Announcement Announcement Module
Collapse
No announcement yet.
Legal SubContracting? Page Title Module
Move Remove Collapse
X
Conversation Detail Module
Collapse
  • Filter
  • Time
  • Show
Clear All
new posts

  • Legal SubContracting?

    They are looking everywhere right now for taxes. Everywhere.

    States, IRS to Join Probe of Home-Builder Pay Practices - WSJ.com


    J.C.

  • #2
    Re: Legal SubContracting?

    This has many contractors worried, including a few I work for. I am NOT an employee but under some of the stupid rules they could try and say that I am. There are many people in this business that are just sick of the red tape bull ****. One of my main contractors I do work for is about ready to call it quits because of this crap. The construction biz I think is on the verge of a huge fundamental change of how things are done, and I don't like it. It's going to end up heavily regulated, and a nightmare, pushing the little guy out of the picture by a few large companies just like everything else. Construction is one of the last businesses that there is many, many small business owners. Something I swear our government is trying to kill...

    Comment


    • #3
      Re: Legal SubContracting?

      that link wants you to subscribe to read it all, found it elsewhere, quoting it so it wont get lost.

      By ROBBIE WHELAN

      Seven states and the Internal Revenue Service plan to join the Department of Labor in a broad review of the hiring and pay practices of home builders and other companies the government says routinely misclassify workers as independent contractors, rather than employees.
      Labor Secretary Hilda L. Solis, Internal Revenue Service Commissioner Douglas Shulman and top labor officials from seven states will agree Monday to coordinate enforcement efforts and share information about companies found to have violated labor laws, including denying workers minimum wages, overtime pay and benefits, according to an announcement Friday by the Labor Department.
      Enlarge Image





      Bloomberg News Workers build a home in a Pulte development in Las Vegas in July.



      The IRS is interested in the issue because employers don't pay payroll taxes on workers classified as independent contractors. A Government Accountability Office report from 2009 found that the misclassification of workers cost the federal government $2.72 billion in 2006. A Labor Department report in 2000 estimated that up to 30% of employers misclassify workers.
      In August, the Labor Department sent letters to large home builders including Lennar Corp., KB Home, D.R. Horton Inc., Pulte Group Inc. and NVR Inc., seeking pay and employment records, according to people familiar with the matter and a copy of one of the letters reviewed by The Wall Street Journal. The letter also asked for names of all contractors hired in the past year. The letter didn't allege any specific violations of law.
      A Pulte spokesman said the company received the letter, and was still reviewing it. The other builders declined to comment.
      The Labor Department, in an emailed statement, said it was looking at industries in addition to home building, including hospitality, janitorial services, agriculture, day care, health care and restaurants.
      "We are actively looking at those industries that employ the most vulnerable workers and that engage in business practices—such as misclassifying employees as independent contractors—that result in violations of minimum wage and overtime laws," a spokeswoman said.
      Builder advocates say the probe represents another example of "regulatory intrusion" by the Obama administration and that the push for increased enforcement couldn't come at a worse time for the hobbled residential construction industry.
      Home builders were on pace in July to sell 298,000 new homes in 2011, which would be the lowest level of new home sales ever recorded. During the housing boom, builders were selling more than 1.2 million homes per year. Few publicly traded builders are profitable, and most of them have laid off hundreds of workers.
      "You've got an industry that's almost singularly responsible for keeping our economy in the doldrums. To pick this time to do these types of investigations, it's counterproductive to the health of the economy," said Jerry Howard, president of the National Association of Home Builders, a trade group.
      The proper classification for a worker depends on factors including how much control or direction an employer wields over the workers. Employers aren't required to withhold income taxes or pay Social Security or Medicare taxes for independent contractors. Meanwhile, independent contractors aren't covered by many labor protections, including minimum wage and overtime laws, and unemployment or workers' compensation insurance.
      Federal and state regulators say worker misclassification is particularly common in residential construction. Most large home builders in the U.S. typically don't keep many laborers on their books and do little actual home construction. Instead, they entrust much of the construction to carpenters, plumbers, roofers, electricians and others employed by contractors. This reduces the companies' costs and exposure to potential violations of labor laws.
      Allegations of worker misclassification in the construction industry generally come in two forms: that builders misclassify laborers they hire directly as independent contractors, or they knowingly hire subcontractors who misclassify workers. The Labor Department's efforts focus at least in part on holding large builders accountable for classification violations by their subcontractors, according to person familiar with the matter.
      The Labor Department is stepping up enforcement due in part to complaints from construction companies that keep laborers on their books as employees and say they can't compete against other companies that classify workers as independent contractors.
      "In industries where there is competitive bidding, the honest contractors get nailed twice. Their rates of worker's comp premiums are higher because the other guys aren't paying, and they're losing jobs," said Carl Hammersburg, compliance chief for the Washington State Department of Labor and Industries, who attend Monday's meeting. "Now things are so cut-throat that every single job matters. If they lose a bid to someone who isn't paying worker's comp, isn't paying unemployment insurance, then they can go out of business."
      The Laborer's International Union of North America has for several years protested Pulte's hiring practices and sought to unionize the builder's subcontractors.
      One of the most high-profile disputes about worker misclassification is a continuing battle between the International Brotherhood of Teamsters and FedEx Corp. The union argues drivers for the company's FedEx Ground operation are illegally classified as independent contractors and thus ineligible to be organized, unlike drivers at rival United Parcel Service Inc. who belong to the union.
      The misclassification issue has taken a higher profile in the past few years as cash-strapped states have focused on ways to capture more revenue and prevent employers from illegally failing to pay taxes on workers.
      "In the last three or four years, the issue has taken off because of the economic downturn and the state budget crisis," said Cathy Ruckelshaus, legal co-director at the National Employment Law Project, a nonprofit, nonpartisan group that works on low-wage worker issues. "It's a huge revenue drain."
      —Kris Maher and Melanie Trottman contributed to this article.
      We don't have preventative maintenance around here, we have CRISIS MANAGEMENT!

