Home > workers compensation compliance > Transporation Carriers Are Easy Prey for State and Federal Audits

Transporation Carriers Are Easy Prey for State and Federal Audits

Who are these ‘transportation carriers’? Just about anything with tires. We are talking about bicycles, parcel delivery companies (sole, LLC, and Dispatchers), inter-modal, intra-state, and inter-state.

The assault on these independents by State and Federal agencies has been relentless. The federal perpetrators are the Department of Labor using IRS filed 1099s to ferret out these unregistered employees and employers looking for payroll taxes.

Did you read this week about the Social Security Administration getting legal permission to withhold tax returns from citizens because some legislator in the Senate added an amendment to the Farm Bill eliminating the ten year statute of limitation? Talk about fleecing the constituent. This is not a business friendly government anymore unless you have deep pockets.

It’s okay; I can say this because I got audited last year for my consulting business that defended small firms being audited by the Sate of Washington. Might have to do with my whistle blowing case and getting a manager transferred….Anyway, the IRS was looking for 1099 programmers at my TIME Integrator business. There were none; all the programmers were employees.

Now Back to Business

The ‘qualifications’ for sole props and others doing business as LLCs are many. From the Statue’s seven to twenty-one point tests that change every year by the Federal  bureaucrats and State legislatures, it is amazing if there is anyone able to deliver parcels, packages, and freight.

Here are some catch 22s: A FedEx operator (an independent) has his own contract. One of his friends wanted to work for FedEx but did not meet the financial requirements in the contract. So being a nice guy, he fronted for him and ended up with three other ‘franchisees’.

What he did not know, is that under Washington State Department of Labor and Industries regulations, he was their employer even though FedEx signed them up.

Here is another: One of the big national interstate freight forwarding companies was going to be audited because they were independent operators only with that one company. To work within the legislative guidelines, I educated the drivers on how to be in compliance.

All they had to do was open up a Labor and Industries account and exempt themselves as the owner of the truck if they did not want any workers compensation coverage. Then, hire a kid to wash the truck or help him with the freight occasionally and pay those premiums.

You can wrestle with the government because you will not win. Ask that guy in Nevada with the traumatized cows.

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