PIAA & Insurance

[BillyMac]

Threads like this always have me question whether, or not, basketball officials are truly independent contractors.

I always hear the term "independent contractor" tossed about willy-nilly here on the Forum, or at my local board meetings.

Perhaps the answer varies from situation to situation and from one locality to another locality.

Perhaps some of us are truly independent contractors, while others are closer to employees.

Or perhaps, it's as LRZ noted earlier, "neither that of employment nor independent contractor, but a hybrid".

Maybe somebody on the Forum with a legal background in labor relations, or a background in tax preparation, can straighten this out?

I've done some research online (mostly regarding taxes and officiating travel mileage deductions) about the difference between independent contractors, and employees, and it's an unbelievably complex issue, requiring one to be an attorney, or a certified public accountant, to get through the paperwork.

I always check off "Individual/Sole Proprietor Or Single-Member LLC" on W-9 forms, but don't really know what that means, or if it has anything to do with independent contractor status or employee status.

Perhaps tax status has absolutely nothing do with independent contractor status or employee status?

[SC Official]

Assigners (including associations that assign) are what throw the IC/EE conundrum into a loop.

If assigners merely acted as agents for officials, helping them solicit business, it would not be such an issue. But assigners (even if they act like they don't) work for the schools, not the officials, so they function much more as bosses than agents due to the nature of their jobs. Many, unfortunately, act more as dictators, thus you get these ridiculous "non-compete agreements" and other restrictions on officials that clearly violate IC laws.

Schools directly hiring officials and the lack of the middleman is the most obvious scenario where we are clearly ICs. Not saying that this would be a good thing by any means (though there are areas that operate this way); merely pointing out the argument.

[BillyMac]

Originally Posted by SC Official

But assigners work for the schools, not the officials ...

That's news to me.

If that's true, why is my local board paying our assignment commissioner $31,920.00 (from our hard earned dues) to assign high school and middle school games in 2019-20?

Are you saying that he's also getting paid by the schools?

I don't think so.

[Rich]

Originally Posted by BillyMac

That's news to me.



If that's true, why is my local board paying our assignment commissioner $31,920.00 (from our hard earned dues) to assign high school and middle school games in 2019-20?



Are you saying that he's also getting paid by the schools?



I don't think so.

I work for my schools and assign conference games for 24 schools. The schools pay for assigning.

Not everything is as in your little corner of.......you know.


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[BillyMac]

Originally Posted by Rich

I work for my schools and assign conference games for 24 schools. The schools pay for assigning. Not everything is as in your little corner of.......you know.

Of course I know, when in Rome (or SC (South Carolina?)) ...

I, like Rich, was just pointing out the differences.

Wow. Seven dots, that's a lot of dots, just like our Tweeter In Chief (with apologies to Stephen Colbert). Did the post really need seven dots? Isn't that wasting dots, you know, dots don't grow on trees ?

[Raymond]

Originally Posted by BillyMac

That's news to me.



If that's true, why is my local board paying our assignment commissioner $31,920.00 (from our hard earned dues) to assign high school and middle school games in 2019-20?



Are you saying that he's also getting paid by the schools?



I don't think so.

In Virginia the commissioners get paid by the school(s), usually a lump sum up front based on the number of games to be assign or a negotiated fee, and also get paid by the officials with an 8-10% commissioner's fee out of our game checks.

I got into a debate with our treasurer this past season because our 1099's are reflecting the full game fees, not the game fees minus 8 to 10%. I told him the 8-10% commissioner's fee needs to reflect as income for the commissioner and whoever else gets paid from those fees. Officials at no time see that 8-10% portion of our game check, so it should not reflect as our income. We get paid by the association, so that 8-10% is only touching the association's hands.

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[Player989random]

Originally Posted by SC Official

Sure, if you say so.

Again, a lot of people with straightforward tax situations see the value in having a CPA sign their 1040. Others just hate doing their taxes and are willing to pay someone to take it off their hands. If you're seeking tax advice from a CPA chances are preparing your return is over your head even if it's straightforward. There are a lot of clients that probably use EAs for "easy" returns, as well.

I'd use a CPA over H&R Block anyday. No offense to you, to each his own.

