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Tax Information With a Mother's Touch Volume 3, Issue 95 January 12, 2001 Constructively Ignoring Form 542? |
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From Knotts Berry Farm and Buena Park, CA ![]() Yes. Everyone. At least, all subcontractors who are not incorporated. Often, if they're smart, general contractors and licensed contractors will incorporate to avoid personal liability for lawsuits. And in the state of California, building contractors may NOT hire laborers as independent contractors unless they are licensed (sub-contractors) ... so, those laborers had darn well better be on payroll and covered by workers compensation. And just an unpleasant side note ... As a general contractor who hires subcontractors, you want to be very sure that your subcontractors are paying their laborers. You want a labor lien release signed by ALL the workers on that job. Otherwise, if your subcontractor, whom YOU may have paid in full, does not pay his employees ... they may come back to your for their wages. Goodness, isn't it frightening what useless things TaxMama knows? Remember, the purpose of the 542 is to track folks who've been ducking debts, like taxes, alimony and child support. The construction industry is a particularly notorious place for guys to pick up free-lance income that they hide from spouses and governments ... so, I would expect this to one of the first industries targeted for compliance audits. (At least if I were running EDD, that's where I'd start.) Best wishes, Eva Rosenberg |
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