      Comment


      • #4
        Re: Legal SubContracting?

        If they are not employees they should have a Tax ID number and received 1099s.

        Mark
        "Somewhere a Village is Missing Twelve Idiots!" - Casey Anthony

        I never lost a cent on the jobs I didn't get!

        Comment


        • #5
          Re: Legal SubContracting?

          At the end of the day with all of the junk cleared out of the way, I believe it's just a witch hunt for taxes. Nothing more.


          J.C.

          Comment


          • #6
            Re: Legal SubContracting?

            Originally posted by masterbeavis View Post
            that link wants you to subscribe to read it all, found it elsewhere, quoting it so it wont get lost.
            Thanks. Where did you find it online? I read it in the actual paper.


            J.C.

            Comment


            • #7
              Re: Legal SubContracting?

              Wall St. Journal I think. I googled the topic and author of the article.
              We don't have preventative maintenance around here, we have CRISIS MANAGEMENT!

              Comment


              • #8
                Re: Legal SubContracting?

                Originally posted by masterbeavis View Post
                Wall St. Journal I think. I googled the topic and author of the article.
                No. I read it in the Wall St. Journal paper. Actually holding it. They make an effort to only show portions of articles online to encourage people to subscribe to the paper. So I was wondering where it was found online. Surprised the article wasn't flagged and blocked in some way by them.

                J.C.

                Comment


                • #9
                  Re: Legal SubContracting?

                  A positive that may come out of it is going after contractors that hired illegal alien labor. They may have 1099ed them or whatever. But the illegals probably did nothing towards it. And I believe it will roll back to the contractor then. They won't allow them to just throw their hands up and say "I did my part and the rest was on them...." Might discourage it in the future.


                  J.C.

                  Comment


                  • #10
                    Re: Legal SubContracting?

                    Here is the link I got it from from my google search. endign in mod=googlenews_wsj

                    States, IRS to Join Probe of Home-Builder Pay Practices - WSJ.com

                    Here is your link ending in mod=ITP_pageone_1
                    States, IRS to Join Probe of Home-Builder Pay Practices - WSJ.com
                    We don't have preventative maintenance around here, we have CRISIS MANAGEMENT!

                    Comment


                    • #11
                      Re: Legal SubContracting?

                      Maybe the IRS should look at our Politicians first, before they start scrounging for pennies from contractors.

                      Comment


                      • #12
                        Re: Legal SubContracting?

                        Originally posted by Flux View Post
                        Maybe the IRS should look at our Politicians first, before they start scrounging for pennies from contractors.
                        What's stupid is that there is a simple, easy fix for all of this.... the fair tax, yet our politicians are freakin to stupid to do it..

                        Comment


                        • #13
                          Re: Legal SubContracting?

                          Originally posted by Alphacowboy View Post
                          What's stupid is that there is a simple, easy fix for all of this.... the fair tax, yet our politicians are freakin to stupid to do it..
                          I would absolutely go for the fair or flat tax system, but the progressives in this country would never go for it. I honestly believe we would see riots in the streets if we abolished the current system.

                          Comment


                          • #14
                            Re: Legal SubContracting?

                            What does the word "independent contractor" really mean? I looked it up just to make sure I was on the right page. Here is the official definition from the IRS website. I suppose the easy fix for this would be to require companies to do more paperwork similar to a Prime Contractor checking Insurance certs for subs he is hiring for jobs.

                            Originally posted by IRS
                            Independent Contractor Defined


                            People such as doctors, dentists, veterinarians, lawyers, accountants, contractors, subcontractors, public stenographers, or auctioneers who are in an independent trade, business, or profession in which they offer their services to the general public are generally independent contractors. However, whether these people are independent contractors or employees depends on the facts in each case. The general rule is that an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done. The earnings of a person who is working as an independent contractor are subject to Self-Employment Tax.

                            If you are an independent contractor, you are self-employed. To find out what your tax obligations are, visit the Self-Employed Tax Center.

                            You are not an independent contractor if you perform services that can be controlled by an employer (what will be done and how it will be done). This applies even if you are given freedom of action. What matters is that the employer has the legal right to control the details of how the services are performed.

                            If an employer-employee relationship exists (regardless of what the relationship is called), you are not an independent contractor and your earnings are generally not subject to Medicare and Social Security Taxes for Self-Employed.

                            However, your earnings as an employee may be subject to Self-Employment Tax.

                            For more information on determining whether you are an independent contractor or an employee, refer to the section on Independent Contractors or Employees
                            We don't have preventative maintenance around here, we have CRISIS MANAGEMENT!

                            Comment


                            • #15
                              Re: Legal SubContracting?

                              Originally posted by masterbeavis View Post
                              What does the word "independent contractor" really mean? I looked it up just to make sure I was on the right page. Here is the official definition from the IRS website. I suppose the easy fix for this would be to require companies to do more paperwork similar to a Prime Contractor checking Insurance certs for subs he is hiring for jobs.
                              It seems that is a poor definition of "independent contractors". Let's say you have a carpenter doing stairs as piece work. The plans dictate the outcome not the employer. Still by that definition I could see the IRS morphing that into an employee.

                              Mark
                              "Somewhere a Village is Missing Twelve Idiots!" - Casey Anthony

                              I never lost a cent on the jobs I didn't get!

                              Comment

                              Working...
                              X