SS-8

Was this done in conjunction with a Form 8919 filed with the tax return for the year in question?

My one experience with this in the last few years is that the tax return was accepted with the Form 8919, and other than one IRS letter asking for some documentation to be re-submitted, nothing else ever happened (that I heard about, anyway).

No. It was done well after the tax return was filed. I wasn't familiar with Form 8919.

Ok, thanks. Sounds like they don't care too much.

Well, they probably do care, but it might matter how much tax money is at issue. I suspect they might look at frequency; a company that gets multiple SS-8's filed by its workers would certainly raise my suspicion.

The SS-8 could certainly be filed before the work relationship starts, but I doubt that happens very often. (California has a similar form, and they probably do care more, since more is at stake, i.e. SUTA and worker's comp and SDI).

The more common scenario is that the worker has received a 1099-MISC, discovers that there is such a thing as self-employment tax, and at the risk of souring the relationship, decides they don't want to pay the "employer" share. Form 8919 was created about 5 or 6 years ago to address this situation; if you confirm that you have filed an SS-8 (even without a final determination), you can use this form to only pay the employee share of FICA and to report the income as wages on your tax return. Before that, some people used to (mis-)use the unreported tip income form to do the same thing.

If 1099-MISC income was already reported and taxed on Schedule C/SE, then an amended return could be filed with Form 8919 to try to get the employer share of SE tax refunded.

Do you know off hand the CA form number?

Excellent suggestion. Thanks!

I partially mis-spoke. While the IRS SS-8 form is designed to be used by either the worker or the firm, the California form & worksheet is designed for use by the firm only, not the worker.

Since California has no equivalent of federal Schedule SE, there is not much reason for an employee to challenge their classification as part of the state income tax return (California allows the 1/2 of SE tax adjustment to income, just like federal). In California, the issue usually arises from the employee side only when they file a claim for unemployment or disability and the firm disputes it.