ACCT 308 - Concepts of Federal Income Tax Accounting Assignment- California State University, Fullerton.
Sam, a resident of California, has been a driver for Blue Delivery Service for the past six years. For this purpose, he leases a truck from Blue, and his compensation is based on a percentage of the income resulting from his pickup and delivery services. Blue allows its drivers to choose their 10-hour shifts and does not exercise any control on how these services are carried out (e.g., the route to be taken or the order in which parcels are delivered or picked up). Under Blue's operating agreement with its drivers, Blue can terminate the arrangement after 30 days' notice. In practice, however, Blue allows its truckers to quit immediately without giving advance notice. The agreement also identifies the drivers as independent contractors. Blue maintains no health or retirement plans for its drivers, and each year it reports their income by issuing Forms 1099-MISC (and not Forms W-2). Blue requires its drivers to maintain a commercial driver's license and be in good standing with the state highway law enforcement division.
An IRS agent contends that Sam is an independent contractor and, therefore, is subject to the self-employment tax. Sam disagrees and contends that he is an employee (i.e., not self-employed). Who is correct? Why?
Use the tax resources available to by the University on Titanium (CCH and/or RIA Checkpoint), also include a review of news groups and general reference materials, practitioner sites, primary sourcesof the tax law, chat rooms and discussion rooms and any other opportunities.
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.