Dave wrote:

- quote -

I think your friend was not so much an "outside contractor"
as "off the books." But he got the money, so he has to
report it, whether he got a 1099 or not.

I'm not sure about the antecedents of all the pronouns in
your last sentence. If YOU have an employee who works in
YOUR store, YOU are not an independent contractor; YOU are
an employer <G> . The person who works in your store is not
an independent contractor either. That person is almost
certainly your employee (and gets a W-2, not a 1099).

Katie in San Diego

The foregoing is intended for educational purposes only and
does not constitute legal or professional advice.

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The IRS should have some publications on their website,
www.irs.gov, that covers who is, and who is not, an
independent contractor or an employee. While you have some
freedom to choose what you will be, there are certain
guidelines that must be followed - you cannot simply call a
person an outside contractor and have that be the last word
on the matter.

It will depend on what your friend did in this person's
store, but if your friend had to be there at certain times
and had to follow orders and do the tasks that the boss told
him to do and had to do them in the way the boss told him to
do, then he was probably an employee, not an independent
contractor.

Depending on your friend's relationship with his employer,
you should consider talking with him to straighten matters
out. Otherwise, you should consider filing complaints with
the IRS and the state employment commission, and filling out
a substitute W-2 form for the IRS (check on their website).
Your friend's employer may have improperly treated him for
tax purposes, both income and social security, and may not
have paid him enough per hour (which is why you should
consider talking to the state employment commission).

This, of course, is just my response to the short facts you
have presented; it is entirely possible that the complete
facts would lead to different conclusions. If you feel the
need of further advice, you should contact a lawyer referral
service in your area and see if you can get an inexpensive
meeting for half an hour with a local labor law attorney.

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Y`ou always are supposed to report income no matter
whether you receive a W2, 1099 or no form.
And pay the employment taxes (social security, any state
comp, etc).
T
he employer may be liable for not filing a 1099 especially
if was a continuing business. The IRS is unlikely to detect
such intermittant income unless they conduct the rare
personal cash flow audit. Getting income on the books helps
qualify for government programs such as disability,
supplemental income and unemployment, and social security
pension.

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My friends took a job last year, where he only made Three
thousand dollars for the whole year, and the gentleman he
worked for told him he would be responsible for his own
taxes, and he had hired him as an out side contractor. We
are not sure the man he worked for ever sent in a 1099 form,
and also, we were wondering, can you have an exployee who
works in your store, and still be considered an independent
contractor?

Thanks, Paul

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