[truckercop]

Hello Sir [Frank]:

Thank you for the valuable information on taxes and tax reporting. I have been pouring through your replys and posts, but I have not found the answer that I am looking for.

I have read horror stories where a truck owner leased to a carrier put drivers in the truck as sub-contractors and is now being investigated by the IRS for failure to pay payroll tax. What is the proper way to put drivers in your truck and list them as sub-contractors, allowing the contractor to avoid payroll tax?


Does it matter if the drivers are relatives or same household (other than hunband/wife).?

Does it matter if the contractor is incorporated and lists the drivers as officers?

Should a contract be drawn?

Can it be done without actually leasing the truck to the drivers?

Can it be done legally?


Thank you very much,

[Fkatz]

Question #1 Is your sub contractor a contractor or employee?

1- If you are a sole-propreitor there are not to many questions that can be approached with the IRS, you recieve a 1099MISC from the Co, report them on a Schedule C, profit or loss from Self employment. you intern send a 1099MISC to your sub contractor for the amount that you paid him, and list them under commissions line line 11, on your Schedule C. he is responsible for the taxes to be paid. :P

Then where the problem lies is if his accountant, or preparer entered the amount that he paid to his sub-contractor on line 26 :'( , Wages, then the contractor would be the one responsible for the payroll tax. not the sub-contractor, and there is where the IRS would get him. :'(

Question #2
As far as drivers, No it does not make a difference as to who they are, only then you would have to split the amount they make on 2- 1099Misc. where if they were Husband & wife, you make out only 1- 1099Mis in the lead drivers name.

Question #3,
If you are incorporated you do not list the drivers as officers, they are not considered officers unless they are willing to take on and share all expenses, losses or profits from the corporation,
then Each would be a partner in the Corp. then you would have to carry a full payroll set-up, pay quarterly taxes, Federal, SS, Medicare, and Federal Unemployment tax, State withholding, and unemployment tax, You would have to supply Workmen Comp to them, Very expensive, your income tax return would consist of 1120, 1120 partner forms for each and what there income was, plus a regular 1040 long form. My answer is NOT TO LIST AS OFFICIERS.

QUESTION #4
YES, DEFINITELY, MAKE OUT A CONTRACT DESCRIBING EXACTLY WHAT YOU ARE PAYING THE SUB=CONTRACTOR,
A. Average is 60% of load on a cargo van or
straight truck Tractor/trailer 65
B. You would normally pay for deadhead miles over
100 miles for a load to be picked up on % only
C. Pay authorized deadhead miles over 100 miles to
a staging area for a possible load
D. Pay him Fuel Surcharge
E. Pay mileage, you pay fuel average is $.35 per
mile loaded only or 35% of load your choice

WHAT SUB-CONTRACTOR PAY FOR
A. If on 60% pays for fuel, tolls
B. Occupational Insurance you can split with him or
pay it yourself
C. Drug Screen for employment, & DOT physical
D. DAC Report/ or driving record, can be reimbursed
after 3 or 6 months with you or can make it
shorter.
E. Collision Insurance if he has an accident taken
out weekly depending on amount
F. Any permits, scale tickets, load locks, that is
needed to carry the load given to him.
G. His food, and snacks, and anything
that pertains to the truck for his/Her
convenience, unless you agree to putting it in.
H. If he has a minor breakdown, due to not
checking oil, filters, antifreeze, tires, air
pressure, Flat tire.

WHAT YOU PAY FOR
A. Truck payments
B. Vehicle Insurance, including Liability,
Collision, bobtail. Cargo Insurance should be
covered by the company you are contracted to
C. Major Repairs, Motor, Valves, plugs, wires,
wheels, heater, transmission, rear axle, etc.
D. Tires, Maintenance, oil, and regular upkeep.

Question #5
Yes, it definitely should be done without leasing the truck to the drivers, this basically is really the only option. i would not even think of the other

And the final question #6
Yes it can be done at any time and it is legal.

Frank:D :D :D :D