Ok OVM, maybe you're wrong, maybe I'm wrong.. but I'm reading it that the driver is getting the 65% and paying for the fuel.
It's always best to get your facts straight, Rangel, before you go calling the government in.
Pro pays $1000 total to truck.
Split is 65/35 to driver who pays fuel, therefore driver gets $650 and owner gets $350.
Owner releases a portion, say 40% (for argument's sake), of driver's share of the gross, so $650x40%=$260, to a flying j card, so the driver can pay for fuel on this trip.
Driver purchases fuel with the $260 advance, and keeps his receipts.
Two weeks later, driver gets settlement, and it shows his $650 share of the $1000 gross. Note that this does not mean the driver actually received $650 in his hand.
The advance he got of $260, to pay for the fuel he bought on the flying j card, is deducted from his $650 share, to pay the flying j credit card bill (or however you'd like to word it),
therefore, driver's gross revenue on this settlement is $650, and his net on this settlement is $390. Driver only actually sees $390 of it, because the rest was spent before he actually got it.
For ease of discussion, this happens for 10 weeks, the same way, one load per week, same run, same pay, same fuel advances and paybacks.
Driver is issued his 1099 for 2008. It shows 10 weeks of receiving $650 gross, so $6500. What???? But the driver only actually saw $3900 of it!!!!!!!
His 1099 doesn't care what monies were advanced and for what, it only cares about the gross revenue the driver earned.
Driver prepares his tax forms, shows the $6500 gross revenue, and then lists his expenses, which include $260x10wks of fuel receipts, so $2600. He had no other expenses (for discussion purposes only), therefore his net is $3900, and he pays taxes on this amount, if any.
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If writer were to have it his way (and eat it too), he would get the $260 advance for fuel. Then he'd get his settlement showing he earned $650, but only receiving $390 because the $260 advance was paid back. Then at 1099 time, he would get a 1099 for $3900 because he paid back his advances. The discrepancy comes in the writer's mind because, in fact, he is being issued his $650 PLUS the $260 advance, and then the $260 is being paid back... the gross revenue is still $650, and not $650 less $260.