Abraham Lincoln reportedly asked, “If you call a dog's tail a leg, how many legs does a dog have?” His answer was, “Four. Calling a dog's tail a leg does not make it a leg.” This is the example that the Ninth Circuit used in its decision in Alexander et al. v. FedEx Ground Package System, Inc,to question the sufficiency of labels.
The decision, as well as the increase in worker classification audits, highlights the importance of properly classifying workers and the potential exposure a business may have if it has misclassified workers—innocently or not, Bruce P. Ely and J. Sims Rhyne III, both with Bradley Arant Boult Cummings LLP, write in this week’s issue of the Bloomberg BNA Weekly State Tax Report.
Using FedEx Ground as a guide, Ely and Rhyne, in their article, which can be read here, discuss several important issues facing businesses and their tax advisers, including: (1) whether contractual language labeling a worker as an independent contractors is sufficient; (2) what constitutes true relinquishment of “control;”and (3) the potential exposure to multiple worker classification audits by different state and federal agencies and the differing standards that may apply.
Some notable developments from the State Tax Developments Tracker – Bloomberg BNA’s new tool for monitoring important developments in all the states:
Colorado Department of Revenue Announces Changes in Tax Return Processing System
Connecticut Department of Revenue Services Issues an Update Regarding Mandatory e-filing for 1040ES and Annual Sales Tax Filing
Massachusetts Department of Revenue Issues a Directive Regarding Sales and Use Tax Exemption for Certain Direct Mail Promotional Advertising Materials
For more information about this and other state tax issues, sign up for a free trial of the Bloomberg BNA Premier State Tax Library.
In other developments…
Tax Foundation Awards for Outstanding Achievement in State Tax Reform in 2014, by the Tax Foundation
State “Income Migration” Claims Are Deeply Flawed, by the Center on Budget and Policy Priorities
Compiled by Priya D. Nair
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)