Aaron, a resident of Minnesota, has been a driver for Green Delivery Service for the past six years. For this purpose, he leases a truck from Green, and his compensation is based on a percentage of the income resulting from his pickup and delivery services. Green allows its drivers to choose their 10-hour shifts and does not exercise any control on how these services are carried out (e.g., the route to be taken or the order in which parcels are delivered or picked up). Under Green’s operating agreement with its drivers, Green can terminate the arrangement after 30 days’ notice. In practice, however, Green allows its truckers to quit immediately without giving advance notice. The agreement also identifies the drivers as independent contractors. Green maintains no health or retirement plans for its drivers, and each year it reports their income by issuing Forms 1099–MISC (and not Forms W–2). Green requires its drivers to maintain a commercial driver’s license and be in good standing with the state highway law enforcement division.
An IRS agent contends that Aaron is an independent contractor and, therefore, is subject to the self-employment tax. Aaron disagrees and contends that he is an employee (i.e., not self-employed). Who is correct? Why?
Use the tax resources available to by the University on Titanium (CCH and/or RIA), also include a review of news groups and general reference materials, practitioner sites, primary sources of the tax law, chat rooms and discussion rooms and any other opportunities.
Your assignment should be at least 500 words. Please type and double space your work. Please reference all outside sources. No credit will be given without a proper bibliography.
Spelling and grammar are part of your grade.
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