|Nov. 1, 2010 | www.fisherphillips.com|
Many dealerships treat their dealer trade drivers (DX drivers, auction drivers, hikers, etc.) as "contract labor" or "independent contractors," paying them a lump sum for their services and withholding no taxes. Some dealerships also pay regular employees an additional lump sum to perform special work outside their normal work hours, such as cleaning or painting the service drive, performing "catch up" filing or even dealer trades. The dealership treats this work as "contract work" and reports the payments on a Form 1099 thus, having a single individual receive both a W-2 and a Form 1099 from the same employer. While dealerships have seldom had problems with these practices in the past, that is likely to change.