Thursday, September 30, 2010

Is Meg Whitman a TAX CHEAT even if her maid were legal?

One of the defenses California Republican nominee for Governor Meg Whitman has put forward in the controversy surrounding the hiring of her maid is a 1099 form.

"We never received those letters," Whitman told GMA's George Stephanopoulos in an interview. "When we hired Nicky we used an employment agency. Nicky provided her social security card, a California drivers license, she filled out a 1099 - because we told the employment agency, we have to hire people only who are documented to work here. So we had no idea that she was not here legally."

CBS news link

Ms. Whitman did you mean a W-2 form for employees?

Form 1099 is a form promulgated by the Internal Revenue Service (IRS) and is used in the United States income tax system to prepare and file an information return to report various types of income other than wages, salaries, and tips (for which Social Security Administration Form W-2 is used instead). The term information return is used in contrast to the term tax return although the latter term is sometimes used colloquially to describe both kinds of returns.
Each payer must complete a 1099 for each covered transaction. Three copies are made: one for the payer, one for the payee, and one for the IRS.

Wiki link

Independent contractor you say, well what on earth is that. I know very well what that is having worked as one for the last 10 years. An independent contractor cannot be given direct instruction. An independent contractor is given a job a due date and money and is expected to pay self employment tax. Let’s take a look at what the IRS has to say.

There are three basic categories of factors that are relevant to determining worker classifications:
Behavioral control
Financial control and
Relationship of the parties

IRS link

Wow Ms. Whitman you’re a multimillionaire but you wont even classify a worker you have in your home and control as an employee? Someone I imagine you were paying a monthly or weekly amount and not by the task, and she was working in your home with your husband tritely telling her to “look into” her citizenship status. This sounds like a really close relationship if not emotionally certainly not like a plumber, or the IT dude you ask to write a program for you.

Where is the IRS in all this, and if they weren’t investigating this, where do I send this information in order to cash in on the whistleblower money? I’m sure Ms. Whitman has more staff than this lady, and I’d be very curious if she has classified them as independent contractors. I wonder if she offered them medical insurance and if so did she classify them as employees to the insurance company? I wonder if she covered them in workers comp?

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