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Old 09-09-2014, 07:18 PM
 
Location: Gulf Coast Texas
26,198 posts, read 14,090,937 times
Reputation: 10086

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Contract to Cheat

Across the country, roughly 10 million construction workers spend each day in a dangerous and fickle industry. They hang drywall, lay carpet, shingle roofs. Yet in the eyes of their bosses, they aren't employees due the benefits the government requires.

Employers treat many of these laborers as independent contractors. It's a tactic that costs taxpayers billions of dollars each year. Yet when it comes to public projects, government regulators have done nearly nothing about it, even when the proof is easy to get.

The workers don't have protections. The companies don't withhold taxes. The regulators don't seem to care.



It's called misclassification - where workers are considered as independent contractors. Therefore, a ton of tax revenue is never paid for work that is done and payment received. Private companies do this. The federal government does this.

Companies that received Stimulus money were allowed to get away with this as regulators looked the other way.

How does it work?

The companies declare on a routine form that the hourly wage earners working for them arenít employees, as laws and several federal regulations require them to be, but rather are independent subcontractors. Those companies then donít withhold income tax or file payroll taxes. They donít pay unemployment tax. And they arenít obliged to provide workersí compensation.

Pretty simple.

I'm sure the illegals just make it easier to pull this off.

Sounds like we need to tighten this up BEFORE raising any taxes.
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Old 09-09-2014, 08:42 PM
 
Location: East of Seattle since 1992, originally from SF Bay Area
28,387 posts, read 50,582,032 times
Reputation: 28616
This has been the case for many years, and it's the nature of the construction business. If they are employees, they have to be paid whether there is any work or not. As contractors they are called in by the job as needed. That means massive layoffs, then call backs as the need for workers goes up and down. Paying required benefits is only a small part of it, and it's perfectly legal. The trend in other industries is more recent as the article suggests, and has expanded greatly in high tech, but also for exotic dancers, and even barber shops, and that has been due to federal regulations on benefits. They employers don't pay into unemployment tax, workers comp or withhold income tax because as contractors the workers are responsible for that themselves, if they are doing it there is no loss of revenue. If they don't pay into UE and W Comp they won't get a benefit, if they don't pay quarterly estimated taxes, the 1099 will get them at the end of the year.
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Old 09-09-2014, 11:46 PM
 
Location: ATX-HOU
10,218 posts, read 6,490,268 times
Reputation: 2033
Quote:
Originally Posted by DRob4JC View Post
Contract to Cheat

Across the country, roughly 10 million construction workers spend each day in a dangerous and fickle industry. They hang drywall, lay carpet, shingle roofs. Yet in the eyes of their bosses, they aren't employees due the benefits the government requires.

Employers treat many of these laborers as independent contractors. It's a tactic that costs taxpayers billions of dollars each year. Yet when it comes to public projects, government regulators have done nearly nothing about it, even when the proof is easy to get.

The workers don't have protections. The companies don't withhold taxes. The regulators don't seem to care.



It's called misclassification - where workers are considered as independent contractors. Therefore, a ton of tax revenue is never paid for work that is done and payment received. Private companies do this. The federal government does this.

Companies that received Stimulus money were allowed to get away with this as regulators looked the other way.

How does it work?

The companies declare on a routine form that the hourly wage earners working for them arenít employees, as laws and several federal regulations require them to be, but rather are independent subcontractors. Those companies then donít withhold income tax or file payroll taxes. They donít pay unemployment tax. And they arenít obliged to provide workersí compensation.

Pretty simple.

I'm sure the illegals just make it easier to pull this off.

Sounds like we need to tighten this up BEFORE raising any taxes.
Dude.... you're from Texas... you didn't realize this was going on plus illegal immigrants?
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Old 09-10-2014, 12:59 PM
 
Location: Annandale, VA
5,098 posts, read 4,122,845 times
Reputation: 4199
Quote:
Originally Posted by DRob4JC View Post
Contract to Cheat

Across the country, roughly 10 million construction workers spend each day in a dangerous and fickle industry. They hang drywall, lay carpet, shingle roofs. Yet in the eyes of their bosses, they aren't employees due the benefits the government requires.

Employers treat many of these laborers as independent contractors. It's a tactic that costs taxpayers billions of dollars each year. Yet when it comes to public projects, government regulators have done nearly nothing about it, even when the proof is easy to get.

The workers don't have protections. The companies don't withhold taxes. The regulators don't seem to care.


It's called misclassification - where workers are considered as independent contractors. Therefore, a ton of tax revenue is never paid for work that is done and payment received. Private companies do this. The federal government does this.

Companies that received Stimulus money were allowed to get away with this as regulators looked the other way.

How does it work?

The companies declare on a routine form that the hourly wage earners working for them arenít employees, as laws and several federal regulations require them to be, but rather are independent subcontractors. Those companies then donít withhold income tax or file payroll taxes. They donít pay unemployment tax. And they arenít obliged to provide workersí compensation.

Pretty simple.

I'm sure the illegals just make it easier to pull this off.

Sounds like we need to tighten this up BEFORE raising any taxes.

