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From:

4512812015 09:08

#141 P.001/016

lwte 17,2409
Onondaga County Department of Law
Attn: Gordon Cufff
John H. Mulroy Civic Center 1Oth FL.
42l Montgomery Street
Syracuse, New York 13202

Dear Gordon:

I am uniting this conceming your assigned counsel program. As you may or may not know I
have had a law practice specializing in Ta< Law (as an Attomey and CPA) since 1978. i have
enclosed a directive from the Intemal Revenue Service mandating that the Onondaga County
Assigned Counsel Prograrn treat the assigned counsel attorney's as employees as not as
independent contractors.
Presently the attorneys involved often do not receive timety payment from the Assigned
Counsel Director and/or where payment is made payments are not subject to mandatory Federal
and State withholdings, putting the attomey at risk for late payment of taxes or late filing of the
refurns.

This creates an unfair situation to the attorneys involved who work diligently for their various
clients and for the County.

If this were just my opinioa

as to what should occur that

would be one thing, but this is the


opinion of the Intemal Revenue Service (as set forttr in the enclosure).
To the best of my knowledge this directive is being routinely ignored by the party(ies) in charge
of the Assigned Counsel Program. Not only does this put the attorney at risk (and I have had
specific cases on this), but it also puts the County at risk.

From:

0512812015

09:10

#141 P.002/016

This directive concems the attorney who made the initial request, but relates to all attorney's in
sirnilar employment positions.
In a worst case scenario the Goveflrment has the authority to impose payroll tax liability on any
responsible (corporate) officer in the Assigned Counsel Program at an entity and/or individual
level under IRC 6672.

it would be very easy to put these attorney on payroll as statutory


protecting
the attorney' s from unnecessary govemment penalties and
employees, thereby
complying with explicit directive from the Internal Revenue Service.
It would

seem to me that

am wrong about my analysis please accept my apologies, if not hopefully you can address
these issues.

If I

Thank you for your kind attention in this matter should you have any questions please call me.

Very tnrly yours,

Daniel J. Arno
DJA/crlh

Enclosure(s)

From:

#141 P.003/01

0512812015 09:11

lnternal Revenue Service

Department of the Treasury

SB/SE, Compliance
BIRSC, SS.8 Unit

40 Lakemont Fload
Newport, VT 0Eg5S-1SSs

Date: May 15,2006

Flenee Captor, Program Director


Onondaga County Bar Association Assigned Counsel
Program
Lobby Ste. 6, State Tower Bldg.
109 S. Warren Street
Syracuse, NY 13202-1701-067

Form: SS-B
Person to Contact:
Pameta Reed 03-00348

Telephone Number: g0Z-7S1-4430


Facsimlle Number: 802-751-4455

Hefer Heply to: Case

# 4StZ6

Dear Ms. Captor:

This.is in response to a Form Ss-8 that was submitted


to request a determination of
employment status for Federat employment tax purposes,
between onondaga County
Bar Association Assigned counseirrogram,
heieaiter refeired to as the firm, and David
referred to as thiwortier, toi serviiJs'pe*ormed
in iesje irrrousn
SfJ,",l5l!,?:t""ntt
We hold the worker to have been an employee of
the firm. ln the rest of this letter, we
will explain the facts, [aw, and rationare thaftorm
tne oasi" for this finding.
lnformation obtained indicates the firm is.a
nor-profit organization which contracts with
the county to coordinate regar representation
toi inaiirni p.[onr. The worker, a
criminal defense attorney, represented tne
rinanciaitf .'n.iidggo individuars,
The worker had completed ah applicaiion to
be consioereo ior.tne program. According
to the firm, the workgl.rggeived.his assignments
direcfly iro* fir. various judges and
provided the representation as he deenieo
approprLi"] in"'.ontinuing tegal education,
offered at least twice year,. was a full day p,rogram
and is required but can bo waived
directty by the judges/courts. rn addition, inu"*rL*i*ri
instruction;
proper
submission of vouchers and.receipts as
wellas .*pmi.o Brnrrior. The firm
responded
that the worker determined the method.
ov *nicr, [e
his assignments and
was responsible for the resolution of any problems
i',J"ncorntered, although the courts
may be invorved as weil, The worke*tlt'eo
he.was

g;;"
p"i"*"0

of the assigned counser programs wittr


any

il;

tqlri-rJo't" contact the supervisor


probrqr: o,,

ffi#E;
resolution' The worker was responsible for
"o*priiii"l#forms,
completing ciienierigibility
expert
seruice forms, and vouchers' ln addition
ne r<epitiac[oi'[ir norrs but did not
report his
time until such time as he submitted a voucher
for pav*rni] rn* worker performed
the

