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My Employer is Committing Tax Fraud ... I THINK. Your Thoughts?

 
WifeOfHusband
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11/15/2021 08:14 AM
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My Employer is Committing Tax Fraud ... I THINK. Your Thoughts?
I'm an employee. Recently, my employer decided to work on various marketing strategies so they've created promo codes for each employee, specific to each employee.

So we can hand out these discount coupon promo codes (on cards) and if someone uses that promo code, we'll get a flat $ amount per booking.

But before they'll 'activate' our promo code (and thus, the discount for customer), we have to 'agree' to T&Cs. One of those conditions is that we agree to have the employer pay us a separate check, once a month, for the accumulation of the commission for those codes.

But instead of it being rolled into regular wage, or, as a supplemental wage, they will file it as a 1099-MISC and we will be on the hook for both employer and employee taxes.

I don't believe that their classification of that as 1099-MISC is correct at all. We're statutory employees and I'm fairly certain that the payment of promo use would be considered commission, not a prize or award (as would be likely what they're putting it in as for the 1099-MISC).

Am I right in knowing that they're classifying that improperly?

I did not agree to their terms because I am SICK of companies using smarmy tactics to push their tax requirements onto everyone else. It would be considered a supplemental wage, to which they would be required to pay the business portion of FICA.

The way they're doing it, they'd owe nothing in taxes on the $ amount paid to us, and would then just write it off as a business expense and reduce their tax liability.

It's not a huge issue, but it annoys me when extremely wealthy people (which the owners are as they live in a 12 million dollar home and it's just the husband and wife) do these little cheapskate, smarmy things to push that stuff onto others.

Thoughts?
todaysnewnormal

User ID: 79718805
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11/15/2021 08:31 AM
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Re: My Employer is Committing Tax Fraud ... I THINK. Your Thoughts?
It depends. Employees of a company can be considered both an employee AND an independent contractor for separate and distinct work. It would depend upon what your normal day job is and, if it has nothing to do with soliciting bookings, then your employer is classifying you as an employee for your normal day job and pay indicated on W2. For the work you do to solicit bookings, you are essentially working for yourself and control how much or little you earn and are classified as an independent contractor and pay reflected on 1099-MISC. Here's some more info - [link to www.payrollpartners.com (secure)]
Overdue

User ID: 80810880
United States
11/15/2021 08:37 AM

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Re: My Employer is Committing Tax Fraud ... I THINK. Your Thoughts?
Blackmail them and make some money
burneracct

User ID: 81124368
United States
11/15/2021 08:41 AM

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Re: My Employer is Committing Tax Fraud ... I THINK. Your Thoughts?
Keep it on the down low

When they try to mandate the vax. Blackmail them
Pfizer redefining rare.
HuJack007

User ID: 76334789
United States
11/15/2021 08:50 AM

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Re: My Employer is Committing Tax Fraud ... I THINK. Your Thoughts?
good for them when you openly see the rich do this with over seas accounts I say F--it fair game
WifeOfHusband  (OP)

User ID: 80535261
United States
11/15/2021 09:06 AM
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Re: My Employer is Committing Tax Fraud ... I THINK. Your Thoughts?
It depends. Employees of a company can be considered both an employee AND an independent contractor for separate and distinct work. It would depend upon what your normal day job is and, if it has nothing to do with soliciting bookings, then your employer is classifying you as an employee for your normal day job and pay indicated on W2. For the work you do to solicit bookings, you are essentially working for yourself and control how much or little you earn and are classified as an independent contractor and pay reflected on 1099-MISC. Here's some more info - [link to www.payrollpartners.com (secure)]
 Quoting: todaysnewnormal


Contractors are no longer filed under 1099-MISC, but instead under 1099-NEC.

Another issue I take with this is that I do voice acting and charge a premium rate for my work. I have a studio set up, etc.

I only took this job because what we do is pretty awesome and it's a lot of fun as well. Just a part-time gig anyway.

But they built animatronic things for the main entry of the building and needed voice work done to be the voice of their new mascot. They even changed their logo to include this animal they had custom built.

My voice is very unique and they knew I did voice acting on the side, so I offered to do contract work with them and would just charge them my normal rate, with a small discount.

The company itself is VERY small. We're talking 9 employees small.

They told me "well, we're not sure how that will work when paying an employee as a contractor too. That will be an accounting nightmare so we'll just pay you the hourly rate if you want."

