Independent Contractor

[Kurly]

Do any of you work with or have clients that have a dance studio or a performance studio having to do with teaching dancing, cheerleading, gymnastics, etc. How do they treat their instructors? Employee or IC? I have been approached by a studio to handle some work for them. They treat all their instructors as IC. The studio provides, space, students, music etc. All the instructor supplies is their talents. Any and all comments will be welcomed.

PS some of the instructors work for multiple studios.

Thanks

Kurly

[solomon]

You might want to read TC Memo 2006-19.

[MLINDER42]

independent contractor

Just came back from the IRS Forum in NY they are looking at these type of situations. If your client gets the students sets the times and controls what is taught plus provides the place and equipment sounds like an employee to me.

[S T]

I have a tax client

One of my Taxpayer's daughters teaches dance classes for several Dance Studios. One of the Studios (in my belief - handles it correctly and has her on W-2 wages) - the other Dance Studio ( in my belief - handles it incorrectly and has her on 1099 Misc as IC)

Both Studios seem to operate in the same fashion - in that the Studio sets the Class Schedule, they advertise for the "students" , provide the facilities, etc. - a specified time, as well as how the instructor is to teach and what they are teaching - and also the instructors "are required" to be at rehearsals and at recitals. There just seems to be a lot of control over the "instructor"

In my taxpayer's case, she is not required to provide any type of liability insurance, the Studio carries the insurance, she is not required to furnish anything for the class, although she does furnish some music, and she has expenses for dance shoes and maybe dance wear.

I believe the Studios have control over the "instructor" and the "instructors" should be classified as an employee on payroll, not as an Independent Contractor.

Sandy

[DaveO]

I have several clients who are aerobics or jazzercise instructors. They are all self-employed. The fitness level and personality of the instructor figures into the group of students they attract. The Jazzercise instructors pay rent for their studio time and have to pay for their replacements when they are on vacation or sick so they are truely self employed. The aerobics are less clear but their pay is based on the number of "students" and they are responsible for their own expenses. Most work for several places including YWCA, city or county programs, retirement homes etc.

[taxmandan]

Don't forget the state laws

Our state employee/IC laws overshadow the federal laws so it is the determiner. It is theoretically possible for someone to be an employee for state purposes and meet the IC rules for federal, but that would be a PITA situation to handle, so they end up being employees.

[Bees Knees]

You might want to read TC Memo 2006-19.

Agreed.

TTB page 5-22:

Court Case: At audit, the IRS said the taxpayer was not
entitled to Section 530 relief for dance teachers treated
as independent contractors. After the taxpayer petitioned
the Tax Court, an appeals officer determined that the taxpayer
had a significant chance of prevailing in court.
The taxpayer then filed a motion for reasonable litigation
costs. The court ruled in favor of the taxpayer and
said it was unreasonable for the IRS examining agent to
conclude that the taxpayer did not qualify for Section 530
relief. (Images in Motion of El Paso, T.C. Memo 2006-19)

TTB page 5-22 lists the requirements for Section 530 relief. Assuming the dance studio has always treated its dance instructors as independent contractors and has issued 1099-MISC for all payments, the dance instructors should qualify for Section 530 relief.

Section 530 may apply when a particular industry has a history of treating its work force as independent contractors. Musicians, actors, artists, dancers, etc. have always been traditionally treated as independent contractors. The same is true for those who teach in those professions.