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Morris Dovey

On 2/19/2010 9:14 AM, wrote:

AIUI, he owned a small software company who hired only "contractors"
and paid on 1099s.

Just out of curiosity, is it your opinion that this is improper? If so,
on what do you base that opinion?

The IRS ruled (or was about to) that they were
employees so he had to fork over back withholding and employment
taxes.

My understanding is that this is SOP when the IRS has difficulty
collecting taxes from the 1099 contractors.

I recall that the IRS received a fair amount of media attention for
responding to taxpayer inquiries with misinterpretations of its own
rules, and later applying stiff penalties when people acted in
conformance with the interpretations provided. IIRC, the IRS' error rate
on taxpayer inquiries was in excess of 30%.

The IRS has a history of terminating (seizing all assets and records for
long enough to prevent recovery) legitimate businesses who owed no taxes
because someone at the IRS thought _incorrectly_ that the business had a
tax delinquency.

He played the game, badly, and lost and was ****ed because he
got caught.

That's certainly a possibility - but it's not the only one. I'm not in
any great rush to accept any IRS version as complete or truthful, so
long as "getting caught" isn't necessarily equivalent to "broke the law".

--
Morris Dovey
DeSoto Solar
DeSoto, Iowa USA
http://www.iedu.com/DeSoto/