I knew they could still pay me as a contractor, without issue, but this was when I first started so I did it because I thought it would be cool anyway. No big deal, but I ended up making about 25% of what I would have charged them for it. Plus, it was a small business and I looked at it like investing in something that could become larger in the future. The owners are quite talented.

Fast-forward 3 months, right when they began to unveil the animatronic animal, plus my voice (and are now asking me to do promo videos with that voice), and now they're going to classify us as contractors when handing out cards that ONLY employees can get (no one but employees can hand these cards out), and maybe you can see why I'm pretty peeved.

I should have just declined their previous offer of hourly rate for the voice over and let them pay someone else to do it, but I did it because the business IS really cool and a lot of fun to do. I don't hate being there.

But, what I took as owners (husband and wife) of a mom & pop shop being new to being in business, not quite understanding all of the ins and outs, I now realize was a huge lie. They understand completely what they're doing. They knew then that they could do it and they played dumb.

It's very irritating. It's so irritating that I may buck up against their request that I be paid hourly for the promo work because if they don't like it, they'll end up having to hire someone else to re-record the animal and reprogram it for someone else's voice.

Ugh.

Again, it's not a major issue as I CAN just not agree to their terms and I think that will not be an issue either way, but it's very annoying and I hate that people do these underhanded things just to get by.

Last Edited by WifeOfHusband on 11/15/2021 09:08 AM
Usually Curious 2018

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11/15/2021 09:57 AM
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Re: My Employer is Committing Tax Fraud ... I THINK. Your Thoughts?
When I went to a CPA friend with questions about tax fraud at a prior job, she said the IRS doesn’t care and won’t investigate unless millions are involved.
Usually Curious 2018
Zovalex

User ID: 80278243
11/15/2021 10:05 AM
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Re: My Employer is Committing Tax Fraud ... I THINK. Your Thoughts?
The Payer is doing nothing underhanded at all.

In fact, the way I see it, dividing your work between hourly and independent contract work is the only way to structure it correctly.

In my view, the comp plan they have created (w2 vs 1099) is the correct structure. Otherwise, all the “employees” could legally claim that talking to someone about a promo while standing in line at the grocery store constitutes “work” and therefore compensable under the federal Fair Labor Standards Act, when in fact the “employer” has absolutely NO control of any kind over your actions when not doing your voice acting.

All due respect, OP, but you need a better understanding of the tax laws that govern this situation. I am absolutely certain the Payer consulted with a qualified labor law attorney before rolling out that agreement.

They’re not doing anything wrong. Nor is it a “loophole”. It is the correct form of compensation based on what you’ve described.

.
“Mental slavery is the worst form of slavery.
It gives you the illusion of freedom,
makes you trust, love, and defend your oppressor,
while making an enemy of those
who are trying to free you or open your eyes.”
-Fiyah

“None are more hopelessly enslaved than those who falsely believe they are free.”
-Johann Wolfgang von Goethe

“You have been programmed to resist the very person that is here to set you free, from the prison of your Mind... You are not free... everything you are has been manufactured by Minds that have not your best interest. You are imprisoned by beliefs and not reality. Religions are mental programs to imprison your Mind.”

-SOL
anonymous4412

User ID: 81128640
United States
11/15/2021 10:13 AM
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Re: My Employer is Committing Tax Fraud ... I THINK. Your Thoughts?
Use it to your advantage and deduct business expenses, so that you minimize taxes paid.
WifeOfHusband  (OP)

User ID: 80535261
United States
11/15/2021 10:46 AM
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Re: My Employer is Committing Tax Fraud ... I THINK. Your Thoughts?
when in fact the “employer” has absolutely NO control of any kind over your actions when not doing your voice acting.
 Quoting: Zovalex


Voice acting is not part of my job description. I did not use the employer's equipment, I used my own. They still did not control the manner in which these things were recorded, nor did they control the voice. The only control they had was with scripting, which they would have had control over anyway, as a contractor.

Had I recorded the voice using THEIR equipment, at THEIR facility, using THEIR electricity and computers and DAWs, and mixers, and microphones, then I would agree with you.

But they did not provide any of that. Every minute of the work that I did was using my own, very expensive, equipment which is owned by a company that I own. It was performed inside a sound-proof building that I built specifically for voice work and other recording needs. They provided none of that. They don't even HAVE the equipment to do all of what I did. Sure, they could have used a cell phone and just slapped it into the pi, but they wanted high quality voice work but didn't want to pay for it.

