Lawyers for Drivers Say FedEx May Owe $1 Billion in Back Taxes in Wake of IRS Ruling

Lawyers for Drivers Say FedEx May Owe $1 Billion in Back Taxes in Wake of IRS
Ruling
IRS fines company $319 Million; joins others in finding drivers are employees,
not contractors

WASHINGTON, Dec. 22 /PRNewswire/ -- The U.S. Internal Revenue Service
delivered the latest massive blow -- which could wind up costing upwards of $1
billion -- to FedEx's scheme of misclassifying thousands of Ground and Home
Delivery drivers as independent contractors rather than employees, lawyers for
the drivers said today.
FedEx disclosed the IRS decision, including the $319 million levy in fines
and penalties, in its most recent filing with the Securities and Exchange
Commission (SEC). It also revealed that while the decision only involves the
tax year 2002, the IRS is looking at subsequent tax years. It is likely that
the IRS assessment will top $1 billion after more recent years are added to
the 2002 tally. The IRS ruling came during a week in which the Massachusetts
Attorney General issued an opinion stating that FedEx ground/home delivery
drivers in that state should be reclassified as employees and fined the
company $190,000 in penalties. Its investigation continues.
FedEx's practice of avoiding tax liabilities and foisting its operating
costs onto its drivers has been under continuous attack at the state and
federal level for several years. The IRS and the Massachusetts rulings are
just the latest.
Class-actions lawsuits by drivers who have been victimized by FedEx's
practices have been multiplying across the country. Over 50 suits have been
consolidated already in federal court in South Bend, Indiana. Lynn Rossman
Faris, Esq., a lead counsel for the drivers in these actions said, "The IRS
decision is another milestone in this long battle. It is wholly justified and
totally consistent with every thorough investigation of the FedEx "independent
contractor" model. The IRS action is further validation that FedEx has been
perpetuating a sham to conceal the fact that the drivers are actually FedEx
employees who have been exploited to the huge monetary benefit of the
company."
Faris added, "The drivers have been shouldering FedEx's tax burden for far
too long. We hope that the government continues to vigorously pursue justice
for the drivers, all American taxpayers and responsible employers."
The continuing spate of legal setbacks for FedEx accelerated last month
when the California Supreme Court had the final word in the landmark Estrada
vs. FedEx Ground case, upholding the Appeals Court finding that the drivers
were misclassified and setting the stage for reimbursement of significant,
wide-ranging business expenses to the drivers. In its oft-quoted opinion, the
appellate court said, "The essence of the trial court's statement of decision
is that if it looks like a duck, walks like a duck, swims like a duck and
quacks like a duck, it is a duck."
Consistent with rulings by the IRS, Massachusetts and California are a
growing number of state and federal agencies, such as the National Labor
Relations Board, which have found the drivers to be employees and not
independent contractors, as FedEx continues to argue.
SOURCE Leonard Carder Law Firm

Lynn Rossman Faris, Leonard Carder Law Firm, +1-510-305-5280, or
lfaris@leonardcarder.com