any other benefits. I've talked to my accountant and he says what she is doing is very unethical and even called her on it. I basically run her business for her. What should I do? Other employess have brought it up and she gets irate and offensive. Suggestions??

Answer 1

Download Form SS-8 from the IRS website, fill it in, and send it off. Here's a link: http://www.irs.gov/pub/irs-pdf/fss8.pdf (I'm surprised that your "accountant" hasn't mentioned this to you. I'd be considering a new accountant as well if he or she hasn't.)

It's likely that all employees there will be ruled as employees and not independent contractors. It would help if everyone filed an SS-8 but probably isn't necessary.

If the determination goes in your favor, it's very likely that she'll be in a serious bucket of **** with the IRS. Depending upon how far back the determination goes, you may need to file amended returns to get some of the excess SS and Medicare taxes refunded. Financially it will be a crushing blow for her so you might want to have some sort of contingency plan for employment as it's possible that the business may go bankrupt due to the tax bills she'll be hit with.

Answer 2

What your employer is doing is not only unethical but illegal. She is paying you as an independent contractor to avoid paying her portion of your social security benefits, state and federal unemployment taxes. If her accountant is a CPA, he is legally and ethically obligated to report her to the IRS and state agencies. By not doing so, he risks the loss of his license.

You can research the definition of an employee versus an independent contract on the IRS website - IRS.gov.

You have several choices in this situation: you can contact the IRS, the state unemployment office, or quit. If you do either of these, you may lose your job.
Sorry I couldn't give you better news. Hope this helps!