Worker Classification & Tax Filing Requirements

What if the same employee was initially hired as an employee and then converted to a 1099 contractor. Same job. No duties changed. No discretion changed. the owner said she wanted to do it for tax purposes. Is that illegal?

According to the Internal Revenue Code, under common-law rules, anyone who performs services for you is your employee if you can control what will be done and how it will be done. An employee is a worker that is directed and controlled by its employer, therefore, the worker cannot be classified as an independent contractor and receive a 1099 as oppose to a W-2. The employer is responsible to pay all employment taxes due for the classification of a worker as an employee. An individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done. Furthermore, the individual is in an independent trade, business, or profession in which they offer their services to the general public.