Summons
Received summons from local IRS investigator demanding business records relating to a sub contractor whose services are rendered through a private trust.
Our contractor's agreement includes covenant of privacy.
A)Am I required to provide such records? If so, do I have the right to request in writing statute numbers which require me to break my covenant?
1 Answer from Attorneys
Re: Summons
You may get into trouble over this. If the "independent contractor" is actually properly classified as an employee under the IRS "factor" tests, then you may be penalized for failure to withhold and remit payroll taxes for him. Even if he really is an independent contractor, these "private trust" schemes are a bucket full of trouble -- everyone should know by now that they are not legitimate, and if you cooperate in the contractor's tax evasion scheme you may be swept up into the investigation. I can recommend a qualified tax lawyer if you need a referral; else, consult your own tax advisor immediately.
Best wishes,
LDWG
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