Truck drivers: employees or independent contractors
TransForce drivers are all TransForce employees. Are your truck drivers correctly classified? Are your vendors’ drivers? You could face fines and back taxes if they are not.
The full costs of employment include payroll taxes and workers compensation insurance as well as benefits and paid time off. In fact, it is not uncommon to estimate that the full cost of employment is at least 50%above base wages. One tactic that is employed by some companies is the use of independent contractors rather than employees. However, there are very stringent IRS rules on who qualifies as an independent contractor. Too often, motor carriers or their vendors may simply classify drivers as contractors and hope that no one discovers the error. This situation can result in significant fines and back taxes for the motor carrier and the vendor. Motor carriers need to exercise due diligence to ensure that the drivers in their trucks are correctly classified.
For an interesting case study about what happened to a trucking company that misclassified its drivers, please read about this Tax Court decision.