Wednesday, Aug. 4, 2010 | 2 a.m.
Senate Majority Leader Harry Reid’s campaign has accused his Republican rival, Sharron Angle, of attempting to skirt tax law by paying her staff as independent contractors instead of employees subject to payroll taxes.
Since she filed to run, Angle has paid her staff as consultants and as such has made no payments to the Internal Revenue Service.
Although not uncommon for political candidates, the practice could raise legal issues with the IRS if she doesn’t carefully follow the rules dictating when a worker can be classified as an independent contractor.
“It’s a way to get around having to pay taxes and provide benefits for your employees,” Reid spokesman Jon Summers said.
Some campaign workers said they prefer to be paid as independent contractors. Campaign staff often move from state to state, working for only a few months at a time and run into confusing tax issues.
But campaigns also enjoy a benefit from paying workers as independent contractors instead of employees: It’s a lot cheaper.
Angle has avoided paying federal taxes on campaign workers. Reid’s campaign, for example, has paid $291,929 to the IRS in payroll taxes since July 2009, according to his Federal Election Commission reports.
Independent contractors also aren’t provided paid benefits such as health insurance or retirement.
IRS rules dictate whether a worker should be classified as an independent contractor or an employee. For example, an employee is subject to employer training, rules for how his or her work is conducted, and where and how to buy supplies.
Independent contractors stand to make a profit or sustain a loss, are in charge of equipment purchases and typically aren’t reimbursed for expenses.
Angle’s FEC reports show some of her workers have been reimbursed for expenses, but others have not.
Jerry Stacy, Angle’s spokesman, said Angle’s campaign treasurer made the decision to hire independent contractors during the primary campaign, when the staff was small and working from their homes.
Since winning the primary, Angle has had to vastly expand her campaign and will no longer rely solely on independent contractors.
“When the decision was made to begin adding staff, the treasurer decided to hire employees with specified duties and use a payroll and accounting firm to handle the expansion and bookkeeping,” Stacy said.
Angle isn’t the only Nevada candidate to pay people as independent contractors.
Republican Joe Heck, who is challenging U.S. Rep. Dina Titus, D-Las Vegas, pays two of his three staff members as independent contractors. The third is employed by the political consulting firm Ryan Erwin & Associates.
Erwin said it’s common for campaigns to employ independent contractors, particularly when hiring someone to work for only a couple of months.
“Sometimes it benefits the workers, sometimes the campaign, sometimes both,” he said.