When I stsrted as a prime 14 years ago I did hours on hours of research. Utilizing the IRS test as well as the state test everything pointed to my installers being 1099. After a few months of doing so I was audited by the state which decided everyone was an employee and not 1099. I disputed the audit and went to a hearing and lost. The judge agreed with my interpretation of the tests but still decided they were employees based on the fact none of them were licensed. He understood how and why I placed them as 1099 and therefor did not impose any fines or penalties but ruled I would immediately treat them as employees.
The IRS couldn't care less, the state you are in is what needs to be looked at in regard to labor laws. As far as who has control over whatever, it does not matter. The judge told me no matter what the test results are they will be an employee if they do not hold a contractors license. The states are the ones pursuing the 1099 misclassifications because they lose out on big $.
Re: Was and is 1099 band by government
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