"Ivan Erwin" <ierwin[at]myexcel.com> wrote:
- quote -

No reason - it happens all the time. The issue is whether
John can work for Company A as an employee, and do
additional work for THE SAME COMPANY as an independent
contractor.

Stu

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"Lanny K Williams CPA" <lanny[at]expatriatetax.net> wrote:
- quote -

My reasoning:
John Doe works for Company A as a "normal" employee and on
his own time also provides services for Company B and meets
all of the requirements as an independent contractor for
Company B.

Why can't John Doe work for Company A as a "normal" employee
and also do additional work as an independent contractor for
Company A that is outside the scope of his "normal"
employment.

Obviously, Company A could use the services of someone else
as an independent contractor. Why couldn't they use the
services of someone who just happens to also be an employee?
Particularly, when as stated that employee also market
their services to other companies?

Ivan Erwin

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- quote -

I don't think forming an entity affects the employee vs.
contractor definition. Contractors who have incorporated
are just as likely to get reclassified as employees as
ones who have not.

To meet the definition, you have the "twenty questions". None of
the twenty questions state that "is also an employee" is a factor
in determining someone's a contractor, or "is also a contractor"
is a factor in determining someone's an employee.

Steve

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MagicianRM wrote:

- quote -

I don't know if there is a specific reg or code section on this issue,
or even if it is in the IRS manual. However, I seem to recall that,
several years ago, the Service took the position that it was not
possible for a given individual to be both an employee and an
independent contractor. Of course, that allowed them to assess payroll
taxes on ALL compensation.

Using things such as separate ID numbers or SMLLCs have been tried.
These make it harder for IRS to discover the dual status but they would
likely recharacterize such payments on the grounds that they lacked
business purpose.

Lanny K. Williams, CPA
Nawarat, Williams & Co., Ltd.
Income Tax Services for Expatriate Americans

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- quote -

I am not an expert but since no one else has replied as yet,
I'll take a stab at an answer.

It seems that the best solution would be for such contractors
to create a separate identity to use for their contract work.
This could be an LLC or something or perhaps as simple as
getting an EIN. You would use their SS# for employee
purposes and their EIN for contract work.

Ivan

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I need some advice. Can someone work for me both as an
employee and independent contractor?

I have a situation in which I use staff who certainly
qualify as employees in that I direct the way and means they
do their work. But some of them also do independent work,
for which they also market their services to other
companies, in which we pay for an end result regardless of
the time or means required to achieve it.

Is it "legal" to pay these employees for their hourly work
but also classify them as contractors for the independent
work?

Thanks so much for your thoughts!

Richard

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