At Appraiser Working As A Independent Contractor?

[AndyKeller]

Hey Gang,

I am currently working as an independent contractor for my mentor. I am talking with another appraiser who wants to mentor me as well, but don't think he can hire me as an independent contractor as long as I have a trainee license. Here is an article on the topic. Does anyone have experience in this area of the IRS tax code?

Employee or independent contractor?
For many appraisal firms hiring (or rehiring) their first appraiser, the independent contractor issue must be faced
. One of your greatest financial risk as a successful appraisal firm is failing an audit by the IRS. You will be liable for all the taxes your appraisers owed to the federal government, including social security and income taxes.
Many appraisers mistakenly believe that they can hire appraisers just like real estate companies hire agents, as independent contractors. Real estate firms have special exemptions from employee laws. Appraisers don't, except possibly in a few states, but only for state taxes.
Payment on a fee split basis does not mean the appraiser is an independent contractor. Almost all employee appraisers are paid on a fee split basis at appraisal firms, except for trainees who are often paid on an hourly basis. Many appraiser employees don't receive any benefits except those that are state and federally mandated, such as workers compensation and unemployment insurance. Check with your state.
If you're hiring a trainee, there is only one legal choice. TRAINEES CAN NEVER BE INDEPENDENT CONTRACTORS because they must be supervised. Until they accumulate enough hours of experience and get their license or certification, to be safe, you should classify them as an employee.
Recruiting experienced appraisers as employees can be a problem, because of the lower fee split paid. You will have to explain that you are paying half their Social Security plus providing insurance.
Independent contractor appraisers are business persons. They are just like you. They can decline work, set their own hours, have their own business location, stationery, business cards, etc. Just like you can work 100% for a bank, they can work 100% for you. But do you work in your client's office, use their phones, computers, data, etc.? No. If you provide these resources, be sure to keep very close track and charge back for everything.
If you are planning on hiring an appraiser as an independent contractor, purchase one or both of the resources at the end of this article. The time to make the decision is when you hire your first appraiser. Changing later can be very difficult

 

[Otis Key]

Andy - the IRS has some strict rules and they change almost on a daily basis and what you're asking is for appraisers to interpret that "legalize" jibberish and put our necks on the line. Above your post is a search button and if you put in IRS, all forums and forever, I bet good money that you'll have enough reading from this forum to last you all night and into the morning.

I bow out since I'm not an accountant or attorney nor do I work for or like the IRS - they don't send me any work - they just want to take my money. :rainfro:

 

[Mickey Stevens]

I am talking with another appraiser who wants to mentor me as well, but don't think he can hire me as an independent contractor as long as I have a trainee license.

You should check with the IRS for the specific criteria. I believe they even have a pamphlet on the subject. I have seen their guidelines and one of them is that you have to be free to contract with others. I remember when I read their guidelines I thought it would be almost impossible for a trainee to be an independent contractor.

 

[Ann O'Rourke]

You have whatever agreement they want, as long as you pay your taxes. The appraiser who hires you takes all the risk. They will be investigated and possibly fined if they hire you as an independent contractor. Not you.

 

[Sue McHugh]

When I was a trainee, I got a fill in form from the IRS.

I qualified as an independent contractor (about 1 year ago). I work at home, my paper, my computer, my files. I made my own schedule. Noone scheduled my appointments for me. The company paid for ACI, whoopee doo-costs $150 to add another computer. They also made available MLS--do not know the cost of adding someone to that.

 

[Sue McHugh]

By the way, I have done many searches way before this post about appraisers and I have never seen an IRS tax code about real estate appraisers. There is nothing on the search feature that you have written about. By the way, about 3 weeks ago, I researched their website again. This is a gray area.

 

[Eric Bishard]

What it takes to be an independent contractor

Employee Vs. Subcontractor Issues

This will save you some time searching through the forum. I got both of these links from a good article on this forum. Can't find the thread but I still had the URL's

 

[Terrel L. Shields]

Are you a "trainee" (i.e.- is that what your license really calls you?) Real estate salespeople are not treated as trainees even if they are newbies. This has been a grey area according to my CPA. And it depends upon the IRS office in charge. Or as the links above state.

The [IRS] test is highly subjective

If you are independent, not exclusively hired by the supervisor, have your own business card, computer and software, a lot of offices would treat you as an independent contractor. Mind you if you insist your supervisor treat you as an employee, you likely are going to be unemployed. But he or she is the one who will be penalized....not you.
In fact, it is good if the supervisor does that. There is no down side for you. If the super turns out to be a prick, you can always turn him in to the IRS!!

 

[Mark A Rewbury]

I would like to hire an indepentent contractor, however if you are supplying the IC with appraisal work, the MLS ETC ETC....he or she is not an indepentent contractor. The IC must have his own clients in his own shop and pay the mentor a percentage to review and sign the report. Thats what I understand.

 

[KD247]

In most cases, trainees must have the signing appraiser inspect the subject property and assume full responsibility for the methodology and conclusions expressed in the appraisal. Many appraisal "shops" operate unethically and illegally by representing that the trainee's work is actually the work of the signing appraiser. (Very profitable for those who sign the reports of five or ten full-time trainees.)

Here's a vindictive suggestion for anyone who is a trainee in this type of situation: As business slows down over the next year, investigate your right to receive the minimum wage with social security and Medicare contributions as well as your right to file for unemployment compensation.

A couple of legitimate appraisers in this area have been ruined when their trainees' independent contractor status was refuted by the IRS. I wouldn't be too upset to see some of our local appraisal sweatshops suffer the same fate.