Employer pays employee as contractor (no FICA). How will the IRS react?

I'm working for a sole proprietor. I don't meet any of the criteria for a contractor except that it's a short-term job (3 months), but the owner pays me as a contractor, using handwritten checks, with no FICA withholding, and presumably no FICA contribution. I've never seen a W-4. If he refuses to comply with the law, I know I could win in a dispute, but I don't want to lose the job or a reference in a legal confrontation over a relatively small amount of money. How does the the IRS handle these situations? Do they demand I pay self-employment tax regardless? Do I have to get a judgment from someone that the owner is at fault?



I don't want answers telling me to take the money under the table. I already know how to hide income. I don't know the procedures and that's what I'm trying to learn about.



Thanks,

HouyhnhnmEmployer pays employee as contractor (no FICA). How will the IRS react?
It doesn't matter how long you are going to work. If you are an employee, you should be treated like one. Send IRS an Form SS-8 http://www.irs.gov/pub/irs-pdf/fss8.pdf requesting a ruling on your status. Most rulings seem to go in favor of employee status.Employer pays employee as contractor (no FICA). How will the IRS react?
it doesn't matter how long you work as a sole proprietor/independent contractor

you will file a Sch C and SE with your 1040

if the man you perform services for pays you $600 or more he will issue you a 1099 and that goes directly to IRS(W-2's go to the Social Security Administration)

if you feel that you are really an employee you can get the SS8 from IRS and complete it, submit to the office noted(Austin I think) and IRS will determine your status

IRS will deal with your employer, you no longer have anything to say about it

if you already have been in the habit of hiding income you very likely have your ways to escape any taxes that can't be traced but 1099's are more and more being enforced and you can't escape forever
Wait until the job is over, then file form SS-8 with the IRS and if they agree with you, the employer will have to pay the employer's side of FICA, you'll just pay the employee half, and whatever other taxes you owe and would have paid anyway if they'd handled it right in the first place.



Your other alternative is to just pay the self employment tax.
If you file a Form SS-8, then the IRS will ask you and the employer some questions, decide that you are an employee, and not an independent contractor, let you pay only the income tax, and not the self-employment tax, and make the employer pay the FICA contributions.



If you do not file the Form SS-8, then you will be required to pay the self-employment tax.



There is no way to avoid paying the self-employment tax without potentially losing a reference.



However, there is no need to risk losing the job. Since the job is short-term anyway, if you do not want to risk losing the job, and do not want to pay self-employment tax, then do not file the Form SS-8 now, wait until after the job ends, and then file the Form SS-8 after the job ends.



When in your situation, I have taken a somewhat different approach: I set up a ';SIMPLE'; retirement plan for my ';business'; of doing short-term contractor work, and contributed most of my earnings. Because of the deduction for contributions to a self-employed person's retirement plan, I avoided most of the income tax, and paid only the self-employment tax on the money that I contributed.



When paid as a contractor, I have always paid the self-employment tax and never disputed it or filed a Form SS-8, even when I felt that I was really an employee. My personal opinion (which the IRS does not share) is that, by signing a Form W-9 and a contract that stated I would work as a contractor, I agreed to be paid as a contractor in return for a higher hourly rate than would have otherwise been available, and that I am therefore ethically obligated to pay the self-employment tax, and would be ethically obligated to return the difference in pay if I was reclassified as an employee. However, if there had not been an agreement at the start as to whether I would be paid as an employee or as an independent contractor, then this argument would not apply.