Unlicensed contractors? Taxtalk highlights and other issues.

• Author: Williams, Len
• Position: CATax

TaxTalk members recently bandied about whether or not unlicensed contractors doing work for homeowners should be classified as employees. The brief answer? Probably not, for the following reasons:

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California Unemployment Insurance Code Sec. 640 states the "employment" of casual labor does not include services not in the course of the employing unit's (i.e. the homeowner's) trade or business in any calendar quarter by an employee, unless such service is performed by the worker for 24 or more days during either the current or the preceding calendar quarter.

A property owner typically is not required to have a contractor's license, so the workers may not be statutory employees under CUIC Secs. 621.5 and 13004.5, unlike workers for construction companies.

For more information, see Information Sheets DE231, "Employment" and DE231G, "Construction Industry" at www.edd.ca.gov/payroll_Taxes/Forms_and_Publications.htm.

EDD Website Redesigned

With the EDD's new online look, www.edd.ca.gov, agency officials advise users that their previously bookmarked pages may need to be updated.

E-filing of Sales Tax Returns

The California Board of Equalization announced June 27 that it will transition most businesses that file sales tax return by mail to e-filing over the next two years. The BOE has its own free e-file system. There also are two fee-based vendors that will transmit e-filed return to the BOE.

So far, the BOE has not announced whether or not there will be a penalty for non-compliance. Taxpayers are receiving letters indicating that they will no longer receive paper sales tax returns in the mail and, thus, will be expected to e-file. Taxpayers who do not wish to e-file sales tax forms must file Form BOE-245-OYE to request a one-year e-filing exemption.

Innocent Spouse Relief

The U.S. 9th Circuit Court of Appeals upheld the Tax Court in denying an innocent spouse a refund of payments made from community property for the husband's understatements (Ordlock v. Commissioner, filed 7/24/08; Tax Court citation 126TC47).

Same-sex RDPs

There was an informative article on filing tax returns for registered domestic couples in the July issue of Spidell's CA Tax Letter. The article observed that although California law is clear that an RDP couple must use the married-filing-jointly status for California purposes, there is no clear-cut answer for same-sex couples who marry in California, but are not RDPs.

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