IRS Gives Employers Break on Misclassified Employees

By Steohen Ohlemacher | September 23, 2011

  • September 23, 2011 at 2:17 pm
    Steve Thompson says:
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    A very complex law and very little leeway for employers today… I’m guessing there are a handful of employers that are in violation.

    Just by offering this the IRS insinuates that there is a problem… My take is that these “forgiveness” programs are insulting and ineffective.

  • September 23, 2011 at 3:18 pm
    IRS Coverup? says:
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    Is this the way the IRS lets cheaters like State Farm get away from all the taxes they have avoided since 1998, by calling their agents independent contractors? State Farm committed perjury to the IRS telling them their agents have no mandatory meetings. This document was signed under penalty of perjury in June 2000 and was after mandatory meetings had been established (1998). Contact any State Farm agent and they will tell you State Farm has mandatory meetings for them. In addition to this the agent is required to use State Farm equipment, subject to termination at will, trained by State Farm and considered a personal service agent. If you go down the list of determinations you will find the State Farm agent has really been an employee since 1998. This has allowed State Farm to avoid payroll taxes on over $4 Billion each year since 1998. Why hasn’t the IRS proscuted State Farm for the perjury and recovered the Billions that would be owed? Is this now a way for both the IRS and State Farm to cover their tracks and have State Farm pay a small pittance of what they really owe or does State Farm think they can continue to get away with caalling their agents independent contractors.

    • September 27, 2011 at 7:46 pm
      GregCW says:
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      I have never been a State Farm Agent, but I was a Farmers Agent. I’ll defend State Farm on this because their agents ARE responsible for leasing OR OWNING their own office space, furnishing the office, purchasing all of their supplies AND hiring and paying their own staff. In exchange for this they receive a commission, just like the independent. Unlike the independent they receive a contribution to a 401K in lieu of having to sell their book of business. They even have to pay for their T-1 connection to interface with State Farm just like we have to pay for our internet service providers for our access to our companies.

      They even have to do this for a smaller commission than the independents receive, although the gap continues to narrow.

      • September 27, 2011 at 8:19 pm
        IRS Coverup? says:
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        Since you were never a State Farm agent you don’t seem to understand State Farm controls the staff via an LSA (Licensed Staff Agreement) and can fire the staff at any time for no reason making them useless to the agent. They do not contribute to a 401K and State Farm has stated in court the agent owes nothing. State Farm requires the agent use State Farm owned computers and gives them free to the agent. Go over the list of determinations and you will quickly see they are employees.

  • September 23, 2011 at 3:51 pm
    Thoughtful says:
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    I don’t think that this is what the president was refering to when he wanted to help small business out by giving them a tax break. These Crooks at State Farm, have a God complex, and frankly need to be brought back to Earth!! If they are a good neighbor, I would rather live in Isolation.

  • September 23, 2011 at 5:19 pm
    Farmers Insurance Sucks says:
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    Farmers Insurance is as guilty if not more guilty than State Farm. Pack of criminals. Agents are treated like employees and are threatened with termination if you voice concerns. Farmers is disgusting.

    • September 27, 2011 at 7:59 pm
      GregCW says:
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      While I have to agree, being an ex-FIG agent, that Farmers is GUILTY of a lot of things, they do still receive a Contract Value plus Quality Bonuses that are better than Sate Farms. The result is that you are treated like employees BUT paid like contractors. Your contract value is significantly less than you’d be able to sell a comparable book of business for as an independent but at least its there. I didn’t leave FIG entirely of my on choice but I DID GET to tell THEM WHEN!

      Just one additional comment. I’m now working on three sides of FIG. I was appointed by Zurich before they acquired Farmers and Foremost before FIG acquired them and AIG before FIG bought them and tried to roll it into 21st Century and appointed me with Bristol-West.

      I still would not appoint with FIG again!!!!

  • September 26, 2011 at 2:10 pm
    LYNNE WEBER says:
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    Did the agents not sign a contract spelling out the expectations?

  • September 26, 2011 at 4:42 pm
    Not Clueless says:
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    This is an enormous problem; many employers that are not able to outsource are trying leased employees and a variety of independent contractor senarios to avoid ee costs. Not only does it avoid taxes and the labor code protections, it avoids workers comp and UI premiums. And, so many people just aren’t going to argue when the company says they’re paying on a 1099. It’s a disgrace, and we all end up paying for it.



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