🚀 go-pugleaf

jason@trg.saic.com (Jason S. Holloway) writes:
 
>In article <1.6sdzh2ios@gate.net>, Stefan Jon Silverman <sjs@sjsinc.com> wrote:
>
>>         First, because of the IRS's 20 question smell test for Independent
>> Contractors vs. W2-able employees, a number of brokers have joined the
>> NACCB (National Association of Computer Consultant Brokers) and using that
>> organizations template contract (which I think won't stand in a court)
>> will only allow IC's to sign a contract that states that the IC only gets
>> paid when the brokerage gets paid by the client (the "assumption of
>> financial risk" question of the IRS 20). This creates a situation where
>> the IC has to work up to 2 weeks before submission of the first invoice,
>> wait for the brokerages client billing cycle to pass, wait for the
>> client's bill paying cycle to elapse, and then finally, wait for the
>> brokerages check-cutting cycle to kick in. The net elapsed time on this
>> could very well be 10 weeks before the IC sees the first check (I have
>> seen it this bad!). Now, if one even takes a conservative rate to the IC
>> of $50.00 / hr. on a 40 hr. work week (how many of us actually get to work
>> this little?), this leaves the IC holding the bag on about $12,000.00 (6
>> wk. cycle) to $20,000.00 (10 wk. cycle). A truly uncomfortable situation
>> when one thinks about "roof over head / food on table." I know it could be
>> argued that we made the decision to enter this line of work, ___BUT!!!___
>> at some point reality has to set in. I personally try to keep an emergency
>> fund of about 6 months living expenses in liquid capital around, but
>> holding the bag on > $20,000.00 in outstanding AR makes me very
>> uncomfortable (and that's at $50.00 / hr., I work for much more than
>> that). So the brokerages are still charging the %15 and in fact are the
>> beneficieries of a non-interest paying loan from the IC to the brokerage
>> (they still get to carry our AR / AP on their books as an expense for tax
>> purposes); neat work if you can get it.
>>
>
>Of course, it can get worse.  What do you think happens to your "loan" to
>the brokerage if they go out of business?  This isn't an FDIC insured $20K
>you got invested!
 
 
One could also take the legal postition, which PATCA and several other
organizations have, that it is a fundemental precept of contracting law
that the sub-contractor (in this case the IC) should get paid regardless
of whether the prime contractor (the brokerage) gets paid by the client.
 
In the case of the housing contracting sector, this is a long standing
principal, with a great deal of precedent case law behind it. It's too
bad that IC's cannot implement some kind of construction lein on the
client...
 
Another point, on the same regard, is that interpreting the IRS statutes
to the benefit of the brokers, regardless of the applicable case law, in
an attempt to keep IRS auditors out of the brokerage is doing a dis-
service to the people that they claim to represent...
 

-- 

	Regards,

	b c++'ing u,

	%-) sjs

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Stefan Jon Silverman - President                     SJS Associates, N.A., Inc.
                                                            572 Chestnut Street
Distributed Systems Architecture & Implementation      San Francisco, Ca. 94133
                                                            Phone: 415 989 2741
E-mail: sjs@sjsinc.com                                      Cell:  415 519 3494
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