Realtor employment agreement

[Unregistered]

Wages

That doesn't accurately represent the argument. Nobody has argued that a person can be an employee without wages. You're setting up a straw man.

The question is the definition of "wages." Let's try IRC section 3121 (employment taxes). "For purposes of this chapter, the term "wages" means all remuneration for employment, including the cash value of all remuneration (including benefits) paid in any medium other than cash..." and it goes on an on.

That's about as much proof as you're going to get, that "wages" can include benefits other than cash. Of course there are probably dozens of definitions of wages in the code. You can't just say "wages" and expect it to apply to every situation.

Then there are wages for purposes of minimum wage. The definition of is different for federal FLSA and has dozens of different meanings for the various states, for unemployment comp, minimum wage, etc., etc.

Once again, the only legitimate question here is whether minimum wage must be paid as cash wages. I don't know the answer, and I've done some digging.

Anyone have a citation that minimum wage must be paid in cash?

Sorry, but I don't think you're argument is any stronger than the other. I'm also bothered that AgriBiz, a leading professional provider of plans like this, will not accept a plan unless W2 wages are paid to the spouse. Section 105 plans are their primary business. Of course, they could be wrong. It is possible we won't know the answer until such a situation is tested in the tax courts. My guess is it would lose. Of course, federal law, state law, city law, social security laws, etc. are all different. We know that. But, any transaction should be structured to satisfy all laws. I do hope someone can answer this question authoritatively.

[Unregistered]

Coordinated issue report

Here's a link to a Coordinated Issue Report issued by the IRS on March 29, 1999. In the Statement of Facts the IRS recognizes that often W2's aren't issued because the compensation for the employee-spouse is determined upon the amount of the accident and health care costs for the taxable year (fringe benefit). I'm not sure it tells us any more than is already known because it doesn't indicate whether that's an acceptable practice, or not.

http://www.coredocuments.com/docs/1999_coordinated_issue_paper.pdf

I did find a June, 2005, tax court update from the Redleaf National Institute. They service day care provider's, and the situation was similar. The IRS disallowed the deduction and it was being contested in tax court. However, the results weren't provided. I'll try calling tomorrow to find out how the case was resolved. I know the attorney since I was on their board years ago.

[Armando Beaujolais]

I checked the Minnesota statutes. Indeed, the term "wages" refers only to cash wages. It appears from what I've been able to dig up, that minimum wage must be paid in cash wages, and noncash benefits do not count, at least in Minnesota.

I'll bet that's the case in most states as well.

I don't see any other issues. I believe this statement sums it up.

The employee-spouse health insurance arrangement is legitimate if a bona fide employment relationship exists and in addition to health benefits, the employee-spouse is paid cash wages of at least minimum wage.

I think this is a pretty big deal. I feel more armed with knowledge than I did yesterday (that's not saying much). I don't think any of my clients have a minimum wage problem with this arrangement. But you can bet from now on my speech will be "bona fide blah blah real work blah blah signed agreement blah blah, and at least minimum wage paid in cash.

[Bees Knees]

I checked the Minnesota statutes. Indeed, the term "wages" refers only to cash wages. It appears from what I've been able to dig up, that minimum wage must be paid in cash wages, and noncash benefits do not count, at least in Minnesota.

So does this mean you have been humbled, and that you apologize for challenging the logical conclusions everyone else came to?

It seems rather silly to make such a big deal over people taking the position that a bona fide employee should at least be paid some cash on the deal, even if it is just a token amount.