The Demise of VK

[Paul Milano]

What's interesting about the subject of W2's versus 1099's (employee status versu independent contractor status) is that most corps, even today, probably regard their instructors as independent contractors.

If, however, an overly curious, overly strict IRS employee decided to interpret the employment "status" of most staff members of most corps, they would likely be found to be "employees," not "independent contractors."

The status is determined less by the amount of pay or job description, but more by the fact that the staff member is obligated to appear and perform their duties at a specified place and time (camps and/or tour), on a relatively routine basis (monthly - or daily, in the case of tour).

Arrangers, who do not teach, but merely mail their scores or drills in (or drop by once or twice to consult or interpret) would not be considered employees. But, almost all techs and caption heads who come to most or all camps, and all who come on most of tour are likely "employees." This would also hold true for paid drivers, cooks, etc.

I would be VERY glad to hear from someone more knowledgeable, that I am wrong, but I delved into this quite extensively when I managed Spirit of Atlanta years ago. Maybe the interpretation is not as stringent now. I hope so, since I suspect many corps are at risk otherwise . . .

P.S. Unless VK's back-tax penalties were in the tens of thousands of dollars, with absolutely NO feasible way to pay back the government over a three to five-year period of time (which is what is almost always allowed in situations like that), I find it hard to believe they would be shut down due to that single circumstance.

[Jeff Ream]

you can never fault the failure of an entire organization on one individual - imo

see westshoremen.

Jeff - even in Westshormen there was a B.O.D. - plus a whole staff and membership which tolerated the situation.

And yes - I am fully in the know about the "situation"

um no. there was no BOD when Mace was director.

and that is when it went to ####.

the BOD that came in in 97 left when mace left and the BOD after 98 was ignored by the then director.

trust me, i was there. if i said it all on here, i'd violate many forum rules.

[Guest GeorgeD]

uh - there "was a B.O.D." - there had to be because it was an NPO and therefore had to list a B.O.B. ( even if it was a B.S.'d thing )

So folks who's names were on that list - even if they never, ever met - actually beared the responsibility - both ethically - and frankly, legally for what "happened"

[ffernbus3]

OK, now let's talk about VK's "siblings", The Anaheim Kingsmen, who now exist as a corporation called "Kingsmen Entertainment" which puts on rock shows in the Anaheim area. I won't go so far as to put the blame for their demise on "one individual" because I was neither there nor associated with my former corps after 1972 so have no first hand knowledge about the situation: only hearsay, and I refuse, therefore, to point any fingers.

I just wanna hear the story! So many good SoCal corps seemed to fold back around the late 60s and early 70s.

RON HOUSLEY

[Jeff Ream]

uh - there "was a B.O.D." - there had to be because it was an NPO and therefore had to list a B.O.B. ( even if it was a B.S.'d thing )

So folks who's names were on that list - even if they never, ever met - actually beared the responsibility - both ethically - and frankly, legally for what "happened"

wow another law broken. especially since one of the names was deceased.

[Sparky7443]

I would be VERY glad to hear from someone more knowledgeable, that I am wrong, but I delved into this quite extensively when I managed Spirit of Atlanta years ago. Maybe the interpretation is not as stringent now. I hope so, since I suspect many corps are at risk otherwise . . .

I just did this research for my work, cause when a person is "NOT" considered an employee, then you are not obligated to take care of medical and workman's comp for those employees, and that could bring cost for a company down a whole lot.

How do you know if a worker is an employee that you must withhold taxes for or an independent contractor who is responsible for his own taxes? In order to determine whether someone who does work for you is an employee or an independent contractor, you need to evaluate several factors regarding your relationship with the worker. When evaluating these factors, keep in mind the nature of the job and how your industry usually handles such situations. This information will guide you in determining the worker's role. In general, the more control you exercise over the worker, the more likely it is that he is an employee.

Do you control when and where the person does their work?

Does the worker use your tools and equipment or his own?

Is the worker able to hire others to assist with the work without your approval?

Does the worker purchase the necessary supplies and services at a place of his own choosing?

Do you determine what specific tasks are to be done by what specific worker?

How much guidance do you provide the worker about how to do the job?

Do you pay the worker a flat fee or an hourly rate?

Do you provide the worker with benefits such as health insurance or paid time off?

Do you reimburse the worker for expenses that are incurred to get the job done?

Does the person perform the same services for others?

Do you have a written agreement with the person regarding the work to be done?