From:

0512812015 09:

#141 P.004/01

services personally and was the party responsible for hiring and paying for support
personnel.
The firm provided nothing; allsupplies, equipment, materials and property are provided
by the worker. The expenses incurred by the worker are unknown eicepi
iititr*a to,
each case at the completion of case. The reimbursed expenses were f6r the process
server, tolls, telephone, extraordinary postage, and mileage for necessary
out-of-county
travel. The worker was paid an hourly wage as pre-determined by the firm, The
staff of
the ACP reviews the vouchers as to compieteness. There is no list as to what
is
considered appropriate time on various actions on a case, The staff witiappiove
the
voucher or not, but.it us the judge that has the final say, lf the voucher is iiilattoweo
it
is refused in its entirety and there are no partial payments made to the worker.
The worker is not extended any benefits such as paid vacations, sick pay,
or health
insurance and taxes are not withheld. The flrm indicated that upon
iniormation ano
belief the worker does perform similar services for others. The
worker r".pono*o tnut
hls case load is 1aa% Assigned Counset Program casei ano
rre ooei noilp*iut,
private practice.

"

The worker had been provided with the handbook of poticies,


Rules, and procedures
for the onondaga county Bar Associatlon Assigneo
counset progr;m (Agptil which
the county has contracted with the Assigneo c6unseip.g-;r,
lnc. in order to
discharge the County's responsibilities'ior tn* JJir",y oirEgd
services to indigent
persons who qualify for the appointment of
counsel iri variols court proceedings. The
delivery of services concerns two primary aspects: criminal
defense ?ino irn.,irv'.o*t

representation. The criminaldefense aspeci.inc.luqe!


rejiesentation on

any offense in
which a jailsentence is possible, more specifically feLniSs,
misoemeanors, some
violations and traffic matters. The family couft aspects
include representation on such
matters as violations of support or{ers,'custody, drltegations
of cfiiifeJn.gl;.i'u;O
abuse, family offense petitions. Tlie overall aominisiiation
of the ACp is vested in its
Board of Directors which was established by ano
is elected by its members i"e. the
onondaga county Bar Association Board oi DirectorsACp
the policies for the operation of the Assigned counser pioJram, Board of Directors set
which are then
implemented by the ACp Executive Direcror.

ih;

The handbook covers the required criteriafor Panel


List Membership which addresses
requirements such as the individual being licensed-d;;;il;e
in the'state or r.rew york;
the person must be a resident of or have-a1
tor
pi."tice
ihr
of law located within
9{tic9
the county of a contiguous couniy. The individual
*urt
r,Ju" compteted the application
for placement on the-assigned cdunreiprogram
and submitted it to the Executive
Director of the ACp fo_r revjew and rpprlrai.
The individuri*u.t have compreted an
initial orientation program conducted ovinr

Executive'D:Lito. of the ACp. The


individual must agree tocompry with ail nc,r
n"rigiii;, il;;;rocedures as adopted by
the Board of Directors of the hbp. rre inoivi'ouir
mririn-.-h'r.*ber of tnaonlnoaga
County Bar Association or pay an annual fee
to the oCBA Jquat to one half of the
base
member dues' The handbook also covers criteria
tor attoiney placement on crirninat
paner
case
Lists, Homicide panerrists,
fiacem;11;1i;Jinqtun paner List, famiry
court Panel Lists as wellas the continuing
Legal Educrtiori-"r Requirements and ctient

0512812015 09:I3

From:

#141 P.005/01

t
1

Eligibitity Flequirements, Under "Accepting Fee for Services from Assigned


Client', no
attorney may accept any money for services from nor arrange to repreient privatelyany
assigned client unless the clients' statement of Financial status has been submitted
to
the program for consideration. No remuneration may be accepted from a client
or on a
client's behalt once the client has been determined tb be eligible. The hanJboof
also
covers Voucher Billinq, Expense Charges, Expert and lnvesligative
service{ as welt as
Voucher Heview and Payment, and Grounds ior Flemoval, Suipension,
oi olniur ot
Placement.
Section 3121(dX2) of the lnternalRevenue Code provides that
the term ,,employee,,
means any individual who, under the usual common law rules
applicabte in determining
the employer-emproyee rerationship, has the status or emfioyee.
The question of whether an individual is. an independent
contractor or an employee is
one of fact to be determined upon consideration of the
racis ano the application of the
law and regulations in a particular case. Guides
tor oetermlning the existence of that
status are found in^tl|"gjybstantially simitar sections
oi tr,. TrEasury n*guLiior..
Thev are sections 31.3121(d)-1, 31.igo6(i)-r, ano

