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Independent Contractor

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Cindy Manning

Thread Starter
Freshman Member
Joined
Aug 20, 2002
Professional Status
IT Professional-Appraisal Related
State
Massachusetts
Does anyone know if a sub-contractor with a trainee license is automatically considered an employee. The state statute reads that trainees are to be under the "direct supervision" of a licensed or certified appraiser. Does this inhibit their ability to work as an "independent contractor" :?: :?:
 

Restrain

Elite Member
Joined
Jan 22, 2002
Professional Status
Certified General Appraiser
State
Florida
The key is whether or not they work set hours, are directly supervised, etc., i.e. like a clerk. If you give them assignments, do not require set hours, and do not direct their actions but rather allow them to complete the assignments, then they are independent contractors.

Roger
 

Cindy Manning

Thread Starter
Freshman Member
Joined
Aug 20, 2002
Professional Status
IT Professional-Appraisal Related
State
Massachusetts
Thanks,
Someone had told me that the term "directly supervise" not allow me to treat a trainee as an independent contractor. I will contact an attorney, but just wondered if others had similar issues.
 

Wally Jones

Senior Member
Joined
Jan 23, 2002
Professional Status
Certified Residential Appraiser
State
Florida
By all means, consult your attorney! The Internal Revenue Code lists several items to test whether or not you can consider a worker an employee or an independent contractor. One of those stipulates they must be able to work for any company they choose to be considered an independent contractor. Some states will allow a trainee to work for only one company and their activities are restricted to such an extent the IRS considers them employees. Maybe even consult TWO attorneys! (I can't believe I just said that!) Good luck.
 
Joined
Jan 16, 2002
Professional Status
Certified General Appraiser
State
Montana
Find out what you don't know and the reason everyone is advocating talking to your attorney and/or your CPA.
Go to:

http://www.nolo.com/lawcenter/ency/article...EA7DE4254733BE3

The above link will send you to the SBA site, the IRS site. You also need to check out your state laws regarding unemployment taxes and other matters such as workers compensation.

It is very unlikely any person working for an appraiser in a fee split arrangement doing appraisals or similar business of the hiring firm is going to be considered an independent contractor by any or all of the government agencies that involve themselves in the affairs of its citizenry.
Supervision is only one test, there are many conditions not the least of which is the person is doing the same kind of business that the firm is doing (appraisals)

Real Estate persons and direct sellers have a distinct status given to them by the IRS making them non-employees. Do not be confused by this status.

The solid way you can bullet proof your self is to 1) Sign up as an employer, get Quick Books and Quick Books Payroll and pay taxes, unemployment, SS, Medicare, workman's comp etc. or 2) have the person sign up with a temporary help agency and pay them to handle the person as a temporary employee.


What you should not do is get some cockamamie legal agreement off the Internet that is not worth anything and then have the person later, get hurt, apply for unemployment, hurt someone or cause damage to someone or file for overtime or any number of other things.
 

Cindy Manning

Thread Starter
Freshman Member
Joined
Aug 20, 2002
Professional Status
IT Professional-Appraisal Related
State
Massachusetts
Thanks for the link. Given this information, why are most apprasial firms in my area using "sub-contract" appraisers, including the national AVMS? Has anyone been challenged by the IRS or others on the status of "sub-contract" appraisers. I personally know of no apprasial companies who treat their appraisers as employess, including 5 that I used to work for. Some have been in business over 20 years. I am not looking for legal advice on-line, just personal experience or helpful info. I'll find a good emloyment lawyer for the legal advice. Thanks for all the help.
 
Joined
Jan 16, 2002
Professional Status
Certified General Appraiser
State
Montana
Cindy:

Another link:

http://208.55.141.201/personne.htm

The Appraisal Instiutute sells a book on Independent Contractor Status

The above site also notes a book is available on the subject.

AMC's assert that appraisers are independent contractors and appraisers sign a contract to that effect. The relationship is based on contracting for something that is not the main business of the AMC. The AMC does not do title work or appraisal work, they contract to have it done, therefore employ independent contractors.

