Here's the deal, I've looked everywhere and asked a few people but haven't come up with anything. My former employer and I had a falling out so I quit. Every chance they got they ran their mouth's about me when I did nothing but better the place, get treated like crap, and get paid poorly. It was a small business of about six people including the owners and all of the employees. Out of spite they fired my girlfriend who worked at the same place. She is filing unemployment on them which they are trying to squirm out of. I was alwasy weary of the way they ran the business. I never signed an application for employment. I never signed any contracts, or any type of paperwork for that matter. I was on a payroll but taxes were not being cut from my check, and they told me I was an Independant Contractor. I will supposedly have to pay out taxes since they weren't being cut from my check but how can they do this? Is it legal to be on a weekly payroll like an employee, them get out of taxes by calling me a Contractor, and not get paid per job that would be contracted by a Contractor? I gave them my name and address on a sticky note, started working the same day, they paid me on payroll, called me a contractor even though I was not contracting out individual job's and getting paid by them, and did not withhold any tax from my checks.
Employment Legality Question
- Thread starter FuryShift
- Start date
Hmmm...something could definitely be a problem there. Your employer might be trying to dodge some withholding responsibilities.FuryShift said:
You absolutely owe federal, state and local income taxes that applied while you worked there. You have to decide whether or not you want to pay the taxes you owe or break the law and not pay.
You can always pretend you never worked there and keep more money in your pocket (which is what your employer is probably banking on)... but if you (or that employer) get busted, you will owe the back taxes AND penalties. If you want to make waves for that business, contact the IRS and they will be glad to check it out:
http://www.bankrate.com/brm/itax/news/20030221a1.asp
Whether or not your employer violated the law is uncertain. An accountant could probably answer your question for sure.
You might want to check this out for info on independent contractors...
http://www.irs.gov/businesses/small/article/0,,id=99921,00.html
I'm not positive, but i think it is perfectly legal - probably thru loopholes but still... You should watch your back though, cause it is your responsibility to pay those taxes.
It could be legal. The employer could also be scamming the IRS. The original poster didn't provide enough information to make a judgement. Treating employees as "contractors" is a common scam that some small businesses use to avoid paying Social Security, Workman's Comp, etc.RidnRodsLightng said:
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What information do you need exactly to determine legality? Nothing was ever signed by me, ever. They had nothing other than my address and name. I was on a weekly payroll getting paid an hourly wage. They considered me to be an independant Contractor so they could skip through witholding taxes on me. Nothing was taken out of my check's, I was paid in gross. Another employee there was actually paid per job completed and titled a Contractor yet I was on a weekly payroll which is beyond me. I just don't understand how I can be an Independant Contractor if I am on an employer's payroll, that would make me an employee and they should have to withold tax, to my understanding. Which opposes an independant being 'contracted' to do individual jobs and getting paid for that. I used all of their equipment and drove a 'company truck' as well. I was also informed after I quit that the owner was going around spouting that they "fired my ass."
I posted before reading that quote. I in fact was told where to work and what was to be done. Judging by that, and all previously listed information, I was an employee of these people who listed me a Contractor, which was illegal on their part as a way to bypass employment taxes. Correct me if I am wrong but that means they should be responsible for paying the taxes that should have been witheld in the first place instead of me paying out of 'my pocket'?
It certainly sounds that way on the surface. Are there more "contractors" on the payroll of this employer???FuryShift said:
Just because your employer didn't withhold taxes doesn't mean you don't owe. No taxes were ever paid by you so you are still responsible for paying the portion you owe.
As an independent contractor, you are required to file quarterly income tax estimates (and tax payments) to the IRS. If you didn't do that, that's your fault.
On the other hand, your former employer could be in for some serious heartache if they are violating IRS regulations and you report them.
Here's another good link...
http://www.wwwebtax.com/general/independent_contractor.htm
i don't think the excerpt from the irs website was even necessary, of course it's not legal to do that, wtf? you can't waive something like the employment tax with a simple re-classification (that doesn't even apply).
if they're as shady as you've described they're probably not paying the taxes they should be. i can't imagine their employment taxes are high with 6 EMPLOYEES, but small businesses try to save money, sometimes by illegal means.
if they're as shady as you've described they're probably not paying the taxes they should be. i can't imagine their employment taxes are high with 6 EMPLOYEES, but small businesses try to save money, sometimes by illegal means.
That link tells me that I was IN FACT an employee of the company. Since that is the case, am I at fault for them not witholding tax from my payroll checks they were giving me? It is to my understanding that is the employer's responsibility and that had nothing to do with me. Thanks for the help so far, some really resourceful information.
Top_Fuel said:
It was me and two other workers who were treated in the same manner, and now four guys since I quit. We were under a lead guy who was paid per job as a contractor. Together we worked under the owner of the business and his wife who would occasionally help out on the jobs. It's all just a heap of their poor ethics and responsibility.
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No...I don't believe you are at fault... BUT you still owe federal/state/local taxes on the money you were paid. If you knew taxes weren't being withheld AND you weren't making quarterly tax payments, when were you planning on paying your taxes???FuryShift said:
As far as you're concerned, this really isn't that big of a deal unless you worked there for the last 5 years, earned $100K and have never paid a single dime in income tax. Then you could have some issues.
The bottom line is you owe the taxes...period. Depending on the time periods involved, you may also be liable for some small penalties as well.
Your former employer, on the other hand, could have a laundry list of problems facing them if the IRS starts poking around and they are breaking the law.
I see. I was told they were giving me a 1099 instead of a w2 since I was a 'Contractor', which I wasn't which is another thing I don't understand since I was actually an employee. It would be at that time I would cover all taxes owed. I earned somewhere in the neighborhood of 16-17k I believe during my employment. Just wanting to get this situation settled before I join the Air National Guard in January so I don't run into any problems there.
That still may be illegal for them. If you want to make their life difficult, talk to the IRS. If you decide to do that, I'd keep it to yourself and not tell anyone.FuryShift said:
Here's one thing you need to find out...you'll need an accountant to answer this. In addition to income taxes, someone (possibly you) may also owe FICA (Social Security and Medicare), FUTA (Federal Unemployment Tax), and SUI (State Unemployment Tax) on the money you earned.
Alright thanks alot. I'll try to get in touch with an accountant and describe to them what happened and see if they can point me in the right direction from there. I appreciate the links and information, helped explain a good bit of things that were questionable before.
I can see paying typical Federal/State/etc but the others I am weary about, considering I should be receiving a w2 in the first place.
http://www.topechelon.com/recruiters/contracting/whats.htm
This is a huge mess is what it is, what the hell am I involved in?
http://www.topechelon.com/recruiters/contracting/whats.htm
This is a huge mess is what it is, what the hell am I involved in?
Good luck and let us know what happens.
Oh, and here's one more link I thought you might find interesting...
http://pittsburgh.preferredjobs.com/altsearch/financeresources.asp
Oh, and here's one more link I thought you might find interesting...
http://pittsburgh.preferredjobs.com/altsearch/financeresources.asp
They never paid overtime either, I never worked less than 50 hours a week, but that's a whole different story. Just ran across something here:
http://www.topechelon.com/recruiters/contracting/penalties.htm
http://www.topechelon.com/recruiters/contracting/penalties.htm
Top_Fuel said:Good luck and let us know what happens.
Oh, and here's one more link I thought you might find interesting...
http://pittsburgh.preferredjobs.com/altsearch/financeresources.asp
Will do, thanks again. :thumbsup:
I know that using "contracted" workers was presented to me as an option in order to save money on labor when I had the business. It always struck me as shady because it takes from the people that are taking care of the business, and, that's bad for business. It's how you get out of providing insurance, vacations etc. I'm not sure about the process(contracts etc.) of having a "contracted worker" working for you tho. If you really feel you got screwed with badly, call the EEOC. The EEOC don't play
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