sr.Baoiicl-r rrr"ting iJih? iederar


lnsurance contributjons.Rci (ncA), the rdoerar ,"H;i;iilent
rax Act (FUTA), and
Federal income tax withhording on'wages at source,
reipdctivery.
section g1'3121(d)-1(cX2) of the.regula-tigns provides.
that generalty, the relationship of
emptoyer and emproyee exists whei the person
for whqm
p",irr*ro
has the right to controt and direct tfre inOiiriOjat;ho
tn"
serrir*iriot
onty as to
the results to be accomplished by the work, but
io'ihe details i"o
nv
which the result is accomplisheo. mat rc,
"l*t!." lI
in empiovJe
to the wilt and contror
of the emplover not only as to what srritr ue d;e,
"roi..t
ilt;rs-o-as
to how it shail be done.
ln this connection, it is not necessary ihat
the *rynrov"iuJtuarry direct or control
the
manner in which services are performed; it is
suriici.nt it ie-or she has the right to do
so' ln general, if an individual'is subject to the control ;i
Jirection of anotner'merely as
to the result to be accomprished and not
as to the means and methods for
'|vvr rv,
accomplishing the result, he or she is an
indepenoent contra;il;:"

#,;,;;'ilLr'r*

;;;i*"

*--r,

ln determining whether an individualis


an employee or an independent contractor
under the common law, all evidence of both
cbnt?or
of conkol or autonomy
must be considered. ln doing so, one must
examin."nalr#

ftr'r"irtionship of the worker and


the business. Facts that illusirat6 wneinerrnere
ii
nnni ioiiru.t or contror how the
worker performs the specific tasks for *r,i"n
r,. or sneT* i,iied, whether tnere is'a right
to direct or control how the financial aspects
or tne wort<eis-activities ir" .onou.tuo,
perceive their retitlonstrip prouio.
r"ialnc. of the o.giu, oi contror
:X5:ffiffi}:Iies

31

('l)']

thq regulations provides that if the relationship


!-*ton '3121
9l(3)
,ol
of an
employer and employee
exists, h, IJJgnuticin oi oescriiiion orrne pi*ieJai.
inytn in g
other than that of er-?roy.el ano empoyJe
is immateriar.--inrr, if an emproyeremployee relationship exists, any contractualoesilnation
oiir.... employee as a partner,
coadventurer, agent, or indepenitent
.ontructor mJsi ue oisregaroeo.

From:

0s12812015 09:1

#141 P.0061016

Section 31.3401 (c)'1(c) of the regulations states that generally physicians,


lav4rers,
dentists, veterinarians, contractors, subcontractors, priUtic stenographers,
auctioneers,
and others who follow an independent trade, business or profesiion
in*ni.r-, they otfer
their services to the public are not employees. However, if the
requisite retaiionsnip
gxtsts between a professional and another, he or she is an employee rather
than an
independent contractor with respect to any seryices performed
under such
circumstances. As pointed out above, one of the major factors
to be considered in
determining the existence of an employment relationship
is trre right to direction and
control.

ln determining wha.t constitute.s the requisite degree of


direction and control, it must be
borne in mind that the methods by whii:n profesiional
men-ano women work are
prescribed by the techniques and standaids
of their profession, ano tne r,igh J;gree
ot
skill required by a professionatsometimes makes it
oiricutior impossible for the
ernployer to supervise his/her services, Therefore,
tne contror ol"n **prov*i over tne
manner in which professional,employees shatt condurt
ir,r orti.r ;i ih;i;
*urt
necessarily be more generarthan th6 contror
ou*,, nonlproJessionat
v-t
despite this absence of direct control, it cannot be
"*pi{rrrr.
doubted that many
professionals are
bmptoyees. See James v. gorr?misii'o, net,2E T,C.
f ag6iiSSOl.

il;jtilr.

