A good while back I was doing payroll for a ‘smallish’ business….the owners were notorious for utilizing trust fund monies (all of them) to maintain their lifestyle….a colleague would always say that they treated the business as if it was their own personal ‘piggybank’….at one point, I was so very disgusted with continually watching them take trust fund taxes from the business, I requested that I be treated as an Independent Contractor….I was informed by one of the owners that it was against IRS ruling……hmmmm…..I thought, this person is using my money that should have been given regularly for safekeeping to the IRS for personal discretions and I’m being told that I cannot stop paying taxes. I put myself on 1099 regardless; the owner and the colleague were sent weekly reports by the payroll company (at my arrangement) for the duration of my tenure with the company which CLEARLY showed that I was a 1099 ‘employee’ and nothing was ever said to me at the time!!!
It was a big mistake on my part in the long run; it turns out, the IRS always catches up with people, the IRS (I later learned) would uphold whatever anyone’s trust fund contributions are…the employer is always responsible for paying them even if they have no monies left after ‘emptying the piggy bank’. The worst part is that I lost the ability to have that income applied to my social security and had to pay the employer percent of the FICA out of my own pocket…..that may, and probably will, change sometime in the near future for the IRS is very attuned to the behavior of organizations that repeatedly consider trust fund taxes their own personal 'piggy bank'. There are no guarantees in life, are there? I would have made a very good whistle blower….
So, the ‘moral’ of this story is if you are an independent contractor, you want to be and expect to be treated as such….if you are an employee, remain an ‘employee’ and appreciate the advantage of the benefits you receive….for social security is considered one of the mandatory benefits you receive as an employee along with Unemployment Compensation and Workers Compensation.