Multi-Ops, you've been warned.

[rhythmgj]

>>>>If by 'represent' you mean that they have certain (any) rules they must abide by, they are employees. If they are a true subcontractor, they are only required to represent themselves. Only employees can be given direction on how to accomplish a task or how to behave, etc. when accomplishing the task.<<<<

Not exactly true. It is case by case. Of course there will be "rules" or some kind of requirements in any contract. Not only the previous example of construction contractor and sub-contractors; but I worked for years as an independent musician with various booking agencies under similar conditions. Also, as a contracting agent myself. The best thing to do is have documentation and a paper trail.

>>>>The IRS itself warns that even their own guidelines must be applied with caution to each unique case.<<<<

THIS, basically.

>>>>The important factor the IRS will consider in our business field is whether or not the subcontractor has the right to refuse a job without penalty. A second factor is whether or not the sub actually has any work capacity or work history independent from what he does for you.<<<<

And this and this, as well.

Now, if you live in New York State, it is not the Feds that you have to fear. It is the state double and triple-dippers... (Did I say that out-loud??!??)...

GJ

 

[DJEP Troy]

This thread was started back in 2010. Has anyone been audited since then?

 

[DJ Wes]

If there were, they probably ain't here (anymore).

 

[Proformance]

I know DJs who have been audited.
Most are scrutinized for their deductions or income claims - not their 1099 reporting.

Multi-ops who get screwed over sub-contractor status are typically found by their state government first, via unemployment claims from non-payroll DJs and "managers" who have been "let go." (Like they say - trouble typically starts close to home.) The parallel employment insurance, tax, and FICA issues then get referred to the IRS.

 

[DJ Ricky B]

My Dad got Audited back in like 1989, and again in 1999 or 2000. The second time they scrutinized his Mileage, but what was interesting was he ended up meeting with a young lady who basically scrolled through his mileage book for like 30 seconds, and moved on. She cleared everything up, and the meeting lasted less than 15 minutes.

The first time, he hired a CPA to do his taxes. And some how the CPA screwed his return up. The CPA fixed everything, BUT at the same time my Dad felt screwed over by the guy. He paid the guy a lot of money...A LOT more than he had ever paid for a tax service before that on a recommendation, and the guy screwed his return up, and he got audited.

...I did not get audited, but the IRS computer flagged my return last year claiming I did not declare my 1099s. I took the notice to my CPA, and he laughed saying it was a computer era. He printed up my taxes and filled out the rebuttle sheet, and mailed it off to them. 3 Weeks later I received a mail saying that an actual human being wes evaluating my return. 2 weeks after that I received a mail from IRS saying everything is OK. Of course they did not say "Sorry for the inconvenience" ...Damn IRS computer! ...At first I thought I was being audited.

 

[Proformance]

My Dad got Audited back in like 1989, and again in 1999 or 2000. The second time they scrutinized his Mileage, but what was interesting was he ended up meeting with a young lady who basically scrolled through his mileage book for like 30 seconds, and moved on. She cleared everything up, and the meeting lasted less than 15 minutes.

That's a common one. My cousin is a CPA and had a DJ client audited for mileage. (He used to school me on what claims DJs were getting burned for.) The fact that your dad had a written log is what ended it. They get paid to find money and scrutinizing a written log for $0.50/mile doesn't justify their hourly wage. The quick scroll was to see if the log looked fake - like it was written all in one sitting - with the same pen, from the same comfortable position. A real log is kind of messy, written on different days, under differing stress, and everyone loses their pen from time to time.

If your dad didn't have the log, that would open the door to go back 7 more years and disallow previous mileage. Logs can finally be electronic now but, they have to make sense. Fake logs rarely do - like 4ok business miles on a car you've had only three months.

The first time, he hired a CPA to do his taxes. And some how the CPA screwed his return up. The CPA fixed everything, BUT at the same time my Dad felt screwed over by the guy. He paid the guy a lot of money...A LOT more than he had ever paid for a tax service before that on a recommendation, and the guy screwed his return up, and he got audited.

The CPA has to know your business and your lifestyle. They can often make decisions based on standard accounting practices that don't really fit your non-standard life and business style. When I first took on doing my own taxes I needed to file an amended return. In the process I discovered that had the CPA taken the full expense for gear that year instead of depreciating it - I would have saved $3,000 in taxes! Reverting to Section 179 is not allowed in an amended return so, I was SOL. I really needed the bigger deduction that year more than I needed depreciation in future tax years. I think even if you hire a CPA you need to understand the process and be involved in the decision making.

...I did not get audited, but the IRS computer flagged my return last year claiming I did not declare my 1099s. I took the notice to my CPA, and he laughed saying it was a computer era. He printed up my taxes and filled out the rebuttle sheet, and mailed it off to them. 3 Weeks later I received a mail saying that an actual human being wes evaluating my return. 2 weeks after that I received a mail from IRS saying everything is OK. Of course they did not say "Sorry for the inconvenience" ...Damn IRS computer! ...At first I thought I was being audited.

That's gotten more detailed over the years. It used to be that your 1099 income was just part of your gross figure. Then the IRS started looking for them specifically, and I would get a letter asking if they were included in my income or overlooked. I still do my accounting the same way but, on the tax form I subtract any income reported on 1099s and list them separately so it matches up to the IRS computers. That ended the letters.

 

[rhythmgj]

Not audited yet (and may it never be!)...

However, musicians, DJ's, and wedding "people" are on the IRS' "high audit" list, unfortunately. They are not fans of "cash businesses."

As to this >>>>Most are scrutinized for their deductions or income claims - not their 1099 reporting.<<<<

One must understand that "income claims" and "1099 reporting" are inextricably intertwined.

GJ