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How a Tax Law Helps Insure a Scarcity of Programmers (1998)

nytimes.com

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Re: How a Tax Law Helps Insure a Scarcity of Programmers (1998)

#61

Post by CulturalNgineer »

tpyo wrote: post #49
CulturalNgineer wrote: post #29

Earlier quoted context omitted.

Absolutely right! This is the problem... Which is also why we've developed such an imbalance in wealth! We've got a serious problem with an imbalance in INFLUENCE!!! Actually that's my own focus for technological innovation... Realtime Networked Citizen Lobbying and distributed credit creation... (no pitches here, see my blog if interested) Fortunately I don't fly planes and still have a sense of humor.

[1-6] Is this an ironic joke? [6] Are you jealous?

Nope, I'm an anthropologist.

Extremes in wealth are not compatible with a stable free society. Though I'm open to contrary evidence.

Re: How a Tax Law Helps Insure a Scarcity of Programmers (1998)

#62

Post by jerf »

grellas wrote: post #58
Seiwynn wrote: post #52

Earlier quoted context omitted.

So I'm thinking this applies to me but I'm not sure. I work part time at a company and they pay me directly as a contractor. I do all my work there and am subject to their workplace regulations. Could the company and I potentially be at risk?

It is the employer who is primarily at risk (I generally agree with rjurney's related comment). The traditional assessment (i.e., one done without regard to any safe harbor protections and also without going mindlessly through the "20 factors," which is usually not helpful) would run roughly as follows: (1) do you have a written agreement specifying that you are an independent contractor and setting forth terms that…

Does the employee get any say in whether he contests his status, or does the IRS tend to do this unilaterally? (This has obvious and multitude implications w.r.t. risk and reputation.)

Re: How a Tax Law Helps Insure a Scarcity of Programmers (1998)

#63

Post by nazgulnarsil »

grellas wrote: post #30

I have dealt with this law in depth, from every angle, from its inception in 1986 and have a few observations to make about it: 1. The technical issue concerns the tax risk to an employer whether someone functioning as an independent contractor might be reclassified as an employee via an IRS audit that finds that the person is in fact functioning as an employee and not as someone who runs his own business. This risk…

I seem to recall that at one point in american history^1, courts could and would strike down laws that were deemed unnecessarily esoteric to the point that they were incomprehensible to the "common man". when you see a system with decades or even centuries of regulations built up via 'regulation, loophole, regulation etc.' you have to wonder if we don't need a clean sheet design.

1. inherited from european common law.

Re: How a Tax Law Helps Insure a Scarcity of Programmers (1998)

#64

Post by grellas »

jerf wrote: post #62
grellas wrote: post #58

Earlier quoted context omitted.

It is the employer who is primarily at risk (I generally agree with rjurney's related comment). The traditional assessment (i.e., one done without regard to any safe harbor protections and also without going mindlessly through the "20 factors," which is usually not helpful) would run roughly as follows: (1) do you have a written agreement specifying that you are an independent contractor and setting forth terms that…

Does the employee get any say in whether he contests his status, or does the IRS tend to do this unilaterally? (This has obvious and multitude implications w.r.t. risk and reputation.)

Generally, the employee faces no risks arising from an employer audit. In fact, the employee is often pushing for a reclassification, e.g., when applying for unemployment benefits (available to employees only) after having been terminated as a "contractor."

In practical terms, employees do have input at hearings in which an employer will challenge the results of an audit because it is the employees who are often the key witnesses in such hearings (this usually works to the severe disadvantage of employers though, as a parade of employees is often called in and asked, "did you have to report in for work at a specific time?", "is it true that your duties consisted of making telemarketing cold calls while strapped to a desk?," "are you telling me that making such calls non-stop from 8 to 5 every day signifies that you were 'in your own business' just because your boss made you get a business license?" - this often goes on and on to disastrous effect for the employer and, though I have framed it a bit facetiously here, this is about the spirit in which it occurs).

Re: How a Tax Law Helps Insure a Scarcity of Programmers (1998)

#66

Post by lsc »

retro wrote: post #3

Does this mean if you're a freelance programmer, you're at risk of running afoul of this law - as Joe Stack did - if you're trying to negotiate programming contracts directly with the client rather than through an agency? My understanding is that you can protect yourself from this law by working through employment agencies as a W2 or Corp-Corp contractor? Is that correct? Is so, then perhaps the programmers I've met…

or they are individuals with a high risk tolerance.

Re: How a Tax Law Helps Insure a Scarcity of Programmers (1998)

#67

Post by lsc »

ajross wrote: post #19

This is confusing. The clear text of the article says that programmers can't do individual contracting, which is insane and clearly wrong. The examples (e.g the contracting company with 50 "workers", none of whom were technically "employees" of anyone but themselves) don't seem nearly so clear cut. I mean, if this is really an important law to understand, wouldn't the idea of good journalism be to tell me how to avoi…

text of the law: http://www.synergistech.com/1706.shtml

the problem is that it's pretty unclear how to avoid violating it.

Re: How a Tax Law Helps Insure a Scarcity of Programmers (1998)

#69

Post by bd_at_rivenhill »

nazgulnarsil wrote: post #63
grellas wrote: post #30

I have dealt with this law in depth, from every angle, from its inception in 1986 and have a few observations to make about it: 1. The technical issue concerns the tax risk to an employer whether someone functioning as an independent contractor might be reclassified as an employee via an IRS audit that finds that the person is in fact functioning as an employee and not as someone who runs his own business. This risk…

I seem to recall that at one point in american history^1, courts could and would strike down laws that were deemed unnecessarily esoteric to the point that they were incomprehensible to the "common man". when you see a system with decades or even centuries of regulations built up via 'regulation, loophole, regulation etc.' you have to wonder if we don't need a clean sheet design. 1. inherited from european common law…

That would be a great idea, but I don't think the courts would ever make a ruling that would cause the entire tax system to collapse, which would be the only logical result of eliminating laws that are unnecessarily esoteric.

Re: How a Tax Law Helps Insure a Scarcity of Programmers (1998)

#70

Post by rozim »

euroclydon wrote: post #32
ww520 wrote: post #18

Here's my experience working as an independent status. Once a megacorp wanted to hire me as a consultant. The problem was that this megacorp had a list of "approved-vendors" to do consulting work for them. To get into the list was a time consuming and expensive hurdle. What did the hiring manager do? He asked me to join one of these approved vendors temporarily and billed through them. And this vendor got a cut out o…

That's not really a complete story.

In particular, did the middleman vendor take a cut?
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