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Originally Posted by JRutledge
Kevin, this is simply not true. Now any organization that is paying out money will have to report those expenses in their tax reports, but the independent contractor does not have to fill out a W-9. I have been sent forms from schools but I do not fill them out. I file my own information for my tax purposes.
This is not true in my state. We only have to file income that we receive. We do not have to declare being self-employed, because people might have other jobs or other income. Independent contractor status is a state law for the most part. So every state might have different requirements and different laws that regulate this. Our State Association (The IHSA) cannot even set up an evaluator program for playoff purposes unless they want to violate independent contractor law. This would make all officials employees of the IHSA and things like benefits and insurance would be the responsibility of the IHSA. This is why I stated this issue is not a universal issue across the board. What might be a law in one state might not apply at all in another state. Not all have the same laws about independent contractors and not all states have the same tax laws. Texas has no income tax, so how you are taxed and who taxes you will vary from one place to another.
Also none of the information you are talking about even applies to where I live. Associations are there for training, they are not there to pay officials and assign officials to work games. The money is taken in to give directly back to the officials that pay dues. Associations do not have to file taxes as cooperation and often have "non for profit" status" which is a state law.
Peace
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Some associations are non profit. Some sports associations are for profit, That is not state law but federal tax law. Not for profit status may be allowed in state law but the ultimate decision for monies in the association is the IRS.
The organization has to be approved by the IRS not be non profit. Unicorporated associations/clubs have a threshold before income is taxable.
If the association is big enough and goes over the threshold limit, the association gets stuck paying taxes...
Some associations do assign officials and pay them... Some associations are "businesses" taht's why I pointed out some of these issues. I was speaking in general terms. For tax purposes the independent contractor is the same. State laws vary on the use of the term independent contractor for UI purposes or for WC purposes
Better go back and read the IRS rules. The law requires us to provide our SSN to those we contract with; if we refuse the payor can impose the 28 percent backup witholding. (W-9's are the way most require us to provide the SSN)
Officiating is self employment income. That is consistent across the board.
What I stated was that in some states the law requires the individual independent contractor to have workers comp or have a certificate exempting them from WC. This obviously does not apply to every state but many have the rule...Most probably have not looked at sports officials but some have...
You have to look at who the person is contracting with, is it the association ?(association is paying the money to sub contractor) or is it some other organization, school board etc. The contracting agency can or in some states is required proof of workers comp before they hire an independent contractor. Like I said that occurs in some states not all. Even in states it is not enforced across the board by governemntal agenices who read the same statute.
Dan is absolutley right, what I was pointing out is the complexities of the law when it comes to running something like this. Paying an attorney who undesratnds business law in the state is worth the time and grief, and allows the "association" to be set up correctly and stay away from trouble with the law..