For all the IRS websites that have been posted, here it is plain & simple, in
English, not legalese, from the CA Franchise Tax Board & the CA Labor Board,
as this is a state issue too.
If you answer "YES" to anyone of the following questions, you are an
EMPLOYEE and NOT an 'independent contractor':
1. Does someone else set your work hours (call time)?
2. Do you work outside of your home (report to location, stage, prod. office)?
3. Do you report to a supervisor (Department Head, Gang Boss, Producer)?
This was told to me by a CALIFORNIA FRANCHISE TAX BOARD
investigator, after they subpoenaed me in a case they (and the Labor Board)
brought against an out-of-state commercial production company who had
repeatedly come to CA & shot jobs & paid the entire crew as 1099,
including making them sign a waiver on their time card that stated that
the crew member "was an independent contractor".
Superior Court found against the company & they were heavily fined for back
taxes, penalties and late fees... and they stated that the 'waiver' was
irrelevant, because a "yes" answer to any of the above questions was all
they needed to consider an crew member an employee, regardless of
what the employer or the employee believed.
Regardless of what some CPA, lawyer, adviser tells you, if you work as
a freelancer in film production as a crew member (other than a DP or
the director) you are not legally to be paid as 1099.
Jibralta Merrill
production manager/supervisor
818 980-2091
The official rules for determining Independent Contractor status can
be found here:
http://www.irs.gov/pub/irs- pdf/p1779. pdf
http://www.irs.gov/pub/irs- pdf/p15a. pdf
be found here:
http://www.irs.
http://www.irs.
And here's a take from DGA First AD/UPM Jonathan Zimmerman . . .
The Federal and State Independent Contractor rules are slightly
different, and the State of California seems to be more aggressive in
enforcing the state rules. Generally, anyone who works on-production is
by definition an employee -- even if you have your own corporation or
business.
A DP contracted to supply plates or stock footage using personal
equipment and facilities, or a VFX artist contracted to perform
animations at home on personal equipment, MIGHT be an independent
contractor, but only if they work without supervision, set the times and
hours of work performed, and meet other criteria.
If you work as an independent contractor and the State of California
disagrees with you, you are potentially liable for your own (worker's)
contributions AND the employer's contributions that should have been
made on your behalf.
It's not easy to determine exactly who can qualify for independent
contractor status. This might help:
http://www.dir.ca.gov/dlse/ FAQ_IndependentC ontractor. htm
<http://www.dir.ca.gov/dlse/ FAQ_IndependentC ontractor. htm >
But if the State thinks you're an employee, and your employer is forcing
independent contractor status on you to make their lives easier, be
advised that your life might become a whole lot more complicated and
expensive if the State of California comes after you. And once the
State gets you, they automatically turn you over to the Feds. It's not
pretty, even if you actually qualify as an independent contractor under
the Federal rules.
Remember, in the Administrative Code you're guilty until you prove
yourself innocent.
different, and the State of California seems to be more aggressive in
enforcing the state rules. Generally, anyone who works on-production is
by definition an employee -- even if you have your own corporation or
business.
A DP contracted to supply plates or stock footage using personal
equipment and facilities, or a VFX artist contracted to perform
animations at home on personal equipment, MIGHT be an independent
contractor, but only if they work without supervision, set the times and
hours of work performed, and meet other criteria.
If you work as an independent contractor and the State of California
disagrees with you, you are potentially liable for your own (worker's)
contributions AND the employer's contributions that should have been
made on your behalf.
It's not easy to determine exactly who can qualify for independent
contractor status. This might help:
http://www.dir.
<http://www.dir.
But if the State thinks you're an employee, and your employer is forcing
independent contractor status on you to make their lives easier, be
advised that your life might become a whole lot more complicated and
expensive if the State of California comes after you. And once the
State gets you, they automatically turn you over to the Feds. It's not
pretty, even if you actually qualify as an independent contractor under
the Federal rules.
Remember, in the Administrative Code you're guilty until you prove
yourself innocent.
7 comments:
Very true. Other facts about the distinction. As an independent contractor, you are legally and financially liable for your work and any mistakes you may make. You are not elegible for unemployment compensation or workmans comp. You are responsible for self-employment tax and the full 11% social security payments. There are other distinctions, but those are the key ones.
Some good things to keep in mind...There are several sources of income that one can make in our industry that must be reported to the IRS. I usually divide them into three categories when tax time comes around:
1. W-2 Income: This is the income that is made when you are hired from a company that pays you through a payroll company, whether it be in house, or outside. This income already has state and local taxes, insurance, social security and union dues (if applicable) taken out. Since you are considered an EMPLOYEE of the production company (no matter how long you are hired for) you are eligible to report this income when applying for unemployment.
2. 1099 Income: This is the income that is made when you are hired as a sub-contracter, or independent free-lancer. Usually you submit an invoice once the job is completed, and the company has to pay you within a 30 day period (30 is standard, but some take longer). The freelancer is solely responsible for keeping track of this income, when it's due, and if late, to contact the company with a friendly reminder. Usually, taxes are not taken out of this check, and the freelancer is paid in full for the billed price. It is now the freelancer's responsibility to pay all taxes due to Fed, State, and local authorities
"3. 1009 Income that is not service related. What I mean by not being "service related" is income that is made by rentals or sales beyond the actual job that one performs. Most crew people rent a "kit" or Box" which is another term for their tool kit or necessary supplies needed to perform their job. Sometimes a crew member may have personally owned equipment that they can rent to a production for the duration of the job. Maybe a crew member may also have "expendables" (necessary replenishable items like tape, gels, pens, etc.) that hey can sell to a production. All of this income is also reported as 1099 income, and the freelancer is responsible for all taxes, and sales tax as needed. A good idea for someone who does considerable 1099 rental and sales, is to set themselves up as a small company, usually sole proprietorship, or LLC's. It's a better way of protecting themselves and their gear, and a better way of keeping track of the income....Sorry Palmer I took up so much space!"
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