Appraiser Trainee Running Their Own Business?

[DTB]

In the case where a license is required, there isn't even a question about the relationship. The supervisor is directly responsible for the trainees workproduct of the trainee, so there is no such thing as an IC relationship in this case.

I bring up the IRS because if anyone is making any money, it's relevant. Plenty of people have paid hefty fines plus all back taxes due to classifying someone as independent when by law they are not.

Not between Supervisor and Trainee, I agree and never claimed it.

We're making progress David.

Now, what if Supervisor and Trainee are employees of ABC Appraisals?

Again I'll ask, do you believe that an employment relationship (between supervisor and trainee) is required in order to establish a supervisor-trainee relationship?

 

[The Warrior Monk]

Now, what if Supervisor and Trainee are employees of ABC Appraisals?

That is an entirely different subject and situation that what the OP stated.

Again I'll ask, do you believe that an employment relationship (between supervisor and trainee) is required in order to establish a supervisor-trainee relationship?

We already know that an independent contractor relationship cannot exist between the two parties.

If there is some type of other relationship that is somehow independent but yet the supervisor pays the SS taxes, Medicare, state taxes, etc. that is not called "employment" then it might be possible.

 

[DTB]

We already know that an independent contractor relationship cannot exist between the two parties.

If there is some type of other relationship that is somehow independent but yet the supervisor pays the SS taxes, Medicare, state taxes, etc. that is not called "employment" then it might be possible.

So, somehow you still believe that the supervisor MUST be the employer and the trainee MUST be his/her employee.

POPPYCOCK.

Have you asked your accountant or attorney that question yet?

 

[MoJo]

I have only recently started appraising, but I have worked on and off in real estate since 2003. My thought is that I can own the business and hire my supervisor as an independent contractor and offer him a much more generous split than what he is receiving now. I know It seems backwards for the trainee to hire out the supervisor, but would it make sense in this situation?

No, it doesn't make sense at all.

Has anyone heard of this type of arrangement? Does anyone think this set up could be problematic when working with AMC's? We have good relationships with several local lenders but the majority of our work does come from AMC's.

Never heard of that type of arrangement. Definitely problematic when working with AMC's. An AMC will not directly engage with a trainee. So, what is your plan with regard to signing up with AMC's? Use your supervisor's name? That would probably be fraudulent. Regardless, even if you did that, since everything would be in his name you would have to start all over once you obtain your license or your supervisor retires.

Here are the rules in my state regarding trainees:

c) The holder of a trainee permit issued by the Board shall not solicit or maintain a direct relationship with a client, a party or parties who engage an appraiser by employment or contract in a specific assignment. The trainee shall not collect any fees from the client, except when acting as an agent of the supervising appraiser. The supervising appraiser shall ensure that any form of payment shall be directed to the supervising appraiser.

d) The holder of a trainee permit issued by the Board shall not advertise. Any advertisement in the name of a supervising appraiser with whom the trainee is associated may include the name of the trainee by clearly indicating such person as a trainee. This shall not prohibit a trainee's use of standard business cards which clearly indicate such person as a trainee.

Maybe your idea would work in your state, but it would not in mine.

My state allows you to have multiple supervisors as a trainee. I had three. If your state allows it, I think that's your market.

 

[The Warrior Monk]

So, somehow you still believe that the supervisor MUST be the employer and the trainee MUST be his/her employee.

I already allowed for the possibility. But for some reason, nobody can provide a real world anecdote. Your argument remains in the realm of the hypothetical.

However, there are real world examples of people, including those on this very forum, that have been audited over this very issue.

POPPYCOCK

You should've stated that in the beginning. Now I'm convinced!

Have you asked your accountant or attorney that question yet?

Believe it or not, I don't involve my accountant or attorney in every internet battle I come across. I should be seeing my attorney in few weeks, and I can run this by him them.

 

[Dale Floyd]

However, there are real world examples of people, including those on this very forum, that have been audited over this very issue.

Sorry David - But I don’t believe there are any real world examples that disputes our points out here.

I can, however, assure you that a few appraisers drawing social security have their companies in the spouse’s names to prevent benefits from being decreased. Your accountant friend will tell you that. It may be questionable ethically, but that’s been going on in every individual profession for ages. If the non-appraiser can own the company, then it just isn’t difficult to apply that same structure in other ways, including somebody with buffers attached to their trainee certificate on the wall.

Playing devils advocate - If we are to take your examples literally, then a certified appraiser who still lives at his parents’ home with an office in the corner of his bedroom, certainly couldn’t be the supervisor of his father who decides to become a trainee appraiser. Why? Well, because the house and office space belongs to dad the trainee - and not son the certified appraiser. And if son still lives under dad’s roof, then who is in charge of who? Lol

I still think you are confusing the distinct differences between owner and supervisor. But I respect the manner in which you are debating the subject.

 

[The Warrior Monk]

I also forgot to mention another point that is relevant. The trainee, and the trainee's company, actual isn't selling the trainee's services, because the trainee does not have the credentials to perform the services that he/she is selling. The trainee/trainee company is selling the services of the supervisor, who actually holds the license to perform the services.

So obviously it would be incredibly difficult to claim an independent contractor relationship when the company's services, income, viability, etc. is entirely dependent on the person(s) they are claiming is an IC.

 

[DTB]

I also forgot to mention another point that is relevant. The trainee, and the trainee's company, actual isn't selling the trainee's services, because the trainee does not have the credentials to perform the services that he/she is selling. The trainee/trainee company is selling the services of the supervisor, who actually holds the license to perform the services.

So obviously it would be incredibly difficult to claim an independent contractor relationship when the company's services, income, viability, etc. is entirely dependent on the person(s) they are claiming is an IC.

...and if the firm had several other Certifieds completing appraisals and several more that also trained other trainees it would be a well diversified business, negating any particular issue with a single supervisor.

Dependent on supervisor A? Nah, supervisor A can move on, stop training or retire, there others in the firm to continue on.

 

[The Warrior Monk]

...and if the firm had several other Certifieds completing appraisals and several more that also trained other trainees it would be a well diversified business, negating any particular issue with a single supervisor.

I thought we were discussing the original post, which is:

My thought is that I can own the business and hire my supervisor as an independent contractor and offer him a much more generous split than what he is receiving now. I know It seems backwards for the trainee to hire out the supervisor, but would it make sense in this situation?

Regarding:

Dependent on supervisor A? Nah, supervisor A can move on, stop training or retire, there others in the firm to continue on.

• Supervisor A - responsible for the workproduct of the trainee, the trainee is selling the supervisors skillset, and the trainee/trainee company is entirely dependent on the supervisor's services.
• Supervisor B - responsible for the workproduct of the trainee, the trainee is selling the supervisors skillset, and the trainee/trainee company is entirely dependent on the supervisor's services.
  
• Supervisor C - responsible for the workproduct of the trainee, the trainee is selling the supervisors skillset, and the trainee/trainee company is entirely dependent on the supervisor's services.

It is especially problematic if the trainee is the only person "employed" by the company, which is what was noted in the OP, because no independence of anything exists whatsoever for the reason stated above; e.g., the trainee is selling other's services due to the lack of the credential to work independently, and the complete inability to perform appraisal services on his own.

 

[bnmappraisal]

I've been following this thread throughout and I think it still comes down to what the OP's state regulates/allows

Again, as I posted (I forget exactly where waaaaaaay back in this thread) FL does not allow a trainee to own the biz

Does anyone have anything regarding PA rules/regs/laws on this topic? Otherwise I think this back and forth is moot