(Nov. 11, 2009), by Staffing Industry Analysis
FedEx Corp. said Tuesday it won't face tax penalties for its treatment of FedEx ground drivers as independent contractors for the years 2004 to 2006.
The announcement of a decision by an Internal Revenue Service audit team for the 2004 to 2006 years follows a similar IRS decision that the company won't face taxes and penalties over the classifications for the year 2002. The IRS, at one point, considered charging FedEx $14 million in taxes and penalties for 2002.
FedEx said similar issues may be audited for 2007 and 2008, but the company said it believes the audit team should reach the same conclusion for those years.
(Nov. 2, 2009), by Staffing Industry Analysis
FedEx Corp. said Friday an Internal Revenue Service audit team now says the company won't have to pay a tax assessment in regard to FedEx Ground's independent contractors for the 2002 calendar year.
FedEx reported in September that the IRS was considering charging the company $14 million in taxes and penalties plus interest over the use of independent contractors in its FedEx Home Delivery service for 2002. Most of the proposed assessment had related to employment and withholding taxes.
"We are pleased with the IRS audit team's decision not to assess any tax or penalty with respect to any of FedEx Ground's independent contractors, including our FedEx Home Delivery independent contractors," according to FedEx.
Similar issues remain under audit for 2004 through 2008, but the company said it believes the audit team should reach the same conclusion for those years as well.
(Oct. 23, 2009), by Staffing Industry Analysis
Attorneys general from New York, New Jersey and Montana announced Tuesday they plan to sue FedEx Ground Package System Inc. after Oct. 27 over its classification of drivers as independent contractors.
The attorneys general argue the drivers should be treated as employees not contractors because of the level of control the FedEx maintains. FedEx prescribes hours drivers work, performance of tasks, uniforms (even down to the color of socks) and opportunities for non-FedEx work are limited, according to the attorneys general.
"By classifying their drivers as independent contractors rather than employees, FedEx Ground is denying the drivers the rights and protections afforded to all workers in our state," said Montana Attorney General Steve Bullock. "And in the process, FedEx Ground is shifting its tax obligations onto hardworking Montanans."
(Sep. 11, 2009), by StaffingIndustry.com
FedEx Corp. may face $14 million in taxes and penalties plus interest over use of independent contractors at its FedEx Home Delivery service for 2002, FedEx reported in a filing today with the U.S. Securities and Exchange Commission. Most of the proposed assessment relates to employment and withholding taxes for 2002.
FedEx said it will challenge the findings of the IRS audit, but a final resolution likely won"t happen for some time.
"We believe that we have strong defenses to the proposed assessment and will vigorously defend our position, as we continue to believe that all of FedEx Ground"s independent contractors, including those providing the FedEx Home Delivery service, are independent contractors," FedEx said in the filing.
The company said similar issues are under audit by the IRS for 2004 through 2008.
Memphis (Dec. 28, 2007), by WebCPA Staff
The Internal Revenue Service has told FedEx that it has been misclassifying its delivery drivers as independent contractors and is ordering the shipping company to pay back taxes and penalties.
FedEx revealed in a regulatory filing that it heard from the IRS on Dec. 20 that an audit team had concluded an audit for 2002 regarding the classification of its "pickup and delivery owner-operators" at FedEx Ground and determined that they should be reclassified as employees for federal income tax purposes. The IRS indicated to FedEx that it anticipated assessing tax penalties of $319 million plus interest for 2002. The IRS is also conducting audits for subsequent years.
But FedEx plans to challenge the ruling. "We believe that we have strong defenses to the IRS"s tentative assessment and will vigorously defend our position, as we continue to believe that FedEx Ground"s owner-operators are independent contractors," said the company. FedEx added that it cannot yet determine the amount it might potentially lose from the IRS decision.
The International Brotherhood of Teamsters, which has been trying to organize FedEx drivers, hailed the decision and estimated that the potential losses to FedEx could total over $1 billion. "It"s game over for FedEx"s independent contractor scam," said Teamsters general president Jim Hoffa in a statement.