Paultry <afn02552at[at]afn.org> wrote:
- quote -

All of which assumes in the fee paid, that a portion of the fee is known
to be equivalent to wages. Even if the entire amount of wages aren't
subject to levy, the entire amount of the fee isn't wages.

That's the whole point of being self employed: One pages wages to one's
self. Just because IRS isn't treating the taxpayer as the employer for
the purpose of the levy doesn't mean that the payer is free to do so.
The payer isn't an employer paying wages.

IRS is in the wrong here but it's a traditional collection tactic: Annoy
enough people in the target's life so that one of them will convince the
target to send money merely to end the hassle.

What payer is going to fight IRS? But if he sends the entire amount to
IRS, he's clearly in breach of contract.

I'd love to know what a lawyer well versed in contract law would recommend.

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

Adam H. Kerman wrote:

- quote -

I never said the entire fee should be sent. Several posts
mentioned amounts exempt from wage levy, specifically:

"(Internal Revenue Manual) 5.11.5.4 (06-17-2008)

Exempt Amount

1. Part of the individual taxpayer's wages, salary,
(including fees, bonuses, commissions and similar items) and
other income, as well as retirement and benefit income, is
exempt from levy.

2. The weekly exempt amount is:

1. The total of the taxpayer's standard deduction and
the amount deductible for exemptions on an income tax return
for the year the levy is served.

2. Then, this total is divided by 52.

3. Income that is not paid weekly is prorated, so the same
amount is exempt.

4. In addition, the amount the taxpayer needs to pay court
ordered child support is exempt."


The levy source has no legal standing to negotiate the terms
of the levy. His defense in a suit brought by his worker
lies in IRC 6332(e).

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

Paultry <afn02552at[at]afn.org> wrote:
- quote -

I'm not recommending not complying with the levy, but your position that
sending the entire fee to IRS as if it were wages avoids trouble and
cost of litigation isn't reasonable either. If the taxpayer feels he is
in the right and will get the money back sooner from his customer than
IRS, he may sue for breach of contract.

The whole fee cannot be wages. Therefore, if levied, the whole fee
should not be sent to IRS. The question is how much to send.

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

Adam H. Kerman wrote:
- quote -

The OP's original question was whether a wage levy extended
to payments to an independent contractor. Several here
provided opinions and statute interpretations that it does
not. I provided personal observation, based on treasury reg
and backed by case law, that the IRS will pursue levy
collection of such payments. No one here has provided a
ruling to the contrary. It's up to the OP to consider the
information provided, to weigh theory against reality, and
decide how to proceed. He can comply with the levy and risk
upsetting his worker, or he can refuse to comply and risk
legal action by the IRS. The dearth of case law on this
subject may be attributable to the willingness of most
payors to accept the IRS position regarding the levy, their
concern that scrutiny of their business practice may raise
employee/IC questions, or their reluctance to incur the
trouble and costs of litigation.

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

Paultry <afn02552at[at]afn.org> wrote:
- quote -

You're missing something obvious that is specific to life insurance
salesmen. By statute, there are many circumstances in which their
commissions are treated as wages and not treated as self-employment
income for Social Security tax purposes, so at least these taxes should be
withheld. That's probably what makes life insurance commissions resemble
wages for the purpose of the ruling and this ruling probably shouldn't
apply to any other type of nonemployee compensation.

For the OP, maybe there is a question of employee versus contractor
treatment. The fact that the service provides translators at a set
hourly rate and the translator is not free to negotiate his rate makes
me wonder. But that's not the question asked.

Part of the fee includes the taxpayer's self-employment taxes (a self-
employed person's equivalent to the employer's portion) and travel
expenses. The payer won't know what remains for fees. So how can the
entire amount be treated as if it were wages for the purpose of applying
the levy?

There's probably a better ruling out there.

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

Adam H. Kerman wrote:

- quote -

The decision has nothing to do with, and doesn't seek to set
a precedent for, anything other than "compensation for
services paid in the form of fees, commissions, bonuses, and
similar items." If it looks, walks, and quacks like salary
and wages...

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

"Adam H. Kerman" wrote:

- quote -

LOL. Yes, he was there.

--
Phil Marti
Clarksburg, MD

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

Phil Marti <prm20871[at]verizon.net> wrote:
- quote -

Well, don't keep us in suspense: Was he?

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

Paultry <afn02552at[at]afn.org> wrote:
- quote -

The taxpayer sold insurance on behalf of a life insurance company. So an
interpretation of that commissions may be levied in the same manner as
wages shouldn't set a precedent for those who receive miscellaneous
compensation that's not for commissions. When a tradesman acts as an
independent contractor, he bills his customer for material, wages of
other laborers, and his own fee. How would the customer know?

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

Grip wrote:
- quote -


--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On Sep 5, 12:36*pm, Paultry <afn0255...[at]afn.org> wrote:
- quote -

Well, it looks like I've raised an interesting question...

Since it's come up I can fill in details about the nature of the
payments to the IC. I'm not sure what's relevant, but here goes...

We're a broker between businesses and language interpreters.
Basically we get calls from hospitals, colleges, lawyers, and
corporations who need someone to translate for them on site. We have
a list of interpreters we call and offer the work to. The
interpreters do the work on site, without direct supervision on our
part and are under no obligation to accept work we have to offer.

