Hello David,--------------------------------------------------------
I found your contact information on the Internet
(http://centapede.centa.com/Week-of-Mon-20050207/001605.html), in a posting
that closely reflects my situation.
I am currently working on a TN visa in the US and just in the process on
moving to another project. However, lawyers from the hiring agency insist
that I *have* to work as a W2 employee and I know that this is not true. My
intent is to work as 1099, which means that billing goes through my Canadian
company (incorporated in Ontario). From your post (link above), I know about
tax considerations I have to keep in mind.
Would it be possible to hire you for a consultation so that you can explain
to the lawyer at the hiring agency that 1099 can be done on a TN visa and
how? I do not anticipate any issues with issuing of the TN visa because I
have done it many times before. This issue I am writing you about is tax
related.
Thank you in advance. Below is the email that hiring agency shared with me.
It contains lawyer's contact information. From his email and suggestion #2,
I see that he has not dealt with TN before, otherwise he would not suggest
obtaining a TN visa without a TN letter from the US company. It would be
great if you could provide clarity on the tax situation and what exactly has
to be specified in the contract between NueVista and my company to avoid any
hassles with the IRS. Thank you in advance.
Regards
XXXXXXXXXXXXXXXx
xxx-xxx-xxxxx1
Here is the lawyer's response:
From: Michael xxxxxx
Sent: Monday, August 06, 2007 10:57 AM
To: xxxxxxx
Cc: xxxxxxxxxxxx
Subject: RE: Monday
8 CFR 214.6(b) prohibits him being on a 1099 if sponsored by xxxxxxx.
trying to get cos. to sponsor for TN under a 1099 is an old scheme designed
to avoid taxation in either country and remains quite popular but, the IRS
can some back on xxxxxxxxx for the tax obligations if you participate in the
scheme.
2 options
1) sponsor as a TN and employee him not as a contractor
1099 but, as an employee W-2 or
2) contract with his company directly and
let him deal with obtaining the TN via for his own company but, provide no TN
support letter but, you can sign a contract with his co. (not with him) and
then pay his co. directly and issue a 1099 to his co. as you would any other
vendor.
If you decide option #2, I recommend that you let me review any
contract or other document he wishes you to sign. xxxxxx
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CEN-TA Cross Border Services - Tax, Visas, Immigration
http://www.centa.com/article.php/20070819002322265