Wheels of Justice
Is you is or is you ain’t an employee?
The latest newest determination by the U.S. Tax Court on who is and who is not an employee was determined by the Tax Court ruling in Ronald E. Byers v. Commissioner, docket no. 11606-05, decided Nov. 5 of this year. The Tax Court set in stone the elements required to be an independent contractor and not an employee of the company.
Jim C. Klepper is president of Interstate Trucker Ltd., an organization that provides legal defense protection to commercial drivers. Jim is a lawyer who focuses on transportation law and the trucking industry in particular. He works to answer your legal questions about trucking, and he holds his Commercial Drivers License.
Let us start with the facts of the Byers case. Mr. Byers worked for four years driving for a local carrier. When he first started work, he signed an in-dependent contractor agreement with the carrier and leased a truck from a sister company of the carrier. The carrier deducted lease payments from his settlements and forwarded them to its sister company. He received monthly settlements based upon 70% of what the carrier received for delivering the packages he carried. The carrier issued him an IRS Form 1099 each year showing the total amount of the settlements he received.
Mr. Byers did not pay any taxes for any of the four years in question. Therefore, the IRS looked at his Form 1099s and his bank ac-count deposits and determined he did owe taxes. Mr. Byers countered the IRS claim with the argument that the carrier should have withheld taxes from him. The Tax Court disagreed and used a variety of factors to determine whether Mr. Byers was in fact an independent contractor.
Generally, services performed as an independent contractor give rise to self-employment income, and any taxpayer who works for someone else but controls the means for doing the work is an independent contractor.
The Court ultimately found five factors that indicate an independent contractor, three factors that indicate an employee and one factor was determined to be neutral, which led to their holding that Mr. Byers was an independent contractor.
The whole thing that started this mess is that Mr. Byers failed to file and pay his tax returns for the money he made working. I don’t understand how he can claim that he did not owe taxes when he had never paid any. I do know that the IRS will hunt you down like a dog if you fail to pay what you owe, which is fine with me. If you and I have to pay taxes, then Mr. Byers should pay his fair share.
I think the Court came to the correct conclusion, and Mr. Byers should have to pay all his back taxes plus the interest and penalties. I don’t know about you, but I do not think that anyone should stick us with their taxes.