There has been a lot of focus recently on worker classification, with the California Supreme Court’s ruling in Dynamex
and the passage of AB 5 and the subsequent backlash. One of the as-yet unresolved issues is how to treat workers who may have different statuses for federal and California purposes. Amidst all this turmoil, it’s easy to forget that this issue has been quietly percolating for years.
In 1991, Bob Spidell received a letter (reproduced here) from the FTB regarding licensed versus unlicensed contractors and how to report a contractor who’s an employee for California purposes (but an independent contractor for federal purposes) on the California income tax return.
The FTB’s initial response is that they will not follow this ruling but we are continuing to pursue this issue.