The oldest trick in the book...

Rep. Henry Waxman, who chairs the Committee on Oversight and Government Reform, released a March letter from the Internal Revenue Service that states the company's classification of a security guard as an independent contractor, instead of company personnel, was "without merit."

Under U.S. law, companies must pay Social Security and other federal taxes on their employees. But unlike other security companies operating in Iraq, Blackwater says the guards it trains, equips and deploys to Iraq and elsewhere are independent contractors hired directly by the federal government.

"By classifying its armed guards and other personnel as independent contractors instead of employees, Blackwater has apparently evaded withholding and paying these taxes," Waxman, D-Calif., wrote in a letter to Blackwater chief Erik Prince.

The oldest trick - force your employees to go without the basic tax protections our society mandates. When I worked as a toner phoner(telemarketing - euwwwww!), that was a standard go around. We ended up having to track our own earnings, and file a 1099 without the benefit of having taxes witheld from our pay(and no benefits at all). So, no matching taxes paid from the company, and all the paperwork is done by the employee.

The full article is here