No offense taken. That mentality is how I make money.

Originally Posted by Raymond

In Virginia the commissioners get paid by the school(s), usually a lump sum up front based on the number of games to be assign or a negotiated fee, and also get paid by the officials with an 8-10% commissioner's fee out of our game checks.

I got into a debate with our treasurer this past season because our 1099's are reflecting the full game fees, not the game fees minus 8 to 10%. I told him the 8-10% commissioner's fee needs to reflect as income for the commissioner and whoever else gets paid from those fees. Officials at no time see that 8-10% portion of our game check, so it should not reflect as our income. We get paid by the association, so that 8-10% is only touching the association's hands.

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It's the same in Western VA and my basketball association as well. I heard that the local rival one pays it's officials the actual amount that is reflected in Arbiter. For soccer and baseball it's different; the amount you see on Arbiter is what you get paid.

The only other one that does it via 11% fee out of your check is the football group. I asked them about that, and next thing you know, I got kicked out.

[Camron Rust]

Originally Posted by Raymond

I got into a debate with our treasurer this past season because our 1099's are reflecting the full game fees, not the game fees minus 8 to 10%. I told him the 8-10% commissioner's fee needs to reflect as income for the commissioner and whoever else gets paid from those fees. Officials at no time see that 8-10% portion of our game check, so it should not reflect as our income. We get paid by the association, so that 8-10% is only touching the association's hands.

Your treasurer was right. You get 1099'd on the gross amount and the assigning fee is an expense you should claim on your schedule C, even if you never actually see the cash.

I previously thought the same as you until I researched it.

These may not be conclusive, but may shed some light on the topic:

• https://ttlc.intuit.com/community/ta...1099/00/356157
  
• https://www.eitcoutreach.org/ridesha...-count-income/

The Commissioner's 1099 should reflect the amount received from those assigning fees.

[BillyMac]

Originally Posted by SC Official

... these ridiculous "non-compete agreements" and other restrictions on officials that clearly violate IC laws.

Several years ago our Connecticut State IAABO Board told that we couldn't work AAU games unless the AAU tournament administrators negotiated payment with our Connecticut State IAABO Board and that we could only work with other IAABO certified officials in such games.

That memorandum lasted just a few weeks and then disappeared (as if it never existed, with no explanation) like dust in the wind after a few guys made a few phone calls to the Connecticut State Department of Labor.

[Player989random]

Fun fact: There are three types of individuals who can represent you before the IRS: Attorneys, CPAs, and Enrolled Agents. Hell is an Enrolled Agent? Well, a CPA has 4 tests and one of them touches on taxes. EA's take 3 tests and 2 of them are on only taxes (3rd is IRS representative regulations). Main difference? EA's are cheaper than the first two.

Anyway, I got one test left for the EA designation. So I'm not an expert, but I've spent the past 2 months reading the tax code 3-5 hours a day.

Originally Posted by BillyMac

I always check off "Individual/Sole Proprietor Or Single-Member LLC" on W-9 forms, but don't really know what that means, or if it has anything to do with independent contractor status or employee status.

Perhaps tax status has absolutely nothing do with independent contractor status or employee status?

Tax status & employee status are linked. To make it simple: That 1099 you get goes to your Schedule C, and you get double tapped on it; first time as "business income" and then again as "personal income".

LLC & S-Corps get to avoid that, so those who are members/shareholders get taxed only once for that income. It's why on a lot of camp forms you'll see pay to "Zebra Refs, LLC" instead of "Bobby Joe". Employees also get to avoid that, as the employer pays half their share of FICA taxes. As an employee you also only pay "personal income" tax on that, not the additional "business income".

Now here's the fun part: An individual is usually an independent contractor if the employer, the person for whom the individual performs the services, has the right to control or direct only the result of the work and not the means and methods of accomplishing the result.

What really matters is the right to control how you work, not the results. What is the result of our work? A fair game? Equity? Ref every call properly? But tell me, we are told how to do our jobs are we not?

How many of us are getting fired if we show up and walk up and down the court? How many of us are getting phone calls if we use unapproved mechanics? Didn't get to the reporting area before you reported the call? Didn't show up 90 minutes before game time? Make the wrong call? You weigh too much?