No one says you can't pay fee splits and assert that they are independent contractors. It is like anything else, you can do anything you want but just be willing to pay the consequences when you are audited by either the state or the IRS. In most cases, audits are triggered by the state, looking for answers when a fee split employee decides to go for unemployment. Personally, I am not much for if everyone does it, it must be ok.
 

Mike Garrett RAA

Elite Member
Gold Supporting Member
Joined
Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
Hey Doug....I work for half a dozen AMCs and no one has ask me to sign a contract about anything. Am I missing something?
 

Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
CM asks
Has anyone been challenged by the IRS or others on the status of "sub-contract" appraisers. I personally know of no apprasial companies who treat their appraisers as employess, including 5 that I used to work for.

Yes, I know two that were challenged, but nearly went bankrupt in the process. The tests in the link Doug presents is a good basis to compare to what those instances were.

In one, the people thought of themselves as employees, kept no records and could not work for anyone else. At years end, one did not have the money to pay his taxes, fessed up to the IRS and Bingo, somebody had to pay.

In the other case, the employer was providing the workers with equipment and autos, and of course, discouraged them from working for anyone else, even themselves....I challenged the owner over the matter because I had came out of the company mentioned above. The owner argued (wrongly) that they were "too small" and the IRS had told them it was OK. But he had about 25 employees instead of the 4 when he last talked to the IRS.

Just because one IRS agent says one thing does not mean the next one reads it that way. Company 2 probably thinks to this day, I am the one who turned them in to the IRS. I quit 2 months before the IRS pounced. They cut no pay checks for 2 months and many hands filed suits, labor claims, etc. until they could dig out from under the mess.

My subs have certifications, work in their own homes, pick and choose their work, accept and hustle other work, and in general, are quite independent of me. Even when I co-sign each has our own copy of the report. They don't work in my office with the rarest of exception.

And Doug, you are right. Real Estate folk are treated differently by IRS fiat. We are not real estate sales people no matter how hard the NAR tries to blur the lines. The only reason we do not see more appraisers caught by the IRS is that we are small 'taters, with too little cash to mess with...the only advantage of poverty.

Terrel Shields
 
Joined
Jan 16, 2002
Professional Status
Certified General Appraiser
State
Montana
Hey Doug....I work for half a dozen AMCs and no one has ask me to sign a contract about anything. Am I missing something?

I know. A lot don't. I wonder how they handle the payments they make on their books. I don't even get 1099's from all the AMC's.

Just ask yourself what happens if they file a 1099 on what they pay you. While we are on that subject, you need to make sure they are getting a W-9 from you.

I will give you an example. I did a feasibility study for a hotel. I think this is similar to doing an appraisal for an AMC. The corporation paid me. They filed a 1099 in my name, not corporation. I threw all the 1099's in my tax envelope and did not check the name at the top. Big mistake. Two years later, I get a tax bill, interest and penalities. I go back to the corp. They for their own reasons don't file an amended 1099. My accountant says too much to fight, write the check for almost $700. Expensive lesson. When you get that pile of 1099's in a few weeks, check them and get them corrected if they should have been issued in your business entity name.

When you work for an AMC, don't wait for them to ask, send them a W-9. If they issue a check to you personally and you have a business entity, make sure they send out the 1099 in your business name. Call accounting and ask them... I know that is hard to do since the cretins of the world work in accounts payable of AMC's, all having landed in some space ship from some distant planet called Nebulous.

Most AMC's will send out a 1099 with the amount they paid you. They are required to get W-9 from you. If the AMC's that you work for don't ask for one, it is time to ask "What's up Doc?" This year a lot more AMC's asked me for a W-9 so I think the IRS is out there lurking maybe checking.

Another hint. The IRS site has the W-9 as a fill out form in PDF. If you put it in your PDF file it sure makes filling them out easier and is a lot better than that out of date W-9 they fax to you.

BTW Cindy, did all those appraisers you worked for give you a 1099 at the end of the year?
 
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