So, you're 100% wrong about your belief that the company was right to only pay me hourly, at my normal rate for other, wholly unrelated work.

100% incorrect. You're so wrong that, using your logic, no company would ever be able to hire a voice acting company because "they'd have no control," which is just nonsense.

As for the other classifications, I don't know because I'm not a tax expert, but I know that handing out business cards, as a representative of their company that I'm employed with, which can only be done as an employee, for which I have zero control over, nor can I negotiate the rate of pay, is NOT contract work.

Last Edited by WifeOfHusband on 11/15/2021 10:51 AM
WifeOfHusband  (OP)

User ID: 80535261
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11/15/2021 10:56 AM
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Re: My Employer is Committing Tax Fraud ... I THINK. Your Thoughts?
Oh, and another thing -- what they are paying would be considered commission.

An employee that is paid commission is filed under employee/employer income, filed under the supplemental wages, NOT a 1099-MISC.

You claimed that they'd be on the hook for any time an employee handed out a card, but that's not true at all, because it would be considered supplemental income, not an hourly payment.

That is commission, period.
Zovalex

User ID: 80278243
11/15/2021 04:29 PM
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Re: My Employer is Committing Tax Fraud ... I THINK. Your Thoughts?
when in fact the “employer” has absolutely NO control of any kind over your actions when not doing your voice acting.
 Quoting: Zovalex


Voice acting is not part of my job description. I did not use the employer's equipment, I used my own. They still did not control the manner in which these things were recorded, nor did they control the voice. The only control they had was with scripting, which they would have had control over anyway, as a contractor.

Had I recorded the voice using THEIR equipment, at THEIR facility, using THEIR electricity and computers and DAWs, and mixers, and microphones, then I would agree with you.

But they did not provide any of that. Every minute of the work that I did was using my own, very expensive, equipment which is owned by a company that I own. It was performed inside a sound-proof building that I built specifically for voice work and other recording needs. They provided none of that. They don't even HAVE the equipment to do all of what I did. Sure, they could have used a cell phone and just slapped it into the pi, but they wanted high quality voice work but didn't want to pay for it.

So, you're 100% wrong about your belief that the company was right to only pay me hourly, at my normal rate for other, wholly unrelated work.

100% incorrect. You're so wrong that, using your logic, no company would ever be able to hire a voice acting company because "they'd have no control," which is just nonsense.

As for the other classifications, I don't know because I'm not a tax expert, but I know that handing out business cards, as a representative of their company that I'm employed with, which can only be done as an employee, for which I have zero control over, nor can I negotiate the rate of pay, is NOT contract work.
 Quoting: WifeOfHusband


Not only did you fail to explain any of that in your original post, but you conceded in your initial argument that you were a W-2 wage-earner and you contested the Payer classifying you as a 1099 contractor.

Your post above completely contradicts the arguments you posted in your first diatribe, because now you’re arguing that you should have been classified as a 1099 contractor for ALL of your work performed.

You’re clearly a very confused (and emotionally unstable) woman.

Stick to doing voice acting, sweet cheeks, because business management is NOT your strength.

.

.
“Mental slavery is the worst form of slavery.
It gives you the illusion of freedom,
makes you trust, love, and defend your oppressor,
while making an enemy of those
who are trying to free you or open your eyes.”
-Fiyah

“None are more hopelessly enslaved than those who falsely believe they are free.”
-Johann Wolfgang von Goethe

“You have been programmed to resist the very person that is here to set you free, from the prison of your Mind... You are not free... everything you are has been manufactured by Minds that have not your best interest. You are imprisoned by beliefs and not reality. Religions are mental programs to imprison your Mind.”

-SOL
AR 15-SPECIALIST
Admit it! We’re Fucked

User ID: 79128566
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11/15/2021 04:33 PM

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Re: My Employer is Committing Tax Fraud ... I THINK. Your Thoughts?
Whistleblowers receive 10-30% of the imposed fine.
TRUMPS FAULT
Larry D. Croc

User ID: 70736097
United States
11/15/2021 07:51 PM

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Re: My Employer is Committing Tax Fraud ... I THINK. Your Thoughts?
If this is a major issue for you, and it appears to be just that, simply resign your position.

