SS-8 Inquiry; Busting a CPA?

How else was I supposed to get the employers to do the right thing?

In both cases, the employer wrongly classified me as an independent contractor. I never agreed with that. My efforts to get the employer to classify me properly went nowhere (in one case the union failed to persuade the employer), so I filed the SS-8. IRS ruled I was an employee in both cases.

Both employers issued 1099s, so I filed C and SE until I received the ruling, then filed amended returns with 8919s.

How long did it take you to get the ruling? If no ruling within the statute of limitations, would you have been of luck? Why not file your original return as an employee with form 8919?

As the previous reply indicated, you were only hurting yourself by not filing Form 8919 with the SS-8. To get the correct tax treatment for yourself does not depend on waiting for the employer to "do the right thing" in this scenario.

Granted, the 8919 form didn't exist until sometime in the last 5-10 years, some folks used to use the "uncollected FICA on Tips" form instead to serve the same purpose.

Similar story for other employee-related benefits. For example, you could still file a claim for unemployment benefits or worker's comp at the state level, if you include your version of the worker classification, then let the tax authorities go after the firm if they wish (at least that's the way it is in CA).

I wouldn't bother. It sounds like the CPA in question is functioning in the capacity of a director of the organization, and NOT as an independent provider of accounting services, and accordingly his State Board is unlikely to care.

But it will be interesting to see how the IRS responds to the SS-8.

MTW (a retired CPA) ============== I concur with this opinion: See what action the IRS takes before reporting the CPA to the state board of accountancy.

Note that filing an IRS Form 3949-A does not give "whistleblower status." Although you may be reporting someone else's suspicious activity, you're not considered a tax whistleblower until you file Form 211 under the Informant Claims Rewards Program. In this case, a 3949-A may be inappropriate (and/or redundant) as you're already filing an SS-8. Form 3949-A is oriented toward [potential] criminal violations of tax law (and/or nonfilers). Here, the issue is who pays half of the FICA taxes, and that's more of a civil issue. Tax isn't being evaded outright - it's being shifted from one taxpayer to another.

To date I have submitted to the IRS--

--Form SS-8 (initially submitted in May; re-submitted in July due to my failing to write "n/a" on a number of questions, per IRS direction)

--Form 1040X, hand in hand with Form 8919

--Form 13909, hand in hand with Form 211

In early August the IRS--

--refunded me the roughly half of the self-employment taxes I paid in 2014.

--wrote that it had completed intake of my Form SS-8 and that it expected to complete the investigation within eight months.

I have not reported the CPA for professional misconduct. For one, I think "financial statements of an enterprise" (quoted in NYS Rules of the Board of Regents, Unprofessional Conduct 29.10 a. 5.) likely do not include IRS Form 990. Else I have not seen any 'financial statements of this enterprise.' For another, from my reading the information I put on the various IRS forms already submitted are supposed to cause red flags to trip with the IRS, resulting in criminal fraud investigations.

In February the IRS (SS-8 division) sent me a letter saying that, based solely on the info I had provided them, the IRS found me to be an "employee" for tax purposes, and to please file my 2015 tax return accordingly. Meaning complete a Form 8919 et cetera and submit with my 2015 taxes. This is done.

The February IRS letter was clear that it was 'not a determination letter and so not binding on the business that employed me.'

I called the IRS SS-8 division today to see what I was allowed to know. All the IRS staff was allowed to say is that the business had not responded to the complaint, but that yes, all workers from 2014-2015 could amend and file as "employees" such that they paid only the roughly half of Self-Employment tax that they would have owed as "independent contractors."

Matter closed from my end. Thanks to all for your patience and help.

Congratulations! That's great news.

Thank you. Please take some of the credit.

I hope the CPAs and attorneys posting here understand how much a difference you make by sharing your understanding of the law here. May you all at least be able to take pro bono credit for participating in online forums such as this, helping the little gal or guy and promoting understanding of the law in general. I imagine overall forums like this save state and federal agencies and the courts a lot of time and money. I would be happy to write a letter in support of awarding such pro bono credit to any agency considering this. Write me in private for same, and then consider it done. Have a nice weekend all.

All's well for me, but there was a development in November, 2016 (a few weeks ago). Maybe it will be of interest to others thinking of reporting an employer.

Out of the blue, an attorney of (what I would call) some local, respectable public prominence phoned. He represents the (recent) widow of the founder of the tiny school. Evidently the headmaster who took over the school signed an agreement with the founder several years ago to pay a certain amount of money each year (month?) to the founder. The headmaster has refused to pay this of late. The headmaster claims the founder more-or-less publicly attacked the school, causing families to withdraw children, reducing enrollment and so revenue. I imagine the headmaster has not been paying for over a year now. The widow of the founder and the headmaster are now in arbitration (per their signed agreement?). As far as I can tell from the online court system here, this never went to court.

The attorney and I talked for awhile. He asked if he could have the tax forms I submitted, alleging the school violated the law on FICA taxes etc. I agreed. The attorney homed in on an elaboration (for one of the tax forms' questions) that gave a written narrative of the events and an estimate of the FICA taxes owed for all teachers. The attorney also wanted to know if I had met the CPA/relative I mention above and what my take on him was. I did not have a whole lot to offer. I tried to be factual, saying I felt the headmaster had some good points but there were some things going on that I felt were weird and caused me to want out of there, such as xyz. The attorney asked if I could stay available on a certain date for possibly testifying in person. Happily, I have not been called to testify. I know at least two other former teachers at the school were contacted; submitted several documents too; and were also asked to remain on standby to testify in person. The attorney also asked if I could contact yet anoth er party and see if they would be willing to speak with him. This party agreed to do so.

As I think I hinted earlier, the headmaster's suddenly switching all teachers to "independent contractor" status is but one of several actions he took that raised people's eyebrows here.

Of course I am curious as to what the final outcome will be. But I bet arbitration rulings are not public information? Plus it's possible all parties will be subject to a non-disclosure agreement? If anyone knows about this process and cares to share their best guess as to whether my former colleagues and I will ever learn the findings of the arbitration, I'd be interested to know.

December 2017 Update: I did have to testify at the December 2016 arbitration hearing. I do not know the outcome. In June, 2017, some of the parents filed a civil lawsuit against the school and its principals alleging, through various allegations of negligence and breach of contract, statutory rape and more unlawful conduct by one of the two administrators, with knowledge of same by the school headmaster and the non-profit school's board of directors. My name was not used. My specific actions make up about 10% of the court complaint. Service of the defendants took awhile and required private investigators. One of those served was the aforementioned CPA. All sides are now lawyered up. I think discovery is underway.

It has crossed my mind that these developments may support, in a small way, the Capone Effect.