The IRS recently found that the Md. State Tchrs. Assn. (MSTA) avoided paying payroll taxes and denied their organizers employment benefits. In a Feb. 23rd letter to the MSTA, IRS officials said that in 2002 the union wrongly classified its 8 organizers as independent contractors. By doing so, the union staffers responsible for recruiting new members were forced to pay self-employment taxes, and the union avoided paying Social Security, Medicare and unemployment taxes.
A few mos. before the IRS ruling, the MSTA reclassified the organizers as “part-time casual employees.” The new status seems to satisfy the IRS’s specific rule on payroll taxes. But the organizers still lack employment benefits, such as paid vacations, paid holidays, sick leave, health insurance and bargaining rights. Three union employees have filed unfair labor practice charges against the MSTA with the Natl. Labor Relations Bd. The employees accuse the union of obstructing their efforts to bargain collectively with the union, and harassing them. [Washington Times, 5/19/04]
Union’s Reported Tax Violations No One’s Business
“It’s none of your business. It is none of the public’s business.” Washington Times, May 19, 2004.
Susan Russell, chief counsel for the Md. State Tchrs. Assn. (MSTA), responding to questions about an IRS ruling that the MSTA wrongly avoided paying payroll taxes for its organizers by reclassifying them as independent contractors.