Robin's Ruminations

Well I'm half finished with this series on the six part test used by the State of Washington in determining whether a worker is an employee or an IC.  From the telephone calls, e-mails, faxes, letters, and posted comments I've received, this is a topic of interest not just in Washington but in other states as well.  Obviously each state is going to treat this topic in its own way but, that said, there is a great deal of overlap across the nation.

As a reminder, you can see L&I's pamphlet on this topic by clicking here.

4.  IRS Taxes - "When you entered into the contract, was this person responsible for filing a tax return with the IRS for his or her business?"  Notice the similarity with test #3.  In particular the use of the past tense "was" in terms of when you entered into the contract.  Let's look at this from a different point of view by asking the question in a different way.

Can I turn an employee into an IC?  It seems the answer would be qualified "no" based on the fact that the worker was not responsible for filing taxes for his business at the time you entered into the contract.  I say "qualified" because it appears the worker could leave your employment, set up his own business (part of which is becoming responsible for the taxes related to the business), and then enter into a contract with you as an IC.  Frankly, this might work but it sounds like something government would attempt to prevent.

 Always keep in mind, government agencies do not like the concept of IC's.  Government's goal is classify all workers as employees.  To achieve that end government will make it difficult, especially for the unknowledgeable, to use IC's.  The claim government makes to support this goal is worker safety.  There is a lot of truth in that claim but I'm sure power and money also enter into the equation.  Thus the use of the past tense in tests #3 and #4.  

As I see it, the most clean cut way of achieving "yes" answers to them is to only contract with people who are already in the process serving business in one form or fashion, have been filing their own business tax returns,  and have never been your employee.