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Professor James Edward Maule, writing in his MauledAgain blog, wonders if Joseph Stack knew about the options available to him:

One ironic aspect of this tragedy is that Stack could have avoided the independent contractor versus employee tax hurdle that he cites as one of many things in life that angered him. In his posting (here), Henchman points out that this issue “seems to have vanished over the last 20 years, since the consultant can incorporate himself or herself.”

It is true that Stack could have incorporated himself, but that likely would not have solved his problem. I have experience working in high-tech companies, including several years as a consultant, and in practice, the issue hasn’t really gone away. High-tech companies are loath to hire consulting firms consisting of a single individual, in part because there’s still a perception that single individuals who incorporate are doing so to dodge taxes, in part because there’s no fallback position if something happens to the individual. To the extent that the issue has gone away, it’s in large part due to consultants banding together under one roof (much as a group of physicians does in a group medical practice, in fact) rather than individuals incorporating on their own.

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Written by nctaxpro

February 22, 2010 at 2:37 pm

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