I don't see a problem here. It is the responsibility of the EMPLOYEE to pay their own taxes since they are being paid GROSS WAGES. The tax evaders are the employees who cash their paychecks and then don't declare the income on their 1040.
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Old 09-10-2014, 01:09 PM
 
25,631 posts, read 29,109,412 times
Reputation: 23049
Quote:
Originally Posted by DRob4JC View Post
Contract to Cheat

Across the country, roughly 10 million construction workers spend each day in a dangerous and fickle industry. They hang drywall, lay carpet, shingle roofs. Yet in the eyes of their bosses, they aren't employees due the benefits the government requires.

Employers treat many of these laborers as independent contractors. It's a tactic that costs taxpayers billions of dollars each year. Yet when it comes to public projects, government regulators have done nearly nothing about it, even when the proof is easy to get.

The workers don't have protections. The companies don't withhold taxes. The regulators don't seem to care.


It's called misclassification - where workers are considered as independent contractors. Therefore, a ton of tax revenue is never paid for work that is done and payment received. Private companies do this. The federal government does this.

Companies that received Stimulus money were allowed to get away with this as regulators looked the other way.

How does it work?

The companies declare on a routine form that the hourly wage earners working for them arenít employees, as laws and several federal regulations require them to be, but rather are independent subcontractors. Those companies then donít withhold income tax or file payroll taxes. They donít pay unemployment tax. And they arenít obliged to provide workersí compensation.

Pretty simple.

I'm sure the illegals just make it easier to pull this off.

Sounds like we need to tighten this up BEFORE raising any taxes.
The only people "cheating" the system in your senario are the contracted workers.
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Old 09-10-2014, 01:13 PM
 
Location: Lewes, Delaware
3,463 posts, read 3,007,560 times
Reputation: 1867
Quote:
Originally Posted by Bulldogdad View Post
The only people "cheating" the system in your senario are the contracted workers.
Being thousands of them are here illegally, paying taxes is the least of their concern. The ones that aren't know better, and they'll be only ones to pay.
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Old 09-10-2014, 01:14 PM
 
Location: Gulf Coast Texas
26,198 posts, read 14,090,937 times
Reputation: 10086
Quote:
Originally Posted by dv1033 View Post
Dude.... you're from Texas... you didn't realize this was going on plus illegal immigrants?
Yes - but this also looks at how the feds allow this to occur.... as it says here.

The federal government, while cracking down on the practice in private industry, let it happen in stimulus projects in the rush to pump money into the economy at a time of crisis.

...
The scheme persists in federal contracting, while government officials acknowledge the mistreatment of hourly wage workers and steep losses to the U.S. treasury.



Just putting this report out there for whomever is interested.

I haven't read through the whole thing yet.

Last edited by DRob4JC; 09-10-2014 at 01:27 PM..
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Old 09-10-2014, 01:24 PM
 
24,843 posts, read 31,246,775 times
Reputation: 11427
There is a good chance the 1099 contractors file......but, do not owe.

I get 25/30 or, so 1099's each year.

I file but, do not owe.

We do not work all year.......and have other write offs.
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Old 09-10-2014, 02:51 PM
 
Location: Gulf Coast Texas
26,198 posts, read 14,090,937 times
Reputation: 10086
Sample case...

Brian ďAndyĒ Anderson of Mesquite, Texas, knows how to hustle.

For years, it paid off. After 12 years in the steel and rebar business, his company had 80 employees. In the first year of the recession, though, he had to drop to 20. Soon he couldnít even keep a core group of 14 busy.

Anderson felt a glimmer of hope in February 2009 when he turned on the news to see Obama announce a lifeline in the form of a stimulus package. Through the summer, though, his companyís bids on dozens of stimulus projects yielded nothing.

A review of federally funded housing projects in Texas shows a third of the companies that won federal housing jobs treated their workers as independent contractors Ė not employees, as Anderson did.

Anderson now suspects that the money he spent on unemployment insurance, workersí compensation insurance and the employerís share of Social Security and Medicare cost him those jobs.

Knowing why he lost Ė by following the governmentís laws Ė frustrates him.

ďHere in Texas, itís just anybody can do anything at any time,Ē Anderson said. ďItís a free-for-all.Ē


This is just an example of how bloated our government is. It is so large and porous that fraud can easily exist in the crevices.

My tax plan? All citizens over 20 pay the same percentage. Maybe have a poverty level percentage - but all pay. This is very little room for fraud.

Get rid of the myriad of behavioral taxes - marriage credits, mortgage interest, 501c3, fica, medicare - blow them all away. Not only does this simplify the process, it would reduce the behemoth IRS. Not expecting that to happen anytime soon.
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Old 09-10-2014, 03:21 PM
 
Location: Gulf Coast Texas
26,198 posts, read 14,090,937 times
Reputation: 10086
Criteria to be an independent contractor...

At one low-income housing project in North Carolina, two-thirds of the workers hired to pour concrete, paint, shingle roofs and hang drywall were treated as independent contractors. Hereís what would have needed to happen with these 100 workers to pass the federal tests:
  • Each worker could come and go as he pleased, setting his own hours and schedule.
  • Each worker owned and used his own tools and supplies and had enough of a line of credit with vendors to buy the necessary materials, such as HVAC equipment and siding.
  • Each worker tackled the work as he saw fit, not heeding direction and correction from superiors.
  • Each worker secured enough compensation to allow him to earn a living and cover the overhead that a self-employed person must handle.
All 100 of these workers earned from $7.25 to $20 an hour.
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