whether requisite c.ontroland supervision exists


is determined by
such factors as (1) the degree to which the individu;ih;;;r"me the application of
integrated into the
operating organization of the person or firm tor
wnLn in" J",vrc"s are performed; (2)
the substantiar nature, reguraiity, ano,ontinritv;iil;;;rk"for
such
;;irm; (o)
the authority vested in or reserved bv such purion
orJii,
io
,"quire
compliance
with its
generalpolicies; and (a) the degree io whicir
tnJinJiriouai-unoe."onsideration has
been accorded the. riglt= and plivireg..
*ni.n rr;h
firm has created or
established for its employees

ptil

ilffi;;r

Regarding the first criterion mention-ed


above, iniegration does not mean
simply that the
services performed are services that
are requireo.ii tne oferating organization
of the
person or firm for which the services
are.rendei;;
;tJgrution
to
this
extent
wifl
usually be present.
.M91. importantin ihi..onnrrtion is th-e manner in which the
services are integrated.
into rhe pa*icuraiopir;t#; iii,iiii.rr,
here are such factors
as (1) the manner in which the
frofessionui i. paio toiiie sirricrs, that is, whether
on
a percentage basis, sarary, or a per.entage
wiih grrrunt.io ,nrniru*; (2) whether
the professionar is permitied to drprov
"
substirures when
absent from work and, if so, whether
t'ne protessionarl" i""hn"ibre for
the
remuneration paid to any associates
or zubstitute, ,ngrb.{'and (3) whether
the

.;

aftrili;; ;;rr;;;ge

3:ff.T1'il?:in::ji'n'

d to

en

sase

in, pii,,i'

;;il;:;

il

p. *d,m

p,"i.,,

", "r

Flegularity and continuity of workare present


under circumstances where the
professional and the.party engagingt["
ulreuure or
of oelrnrte
definite and
E
fixed hours which is foflowed iritfior-ti'rortantiardeviation. !"n.drt"

srrire;;b;il;;

From:

0512812015 09:15

#141 P.007r01

Turning to the third criterion, whether authority ls vested in


or reserved by the person or
firm to require compliance.with its general policies is indicated by
whether oinlt tn*
protessional is subject to the direction and control of some
otheiauthoriit.
Ftights and privileges created and established for employees generally
include such

items as vacation and sick leave with pay, pay tor rroiioayi,
severance pay in case of
discharge or layoff, increments for length oi serrice, and'life

and accident insurance.

It is difficult to assign relative weights to the various tests


mentioned above; however,
some are more important than others and, hence, should
be given greateiwe,gnt in
reaching the overall determination as to whether rn

or independent
contractor relationship exists. while some general guioitiries
"*ptoy*ent
have n**n pr*rioed as to
the relative importance of the various factori to be c.-onsidered
in oetermiriing;hetl^rer a
professional is an employee or an independent
contractoi, nevertheless, each case
must be determined on its own facts and no ctear-cui
iut.'.un be laid down in advance
that will be applicable to all cases.

we have applied the law, regulations, and principles as


cited above to the information
submitted' As is the case in almost ailwori<er clissfficatiln
cases, some facts point to
an employment relationship while other facts
indic;te lnJ"p"no"nt contractor status.
The determination of the worke/s status,
thererorq ie;i;;; the weight given to the
factors under lhe common law, keepinf in
mind ilrdt no one factor is determinaiive
of a
workeds status' The degree oi irpbrtince
of each tactor riaries depending on the
occupation and the factual contexi in which
tne servicemi. purrormed. tn weighing
the
evidence, carefur consideration has been
given to tneiietois ourined berow.
Under the common
the rerationshrp of emproyer and emproyee
exists when the
person for whom the]1ry,
seruices are performed his
right
t"
control
not only what is
'done, but also how it is done. fvijence of controlin"
glnEi"fflituff, into three categories:
behavioral controts, Jinancial controis,
parties, which are
collectively referred to as the categories

an;i;-lrtdfiilfti.
of evidence

Factors that illustrate whether there is


a right to contror how a worker performs
a task
include training and instructions. rn
tnis cise, yo, ,"t"in.o tire rignt to
change the
worker's methods and to direct the worter
to the **t"nt n-*r"rrury to protect your

