Form 8919: 1099 Squealers

published December, 2007

There’s a new form coming out of the IRS for 2007, Form 8919 that can be filed with an individual’s 1040. The form allows workers who have been determined to be employees who have NOT been treated as such by their employers to report their income and pay their share of FICA instead of self-employment tax (W-2 as opposed to independent contractors on 1099).

So what’s the big deal? If your 1099 contractor decides they are an employee (they may file their OWN Form SS-8 form and involve the IRS in a determination) and they don’t want to pay the 15% self-employment tax they can pay HALF, which would have come out of their paychecks anyway if they’d been employees on W-2’s. And it’s less expensive than incorporating!

Now where do you suppose the other half will come from?

Might the other half come from YOU? And if you should have been paying this all along, are you now late, implying penalties and interest?

This is part of a new IRS program called QETP or Questionable Employment Tax Program where they plan to start sharing info more actively with state agencies, including tax returns, to try to catch workers classified as 1099 independent contractors who should be W-2 employees.

This makes it an even better idea to come to one of my Basic Payroll classes (see below), plus we do a pretty good show even if we are talking about tax for five hours. If you have control over not only results, but also detail and means for a worker, you probably have an employee. There are 20 tests to determine 1099 vs.W-2 contained in Revenue Ruling 87-41 found at

Be sure to create 1099s for all your independent contractors, it’s a factor that MAY help with relief from an adverse determination but just filing the 1099 doesn’t relieve you from the requirements if you have misclassified workers as 1099 instead of W-2.