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Subject:FWD: IRS 20 Questions and HR unreasonableness From:Anonymous User <anonfwd -at- RAYCOMM -dot- COM> Date:Wed, 21 Apr 1999 10:34:55 -0600
Name withheld upon request. Please reply on list.
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Hello all,
There have been a lot of threads lately about 1099 vs. W-2 issues, but I searched the archives and couldn't find anything specific about the problem I'm having. Hopefully someone can help me out.
Last November, I started working at a company as a W-2 contractor through an agency. The client company was pleased with my work and asked if I'd like to stay on as a direct 1099 contractor with them, as soon as I had fulfilled the number of hours required for the agency to let me go without any consequences for the client company. I said yes and after I had worked the specified hours, I began a 1099 contract directly with the client company.
Because we slid into the 1099 arrangement from the arrangement with the agency, and because most of my previous contractor experience has been for smaller companies with more casual policies, I did not insist on a formal contract. (A mistake....I know!) We did talk about specifics -- hours, projects, hourly wage, etc. -- and I outlined all of these items in an email to my supervisors at the client company, neither of whom expressed disagreement with it.
To make a long story short, the company's HR department got wind of my status and now wants me to have a contract. That's fine, and it's my preference as well -- I know I should have insisted on one earlier.
The problem is that, in order to qualify as a "true" 1099 contractor, the HR department wants me to address all of the IRS's Twenty-Point Checklist items. They say they realize that no one can fulfill all of the items, but if I can't come up with a reasonable contract that addresses all of these IRS points, I will not be able to continue working there as a 1099 contractor.
The issues that are sticking points are:
> Services rendered personally by me, rather than delegated to persons working for me. Apparently this implies that the client company is interested in me personally, not just the results of my work. However, I have no employees and have no intention of hiring any at this time. Aren't there a lot of tech writers out there going solo? How do you handle this?
> Continuous time frame. Right now my supervisors and I would like the relationship to be ongoing. There are several projects I'm working on, most of which will stretch out through this year and perhaps beyond. The specific scope of the projects, and how much time needs to be devoted to each one, is nebulous right now, making it quite difficult to outline specifics of the projects in the contract.
> Payment by the hour. Apparently this is another thing the IRS thinks makes someone an employee. (Although I don't know why; most employees I know are salaried, not hourly.) According to the IRS, contractors generally work on a project basis, not on an hourly one. Given the current vague nature of the projects, I don't want to give a per-project quote to the company, as it's almost a sure bet that I'll under-quote the projects and then have to spend a lot of time justifying why the projects are taking longer than I expected.
> Requirement of full-time work. The IRS seems to think that a contractor always has to have a number of clients, and be working for all of them at any given time. I don't know any tech writers who work that way. Don't many (if not most) tech writer contractors work full time (or more than that) on a project until it's done, and then move on to another full-time project?
> Requiring that things be done in a certain sequence. The IRS says this is control, and that means you're an employee. But documentation projects *do* have a sequence. Hopefully, the tech writer has some say in what the sequence is. (And in my case, I do.) But it is still required that the projects progress in a certain order. Isn't that the case with most documentation projects?
Those are my problem issues in developing this contract. If anyone has any experience addressing these issues, and could provide some advice, I'd really appreciate it.
Finally, for anyone who has been in this situation, am I better off just forgetting the 1099 idea and going back to being a W-2 contractor through an agency? My hourly rate would be the same, but I'd lose the tax writeoffs that come with 1099 contracting. Are the tax breaks worth this hassle?
