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January 25 IRS Information for Ground/Home Delivery DriversThe IRS has previously said that a priority for 2008 is to increase vigilance over employers that intentionally misclassify its workforce as “contractors.” The IRS sees this illegal behavior as contributing to the federal “tax gap.” There are several IRS resources for FedEx Ground and Home Delivery drivers that should be evaluated by anyone who seeks to prove they are employees or joint employees of FedEx.  FedExWatch offers these resources and links for informational purposes only and all drivers should seek professional tax advice for their own personal situation.
January 15 CA Judge Says RPS-IRS Agreement "Not Worth Paper it is Written On"FedEx managers regularly point to the RPS-IRS 1995 Agreement in defending its contractor model. RPS is the predecessor company to FedEx Ground.  With the IRS in 2007 preliminarily determining that FedEx Ground and Home Delivery drivers are employees and not contractors, FedEx still clings to the decade old agreement as critical to affirming the company’s position.  But in the Estrada class action lawsuit in California, the trial judge reviewed the probative value of including the RPS-IRS 1995 Agreement into evidence in 2004 and the judge concluded, “If one actually reads the letter, it is not terribly convincing…I quote, ‘This letter does not preclude any owner-operator from filing an SS-8 to request an employment status determination of the relationship with RPS.  The determination of employment status by the Service will be based upon an analysis of the facts as presented by the worker and RPS’…In effect, what you have here is an opinion based upon the representations and statements made by the lawyers for RPS…The fact the IRS believed such status was not static is based upon the next to last paragraph which I read into the record.  As such I believe the letter is relevant only to show that RPS received this letter and it therefore goes to the beliefs of the parties.  But as an opinion in and of itself, I think it is really not worth the paper it is written on.”
January 09 IRS is Correct (Yesterday), IRS is Wrong (Today)In the past, FedEx’s lawyers highlighted the 1994 RPS-IRS Agreement to support its defenses.  Like when they argued in 2004 in California, “The decisions of both the IRS and the EDD to respect the independent contractor treatment was correct when it was made.  Nothing has happened since that would justify a change.  The Company and the contractors relied on these decisions in structuring their business relationships over the past nine years and it would be manifestly unfair to upset those relationships now, particularly given the fact that there have been no changes to the contractual arrangement.” Now, the company seeks to dismiss the 2007 IRS audit determination as “tentative” and thus not worth noticing.  Something certainly changed that caught the IRS auditors attention.  FedExWatch will gather what is publicly available to provide the info as this story unfolds.  We’ve started with the IRS “Closing Agreement” here and will post more.