Alternately, "I'm just not comfortable with X so I'll take a pass on that, signing the T&C associated with it, etc."
"Socialism only works in two places: Heaven where they don't need it and hell, where they already have it." Ronald Reagan

The trouble with our liberal friends is not that they're ignorant; it's just that they know so much that isn't so." Ronald Reagan
WifeOfHusband  (OP)

User ID: 80535261
United States
11/16/2021 08:38 PM
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Re: My Employer is Committing Tax Fraud ... I THINK. Your Thoughts?
when in fact the “employer” has absolutely NO control of any kind over your actions when not doing your voice acting.
 Quoting: Zovalex


Voice acting is not part of my job description. I did not use the employer's equipment, I used my own. They still did not control the manner in which these things were recorded, nor did they control the voice. The only control they had was with scripting, which they would have had control over anyway, as a contractor.

Had I recorded the voice using THEIR equipment, at THEIR facility, using THEIR electricity and computers and DAWs, and mixers, and microphones, then I would agree with you.

But they did not provide any of that. Every minute of the work that I did was using my own, very expensive, equipment which is owned by a company that I own. It was performed inside a sound-proof building that I built specifically for voice work and other recording needs. They provided none of that. They don't even HAVE the equipment to do all of what I did. Sure, they could have used a cell phone and just slapped it into the pi, but they wanted high quality voice work but didn't want to pay for it.

So, you're 100% wrong about your belief that the company was right to only pay me hourly, at my normal rate for other, wholly unrelated work.

100% incorrect. You're so wrong that, using your logic, no company would ever be able to hire a voice acting company because "they'd have no control," which is just nonsense.

As for the other classifications, I don't know because I'm not a tax expert, but I know that handing out business cards, as a representative of their company that I'm employed with, which can only be done as an employee, for which I have zero control over, nor can I negotiate the rate of pay, is NOT contract work.
 Quoting: WifeOfHusband


Not only did you fail to explain any of that in your original post, but you conceded in your initial argument that you were a W-2 wage-earner and you contested the Payer classifying you as a 1099 contractor.

Your post above completely contradicts the arguments you posted in your first diatribe, because now you’re arguing that you should have been classified as a 1099 contractor for ALL of your work performed.

You’re clearly a very confused (and emotionally unstable) woman.

Stick to doing voice acting, sweet cheeks, because business management is NOT your strength.

.

.
 Quoting: Zovalex


1) My OP was unrelated to my irritation with the employer claiming to be ignorant, as it relates to tax law and employees also being paid as contractors for work done outside of their normal job function, which is why I didn't add it.

I actually added it - just as a general complaint about the smarminess of the situation - but then removed it because the post was WAY too long, so I cut out the irrelevant parts.

2)

"Your post above completely contradicts the arguments you posted in your first diatribe, because now you’re arguing that you should have been classified as a 1099 contractor for ALL of your work performed."

That is 100% incorrect and I never once argued that I should be paid as a contractor for all of my work. I should be paid as a contractor for my VOICE work, but as an employee for that which I was hired to do.

When I applied to the part-time job, I didn't even need a job. Just ran across it and thought it sounded like something fun to do. Once I got in there, and they realized I did voice acting as one of my main sources of income, and had a studio set up, they asked if I would do the voice of their new mascot. I let them know what I would charge - as I would do any client - and they said they didn't know if they could pay me as an employee and a contractor.

I knew they could but just went ahead and did it as a favor for it and they just rolled it into my part time hours as an employee, but I did not perform that work at their storefront, nor did I use any of their equipment.

I never once stated that they should pay me as a contractor for all the work I do -- only that they should have paid me as a contractor for the voice work. Voice acting is not part of my job description as an employee.


3)

"and you contested the Payer classifying you as a 1099 contractor."

That is correct, because what they are wanting to pay as contract work is actually commission. You do know what commission is, right? lol

Please point to tax code that proves that what they are doing gets filed under the new 1099-MISC. I don't know if you're aware of this but 1099-MISC is different than it was last year. You'd know that if you understood business, which you clearly don't.

But thanks for your useless opinion.
LostReality33

User ID: 43651659
United States
11/18/2021 11:54 PM
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Re: My Employer is Committing Tax Fraud ... I THINK. Your Thoughts?
My thought:

I actually LIVE in a 12 Million Dollar Home

So

LOL HA-HA
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