Can you hire computer programmers as 1099...

[andrewfromfly]

...contractors? Is there some 1986 tax law that says no? This article is from 1998 http://www.nytimes.com/1998/04/27/business/how-a-tax-law-helps-insure-a-scarcity-of-programmers.html?pagewanted=1 is the info correct for 2010? Is it saying you can't hire any 1099 computer programmer contractors you MUST hire them as W2 employees? Or is it saying you can hire one as 1099, they just can't form their own LLC or C-Corp business with just 1 person in the business?
http://www.nytimes.com/1998/04/27/business/how-a-tax-law-helps-insure-a-scarcity-of-programmers.html

[Gaytheist Buddha]

I never heard of that law and I doubt it was ever overturned.

So as an employer (you said you want to hire) you want to avoid paying your 7.6% half of payroll taxes (Social Security and Medicare) and avoid paying unemployment insurance and avoid paying for any form of benefits. You sound like a tightwad.

Set vs fixed hours has to do with FLSA Exempt and Non-Exempt. They are 1099 employees if you don't withhold income taxes or Social Security, and you don't pay unemployment insurance.

[tro]

a company very likely would not have a computer programmer on site as a full time employee unless there was a need to have one on site for any immediate emergencies that arise in their process
most computer programmers work as independent contractors for the general public and as such would be issued 1099's if they performed services that amounted to $600 or more
they certainly can operate as a sole proprietor, and if and when the time is right form a corporation, or partnership, whatever

[the tax lady]

Here's the problem.

If a payer *wrongly* classifies an employee as a contractor, they are subject to harsh penalties. They have to go back and pay 15.3% payroll taxes as well as unemployment taxes and then owe a 100% penalty on top of that. If employees get benefits (health care, stock options), then these contractors-cum-employees can demand that they get compensation as well. Microsoft was sued over this and lost.

The government uses a series of tests to determine if one is a contractor or an employee. Computer programmers are generally paid by the hour, told exactly what to do, etc. As a rule, they *are* employees. So to guess wrong is expensive and most payers decided to follow congress's intent and hire people ONLY as employees.

Congress *also* knew that as employees, the 15.3% fica/mc taxes *would* get paid. Self-employed people routinely screw this up and never pay. The government and SSA got really tired of people setting up an S-corp, making $100K as a programmer--and then claim they only paid themselves $10,000 for fica/mc purposes.

You cannot get around the classification rule by telling someone to set up an S-corp or LLC. The WORK determines the classification.

Of course, you don't bother to mention that you got the idea to look up this article from the IRS attacker's 6 pages of rambling.