We pay an hourly rate, no expenses. We pay bi-weekly, using a payroll
service (ADP) and the IC in question may have anywhere from $0 to
$1000 in a given two-week period.

If there's specific info relevant to this question, I can relate it.

Thanks again,

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

"Paultry" wrote:

- quote -

Mine too. It was even more effective back in the days when the levy yielded
the entire paycheck, albeit one-time only.

It's a shame you never got to see it in action in a community property
setting, where it's possible to levy on Wife # 2's paycheck for hubby and
Wife # 1's joint liability. I remember one woman who called on a Friday to
ask what time the office would be open on Monday. "He'll be waiting for
you, if he's still alive."

--
Phil Marti
Clarksburg, MD

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

Phil Marti wrote:
- quote -

You're welcome. No, I never worked in the Fourth Circuit, I
spent my entire career in Florida, retired in 2004. I just
happened to Google my way to the Fourth Circuit case.

In my experience, the purpose and result of most wage levies
was to motivate an uncooperative taxpayer to meet and deal
to resolve the issue, thus taking the levy source out of the
mix. I'd advise the OP to encourage his worker to do the
same.

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

"D. Stussy" wrote:

- quote -

The problem with this approach is that it won't protect the payor from IRS
in a failure to honor levy action, and it won't protect the payor from the
worker in a "where's my pay?" action.

--
Phil Marti
Clarksburg, MD

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

"Paultry" wrote:

- quote -

http://bulk.resource.org/courts.gov/...0.94-1756.html

Thanks for the cite. It certainly confirms what you're saying. Looks like
another case of the left hand (National Office) not knowing what the right
hand (the field) is up to.

I fully expected to find something directly mentioning IC's when I went
hunting in the IRM and didn't find anything. I'm curious. Did/do you work
in the Fourth Circuit? I ask because I recall several instances in which
procedures differed by Circuit.

For OP, I join Paultry in saying you should treat the levy as attaching to
future payments. You're protected from any claims by the worker by Code
section 6332(e). The worker can always file a wrongful levy claim against
the US if he thinks you acted improperly.

--
Phil Marti
Clarksburg, MD

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

"Grip" <grip[at]cybermesa.com> wrote in message
news:b642aa2e-d56b-4a12-9f9f-000660978bd5[at]q5g2000prf.googlegroups.com...
- quote -

I am not a collection expert. However, I say this: Regardless of his
relationship to you, you probably need to withhold something.

Employee: The levy applies. Follow it.

IC: The existence of the levy implies a tax problem - and therefore it may
be a good idea to withhold as if "backup withholding" (like when a bogus or
no TIN is used) were the appropriate avenue. Granted that this will post
the withheld funds to the current year, not the back year, but the point is
to do something to cover your own ass. Also note: If the IRS has treated
you as an employer, perhaps there's an employee reclassification case out
there, so watch out for a 100% employment tax penalty unless you have a
satisfactory "section 530 safe harbor."

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

Harlan Lunsford <hlunsford[at]bellsouth.net> wrote:

- quote -

The distinction is whether or not a levy applies only to what money is
owed on the date of the levy, but also moneys that will be owed to him
in the future. With an employee the statute states that the employer
must keep the levy open and apply future payments to the IRS lien
without a further levy notice.

The statutes appears to say that rule does not apply to independent
contractors. But the IRS has taken the position that it does.

Does that make it more clear?

Stu

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

Paultry wrote:
- quote -


Take a case of a contractor who treats his workers as independent
contractors. (And no, let's not argue the correctness of that! grin)

Are you saying that if the service uses a form 668-A form, all moneys
(like I thought, remember?) due the subcontractor are available for
levy? And if they use the form 668-W that the levy is structured just
like salaries/wages, i.e. that some allowance for minimum amounts,
standard amount plus exemptions, can be subtraced and paid to
subcontractor before sending the balance to IRS?

IMTWK.

ChEAr$,
Harlan

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

Harlan Lunsford wrote:
- quote -


--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

Phil Marti wrote:
- quote -


For the record, it's not my interpretation, but one
regularly asserted by the Service, with the backing of
District Counsel, during my many years in field collection.
I don't have personal knowledge of any case law on this; I
can't recall a payer, once confronted with the reg, who
wanted to contest the issue. A little research today
disclosed this from the US Court of Appeals, Fourth Circuit:

http://bulk.resource.org/courts.gov/...0.94-1756.html

"(Payer) argues that because (taxpayer) was not its
employee, but an independent contractor, any obligation owed
to (taxpayer) cannot be considered "salary or wages" under
the continuing levy provision. Section 6331 does not contain
a definition for either the term "salary" or the term
"wages." According to the regulations promulgated by the
Secretary of the Treasury, however, the terms include
"compensation for services paid in the form of fees,
commissions, bonuses, and similar items." Treas.Reg. Sec.
301.6331-2(c) (1994) (emphasis added). It is upon this
regulation that the IRS relies.

The IRS contends that its interpretation of 26 U.S.C. Sec.
6331(e) to include the commissions of independent
contractors is reasonable. We agree."

The OP hasn't disclosed the nature of the payments to his
worker, so we don't know if they represent any of the items
of compensation addressed by the reg. I agree with your
advice to OP to talk to his accountant, and, further, to a
tax attorney, before choosing not to honor the levy. But it
appears the Service and some courts don't agree with your
position that the continuous nature of the levy does not
extend to independent contractors.

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >