Klarinet Archive - Posting 000607.txt from 1997/09

From: Jacqueline Eastwood <eastwooj@-----.EDU>
Subj: Re: Prof. Musician: Employee or Contract Labor
Date: Fri, 12 Sep 1997 02:30:41 -0400

(I'm not cutting, as this is all relevant...)

On Wed, 10 Sep 1997, Jonathan Cohler wrote:

> >I play in the Lubbock Symphony Orchestra, an orchestra with about an
> >$850,000 budget and a season of about 60 services. We are not a union
> >orchestra, as there is no music union in Lubbock. However, there are about
> >6 or 8 musicians, including myself, who belong to locals in other cities.
> >Our symphony management in their infinite ignoranace tries to save itself
> >money by declaring musicians as contract labor rather than employees. Each
> >year they issue us 1099 rather than W-2 income tax statements. By doing
> >this, they avoid having to withhold tax from our checks and avoid having to
> >make employer contributions to Social Security.
> >
> >Needless to say, the musicians of our orchestra do not think this is fair.
> >Is there anyone on the list who can share some insight on how we might
> >proceed to have this practice changed by our management. Any other
> >experience dealing with this issue would also certainly be appreciated.
> >
> >Thanks! Bob Walzel
> >
> >Robert Walzel
> >Texas Tech University School of Music
> >PO Box 42033 Lubbock, TX 79409-2033
> >ph#806-742-2270 FAX#806-742-2294
>
> Hi Robert,
>
> It's very simply really. It is not a matter of fair or unfair. It is a
> matter of fact (once again).
>
> Whether a person is an employee or independent contractor is not a matter
> of opinion. There is a form that you can get from the IRS. I forget what
> it is called, but it is the form for determining the status of a worker.
>
> Here's what you do:
>
> 1. Fill out the form and send it into the IRS. The form asks about
> twenty different questions about you and your work etc....
>
> 2. After awhile (who knows how long the IRS takes) they will return
> a determination to you as to whether you are an employee or an
> independent contractor. The IRS determines this, nobody else.
>
> 3. If they determine that you are, in fact, an employee, and that
> your employer has been treating you as an independent contractor,
> they will then proceed to notify your employer to change the
> practice. They will charge the employer for all back taxes that
> it owes and they can asses triple damages (as I recall).
>
> 4. Furthermore, if they determine that you are representative of a
> class of workers (like other players in the orchestra), they will
> take the action on behalf of everyone.
>
> I learned this all at a seminar I took from the IRS for small business owners.
>
> Again, the key thing here is that whether the management of the orchestra
> says you are an independent contractor is irrelevant. Only the IRS
> determines who is and is not an independent contractor.
>
> Go for it. Let us know what happens.
>
> ----------------------
> Jonathan Cohler
> cohler@-----.net
>
>
>
As the Accounting Specialist for the School of Music here, I have to chip
in my two cents' (actually, it's more than that!!). The U of A
administration is *petrified* that the IRS will audit them, so this fiscal
year, we began enforcing these same rules that Jonathan outlined above.
This has turned into an absolute nightmare for the "financial people" at
the departmental level.

Basically, the "independent contractor" designation has been eliminated.
If an implied employer-employee relationship exists, the person in
question must be hired. If the person is using University-provided
facilities, supplies, and equipment, if they have a "supervisor" who sets
their hours, if they do not have other "customers", etc. etc., that is
defined as an employee. As Jonathan said, there is a questionnaire
available from the IRS for classification purposes.

The big threat to us at the departmental level is that we are PERSONALLY
liable for any classification errors and resulting fines or back taxes
owed by the employer. Therefore, we are being EXTREMELY careful in our
judgement!

Peons everywhere (like myself) would appreciate a little caution before
reporting past errors to the IRS; the people who actually prepare and
sign off on the paperwork are not the ones you want to hurt, but it CAN
happen. Make every effort to change your status now, though, because the
IRS is indeed trying to crack down in this area.

Just a few words from a bean-counter....who doesn't get paid well enough
to be able to afford triple damages....

Jacqueline Eastwood
University of Arizona/Arizona Opera Orchestra
eastwooj@-----.edu