The schools might not employ us, but the assignors sure do. In VA associations get contracts, not refs. Then the association "works" the game. How you can be an IC yet work for an association that tells you how to ref, where to work, and what time you work flies in the face of reason.

Why not make us employees? That's easy: Insurance, taxes, per diem, pay roll, benefits. It's a headache that no one wants to deal with.

[BillyMac]

Originally Posted by Player989random

Tax status & employee status are linked ...

Thanks Player989random. It's nice to have an expert like you on the Forum.

Originally Posted by Player989random

... employer pays half their share of FICA taxes.

I pay Social Security (FICA) tax (the full 15.3%) on my officiating income in April of every year.

Doesn't everybody on the Forum do this?

If I don't pay this won't I have to share a prison cell with the partners of my accounting firm, Dewey, Cheatem & Howe?

[SC Official]

Originally Posted by Player989random

Fun fact: There are three types of individuals who can represent you before the IRS: Attorneys, CPAs, and Enrolled Agents. Hell is an Enrolled Agent? Well, a CPA has 4 tests and one of them touches on taxes. EA's take 3 tests and 2 of them are on only taxes (3rd is IRS representative regulations). Main difference? EA's are cheaper than the first two.

A CPA license is not a "tax license" like many people think. They have to know much more than taxes because their certification covers way more.

I know some external auditors. They get annoyed when people ask them about taxes.

[Player989random]

Originally Posted by BillyMac

Thanks Player989random. It's nice to have an expert like you on the Forum.

It's good to feel appreciated.

Originally Posted by BillyMac

I pay Social Security (FICA) tax (the full 15.3%) on my officiating income in April of every year.

Doesn't everybody on the Forum do this?

If I don't pay this won't I have to share a prison cell with the partners of my accounting firm, Dewey, Cheatem & Howe?

Do you get paid directly to yourself or via "Mac Daddy's Rules & Reffing LLC"? You can't avoid truly avoid FICA, but you can decrease how much you pay, legally. Make an S-Corp, pay a "reasonable salary" and take the rest as a dividend. Dividends don't pay FICA.

Originally Posted by SC Official

A CPA license is not a "tax license" like many people think. They have to know much more than taxes because their certification covers way more.

I know some external auditors. They get annoyed when people ask them about taxes.

Yup, CPAs are a lot more than tax preps. I've also worked with CPA's who use this ignorance so people will pay them $150/hour to plug information into TurboTax. I highly recommend everyone here talks to a tax professional for tax planning, not filing. Unless you straight-up didn't file.

[BillyMac]

Originally Posted by Player989random

Do you get paid directly to yourself or via "Mac Daddy's Rules & Reffing LLC"? You can't avoid truly avoid FICA, but you can decrease how much you pay, legally. Make an S-Corp, pay a "reasonable salary" and take the rest as a dividend. Dividends don't pay FICA.

Thanks for the free advice (I assume that I won't get a bill) but it seems like a lot of work for only a little payoff. By the time I declare my business expenses for dues, fees, fines, insurance, uniforms, shoes, equipment, laundry, and travel mileage, officiating seems more like a hobby rather than a business.

Now that I'm retired from my day job (fans have been telling me not to do that for years), I'm legally declaring my round trip mileage for all my assignments. I couldn't do this when I was traveling to assignments from my day job that I commuted to every day, right?

Of course, I did know a "guy" at work who told our boss that in case the IRS called, he should tell them that I, I mean he, would drive home before all of my, I mean his, assignments to "get my, I mean his, bag" even if the assignment was in the same town where I, I mean he, worked. Wink. Wink. Nod. Nod.

[SC Official]

Originally Posted by Player989random

Yup, CPAs are a lot more than tax preps. I've also worked with CPA's who use this ignorance so people will pay them $150/hour to plug information into TurboTax. I highly recommend everyone here talks to a tax professional for tax planning, not filing. Unless you straight-up didn't file.

I highly doubt CPA firms are using TurboTax.

As long as tax law is complicated, the IRS is intimidating, and clients are willing to pay to have a CPA sign their 1040, I don't really see the issue.

I love my CPA. For tax guidance and preparing my returns. Well worth the fee to me.