Will the person work for you indefinitely or just until a certain job is completed?

Is the work the person does an integral aspect of your business or is it ancillary?

Each of the above questions addresses the degree of control you have over the worker. Remember to consider each of these factors in light of the normal practices for the given industry. For example, it is more common for a trade worker who is an employee to use his own tools than for an office worker who is an employee to provide his own office equipment. No single factor is determinative.

Several factors may indicate a degree of control even though the person is an independent contractor. An example: You hire a plumber to install new fixtures when remodeling your home. You require the job to be done at a certain time and at a certain place. You pay an hourly rate and reimburse for expenses. All of these factors indicate a certain degree of control, but the person is still an independent contractor. After all factors are considered, the control is with the worker.

For more help in determining whether a person who works for you is an employee or independent contractor, get IRS publication 15a.

<insert from IRS Publication 15a>

Independent Contractors

People such as lawyers, contractors, subcontractors, public stenographers, and auctioneers who follow an independent trade, business, or profession in which they offer their services to the public, are generally not employees. However, whether such people are employees or independent contractors depends on the facts in each case. The general rule is that an individual is an independent contractor if you, the person for whom the services are performed, have the right to control or direct only the result of the work and not the means and methods of accomplishing the result.

Common-Law Employees

Under common-law rules, anyone who performs services for you is your employee if you can control what will be done and how it will be done. This is so even when you give the employee freedom of action. What matters is that you have the right to control the details of how the services are performed. For a discussion of facts that indicate whether an individual providing services is an independent contractor or employee, see Employee or Independent Contractor? (section 2).

If you have an employer-employee relationship, it makes no difference how it is labeled. The substance of the relationship, not the label, governs the worker's status. Nor does it matter whether the individual is employed full time or part time.

For employment tax purposes, no distinction is made between classes of employees. Superintendents, managers, and other supervisory personnel are all employees. An officer of a corporation is generally an employee; however, an officer who performs no services or only minor services, and neither receives nor is entitled to receive any pay, is not considered an employee. A director of a corporation is not an employee with respect to services performed as a director.

You generally have to withhold and pay income, social security, and Medicare taxes on wages you pay to common-law employees. However, the wages of certain employees may be exempt from one or more of these taxes. See Employees of Exempt Organizations (section 3) and Religious Exemptions (section 4).

Leased employees. Under certain circumstances, a corporation furnishing workers to various professional people and firms is the employer of those workers for employment tax purposes. For example, a professional service corporation may provide the services of secretaries, nurses, and other similarly trained workers to its subscribers.

The service corporation enters into contracts with the subscribers under which the subscribers specify the services to be provided and the fee to be paid to the service corporation for each individual furnished. The service corporation has the right to control and direct the worker's services for the subscriber, including the right to discharge or reassign the worker. The service corporation hires the workers, controls the payment of their wages, provides them with unemployment insurance and other benefits, and is the employer for employment tax purposes. For information on employee leasing as it relates to pension plan qualification requirements, see Leased employees in Pub. 560, Retirement Plans for Small Business (SEP, SIMPLE, and Keogh Plans).

[Paul Milano]

Good work, Sparky 7443.

It shows that a snare tech, for example, would certainly be just an independent contractor (in all likelihood). A Caption Head, however, COULD be an employee, under certain circumstances.

I guess each corps should look closely at their individual operations and take heed.

P.S. The IRS has definitely clarified this over the years, thank God!!

[chasgroh]

Hixon was not the man for the job, unfortunately no one else wanted the job, that's how he got it.

...well, your statement is partially true, Bill, but there were at least two other people with their hats in the ring for the job: one was Mike Mercadante, and the other was me. Tom Hixon provided a rather spiffy resume, as I understand, and Merk and I, trying to get the '93 program completed and under way, pretty much depended on the BOD to know what was up...Merk was disappointed (I think he would have done a great job...) and I was put into a very...er...*abnormal* frame of mind! I must say I thought at the time Tom would do the corps right...but I still parted company with the group after that season, it just didn't feel right. Through the next 3 years, rumors flew about the "money thing" and, of course, this and that...it was apparent to a lot of us who cared that the corps was sliding. What a #### shame.

[Jared_mello]

you can never fault the failure of an entire organization on one individual - imo

Ira Freedman and Tarheel Sun? Wasn't their folding his doing?

[Rocketman]

Well, I think it is time to Abolish the IRS and repeal the 16th amendment!

Rocketman - Rebel

ampssuck