financial investment. A worker *no


i, ,.qr;;;
another person,s
instructions about when, where, uno
t',o*'r," or.nul"io;;;k is ordinarily
an employee.
This controrfactori" p,p..gnt if the person
or persons for whom the services
are
performed have the right to .'"quire'compriance
*iir,i*trr.iions. some ,*ptoy*ru *"y
work without receiving instructibnsGalse
tney ;e riighr; proficient and
constientious
workers or because the duties.t*
.o ri*ple oriarniliari"i#*. Furthermore,
instructions that show how to r."rr''
n* o$1r;1r;1;jti'*ii'[ru* been orar andthe
qiven
onty once at the beoinning of the i"rai[nsr.,ip.
Trai;ifu
by
requiring
experienced emproiee to-work *iin tnr*orker,
an
uy loirrlpo-noing
",. with the w6rker,
requiring the worker to attend.me.tinfr,-or
uy
by usihg otnl-Ir"irrods, indicates
person or persons for whom the
thai
the
services ur.
the services porformed in
a particurar method or manner. This
ii true
if
'
was onry given once at
the beginning of the work relationrnip.

;-;;ir,ril,in

;iioi

p"*oi*;;;;i
.;;. il;j;;i;g

From:

0512812015 09:16

#141 P.008/01

Factors that illustrate whether there is a right to direct and control


the financial aspects
of the workefs activities include significani investment, unreimbur#
rhe
methods of payment, and-the opportunity lor profit or loss. ln this
.*r*,
iG
worker Oid
not have an investment of capital or assume ihe risks associateJ*ithU;;; jn-nr"inr""
risks, and therefore, did not have the opportunity to realize profit
a
or incur a loss as a
result of his services. Lack of investment by a person
in facitities oi.quip**ni used in
performing services for another indicates
dependence on the emproyer;;J,accordingly, the existenc.e
an
employer-employee
retationship.' iir- t-r* ,,significant
9f
investmenf'does not include
tools, insirumenis, ind clothing commonly provided
by
employees in their trade; nor does it include education,
exferience, or training. Atso, if
ihe firm has. th-e right to control the equipmeni, iii.
,nrik.iil1.,. worker had an
investment in facilities. A person who can reaiize protit
a
tr suffer a loss as a result of
his or her seruices-is geneially an independent
contiactor,-while the person who cannot
is an employee. "Profit or losi" impliesrhe
,...oi *pitur'tv, person in an independent
business of his or her own. The risk that a worker
wiit not rLceive payment for his or
her seruices, however, is common to both inoepenoeniconiractors
and employees and,
thus, does not constitute a sufficient economic
risk to support treatment as an
independent contractor. lf a wort<er toies payment
*om'the firm,s customliior poor
'work' the firm shares the risk of such loss.' cbntrol of *re riim
over the worker would be
necessary in order to reduce the rlsk of financial
ro.i to in"'tirm. The opportunity for
higher earnings or of gain or loss trom
a commission arrangement is not considered
profit or loss.

;;il;;;s,

Factors that illustratg


.ho* the parties perceive their relationship include the intent of the
parties as expressed in
written contracts; tn" prorisitnH; lack
of emptoyee benefits;
the right of the parties to terminate tne
ieration*nipl tn* pirirrn"n.y of the
retationship;
and whether the seruices performed are part
of the
recipient,s regular business

..rG
in.*s"rv
ers.;ffi;

activities. tn this case, the worker;d ili.ilil;i;';Tnoepenoent


enterprise, but
rather the services performed by the-wort<er
wire=
and
integral
part of the
firm's business. tntegration of il',e won
;;*"
ffiDusrness
operations
generally shows that the worker is
subiect to direction uno control. when
the success
or contlnuation of a business depends'to
an appreciable degree upon the performance
of certain services, the workers rn"
necessariry be subject
to a certain amount of control by the L*n.,
of the
Both
parties retained the
right to terminate the work retationsnip
x
ti*r *ith;;l;rurring a riabitity.
"nv
ln evaluating the facts. in this case, is
lt clear that the worker performed
services in a
manner consistent with an emproyer-em{gvee
r.r;tio;;hi;. npptying the raw,
regulations, and principres set'forih
,"Qigr revenue.rurings and court cases, as we,
as the categories of evidence outtinec
we qoncrude [r,at the worker was
an
ernployee of the f'rTioJ,I:ggarileSnioyme.n*ax
"ior,",
purpoi.*,-rnd not an independent
contractor engagerl in his own trade'or'business.

pr***ffi;;;ff.Irt*r.l
d;i;;.r.

Many rerigious, charitabre,.educationar,


o11t!gr
from Federal incomelax However, tnlv
rtplgft organizations are exempt
must withhold F"lErar income tax from
their
employees' pay and report eacn emptoye*'r.o*f.nr;til;"
Form w-2. rf an