11
Jul
10

AZDOR: Just Because You Work, Doesn’t Mean You Are An Employee

From a very young age we are taught that everyone pays taxes. Later on in our lives when we start working we are told that when you work, you pay taxes. We are told that the 16th Amendment allows the government to tax any “income” you may have. You are a worker, then you are an employee. You pay someone for work, then you are an employer. You pay someone for work, and that money is a wage. Someone does work for you, and that work is considered a service provided.

But, what happens when you have someone in power admit that these are not necessarily true?

I asked the Arizona Department of Revenue 4 very simple questions, which to me their answers are surprising.

1. According to Arizona law, is every individual that works considered an “employee”?

2. According to Arizona law, is every individual that pays someone else for work completed considered to be an “employer”?

3. According to Arizona law, is every payment made for work completed considered to be a “wage”?

4. According to Arizona law, is all work completed considered to be a “service”?

Their answers were as follows.

1. No, but many are.

2. No, but many are.

3. No, but many are.

4. No, but most are.

What? Now, I know that my questions were ambiguous and that they can only answer ambiguously. To me, however, this is odd. Not everyone is an employee just because they work? So how is one ever designated to be an employee? How is one ever designated to be an employer? Who makes wages? Who performs services? There is no place in the Arizona Revised Statutes that have an “exception” list for any of these things. So, how do we know who is and who is not? AZDOR is saying that not everyone meets these definitions but the law provides for no way of telling us who is and who is not! What gives?

I will pry on, but this information should cause you to question what is and what is not. Why? Because under law, only employees work for employers and employers are the only ones that pay wages for services, which then makes you taxable for money earned on your paycheck. In other words, if you are not an employee then you don’t have an employer which of course does not pay you wages on your paycheck because you are not providing services for them.

In fact, check out ARS 43-403 entitled, Employment excluded from withholding:

A. No amount shall be deducted or retained from:

[…]

3. Wages paid for casual labor not in the course of the employer’s trade or business.

Arizona cannot withhold or tax you on “casual labor” that is not part of the “trade or business”? What is the difference between casual labor and labor? I thought that any work (labor) for an employer was taxable, but ARS 43-403 seems to disagree. This should make you wonder…

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