Trendsource responds: here is why an EIN is necessary and will be with all msc's soon

As I suspected, it has to do with the gov't and coming state and federal regulations and them going the length to make sure they can't classify IC's and employees. Here is what they say(The part of Congress trying repeal section 530 of a law in effect since 1978 is what has them concerned):

"The Truth about EIN and Independent Contractor Status
Some simple truths:

MSI Services may be one of the first companies in this industry to make these changes, but we will not be the last. The Mystery Shopping/Market Research Industries will be taking more action to protect the status of Independent Contractors over the coming months/years. Changes like requiring EINs will become more of a standard in the industry and will serve to protect not only the Mystery Shopping companies, but ICs as well, from being classified as employees.
MSI Services has already begun massive updates to the language we use with Independent Field Agents. You may have already noticed a number of updates on the website and in our Project Description materials going into effect. These changes are all to help us stay in compliance with government expectations regarding how independent contractors go about performing work.
The reality is that when working in the U.S., you must pay taxes on all earned income. Obtaining an EIN does not change whether or not you need to pay taxes.
TrendSource is required to send 1099 forms for all ICs who make over $600 per year in Project Payments and PAD (this does not include reimbursements for required purchases). Whether you receive a 1099 from TrendSource or not, you should still evaluate your tax situation based on the income you make across all companies you work as an IC for and report income accordingly.
The only difference in filing taxes with an EIN vs. no EIN is that you will need to provide your EIN on your Income Tax Return – Schedule C.
We highly suggest that if you have concerns or questions about your personal tax situation that you speak to a tax professional directly.

In the sections below we have provided some brief overview information about why the EIN requirement came about and what you need to know to be informed on Independent Contractor status in the United States. Additionally, there are links to helpful websites and resources you can use to research this more on your own. Remember, these changes affect us all!
Independent Contractors versus Employees
According to the IRS website, the following definition is applied to Independent Contractors in the U.S;

The general rule is that an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done. The earnings of a person who is working as an independent contractor are subject to Self-Employment Tax.
Common Law Rules
Facts that provide evidence of the degree of control and independence fall into three categories:

Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?
Financial: Are the business aspects of the worker’s job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, such as computer equipment, gas, vehicles, etc., and who provides tools/supplies, etc.)
Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?

Independent Field Agents with MSI Services are considered Independent Contractors because you control what work you perform and how it is performed. The result of the work performed needs to meet Client objectives and requirements, but there are no rules surrounding how an Independent Field Agent goes about meeting these objectives.
When performing projects for TrendSource Clients, Independent Field Agents are provided with Project Description materials, which outline the Client objectives and requirements, such as Purchase Requirements, Day and Time Restrictions of the project, deadlines for reporting completed projects and explanations of what data is expected to be collected while performing the project. Outside of the client objectives explained in these Project Description materials, Independent Field Agents are free to choose when and how to complete projects, or even if they want to complete said project.
Sole Proprietorship and EIN

As an independent contractor, you are viewed as a sole proprietor. A sole proprietorship is a one-person business that is not registered as a corporation or LLC. As a sole proprietor you are responsible for maintaining your business by complying with local requirements, which may include obtaining a business license (check with your local county office). Although some counties may require all businesses to obtain a license, most will not actually expect a license to be filed when you work as an independent contractor in your own home. Again, it is advised that you check with your local county office to confirm whether a business license is required for your sole proprietorship.
The most important responsibility you have as a sole proprietor is paying income taxes. Since you are not an employee, companies you perform work for will not withhold tax from your payments; therefore you are responsible for ensuring your income taxes are filed and paid each year.
The following information comes from, where “Paying Taxes on Business Income” is explained;

Paying Taxes on Business Income
In the eyes of the law, a sole proprietorship is not legally separate from the person who owns it. The fact that a sole proprietorship and its owner are one and the same means that a sole proprietor simply reports all business income or losses on his or her individual income tax return -- IRS Form 1040, with Schedule C attached.
As a sole proprietor, you'll have to take responsibility for withholding and paying all income taxes -- something an employer would normally do for you. This means you'll have to pay a "self-employment" tax, which consists of contributions to Social Security and Medicare, and pay estimated taxes throughout the year.
(Mancuso, Anthony; “Paying Taxes on Business Income”; Sole Proprietorship Basics; Nolo; 2012; [])

Although a sole proprietor is not required by the IRS to obtain an EIN (Employment Identification Number), it is still wise for sole proprietors to use one for number of reasons.

For the purpose of MSI Services and TrendSource, requiring our Independent Field Agents to obtain an EIN protects both us and you from having independent contractors be misclassified as an employee. With an EIN set-up for your sole proprietorship, you are viewed as working for yourself and there is little room for misunderstanding with the IRS regarding classification.
(Mancuso, Anthony; Does a Sole Proprietor Need an Employment Identification Number?; Nolo; 2012; [])
Repeal on Section 530 and how it affects the Mystery Shopping Industry

What is Section 530 and what is the Repeal on it?
According to the website for the “Coalition to Preserve Independent Contractor Status” is explained that Section 530 is a law that is currently providing qualifying taxpayers permanent protection again the IRS reclassifying them as employees instead of independent contractors. The law has been in effect since 1978 and was put into place to protect taxpayers from what was then characterized as “overzealous” actions by the IRS in reclassifying independent contractors to employees.
The repeal on Section 530 is known as H.R. 5804, and would replace Section 530 with a new safe-harbor provision that fewer taxpayers could qualify for. While the bill would help those workers who want to be employees but are working as independent contractors, it would harm the self-employed individuals who want to expand their business and attract new clients, as the bill would significantly increase the financial risks associated with purchasing services from independent contractors. (Hollarah, Russ; “Bill Introduced in House of Representatives Would Repeal Section 530”; Coalition to Preserve Independent Contractor Status; 2006-2010; [])
How does Section 530 affect the Mystery Shopping Industry?
As stated above, the reclassification of independent contractors to employees would be a large financial risk to companies who purchase services from independent contractors. The current state of the mystery shopping industry depends greatly on the use of independent contractors to perform mystery shops and other similar inspections, audits and merchandising projects. If independent contractors were suddenly reclassified as employees, the industry would no longer be able to support the increased cost structure and would cease to exist in its current state. Many mystery shopping companies would go out of business altogether and others would move to using employees to do work, resulting in higher costs for the company, as well as higher costs for Clients.
What does this mean for you? It would mean that mystery shoppers would no longer be able to perform work for multiple companies, since employees cannot work for more than one company at the same time due to confidentiality. This would mean a significant decrease in available work. Additionally, as employees, mystery shoppers would no longer have a choice of what projects they perform, when they are performed or how.
We hope this information has been helpful for you in understanding why MSI Services is requiring EINs instead of Social Security Numbers for tax purposes. This request is not just for our own good, but ultimately for the good of the industry and to save your independent contractor status.

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There are no stupid questions, but there are a lot of inquisitive idiots
When you try to please everybody, you end up pleasing nobody

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Didn't read the whole thing. However, this whole IC vs. employee situation didn't come about because of mystery shoppers or the like. This came about because companies like Microsoft were hiring people as ICs but treating them as employees without paying employer taxes or providing benefits. That's the whole purpose of the crackdown which is justified. The explanations sound suspect to me and I question who actually prepared the document you posted. It has been ICs who were being cheated who made complaints, not the other way around. As long as the MSCs don't tell us exactly when we have to be some place and how to conduct the shop (other than the guidelines), I don't think there will be a problem.
The whole point is that IT IS NOT THE IRS that wants us to have EINs.

Based in MD, near DC
Shopping from the Carolinas to New York
Have video cam; will travel

Poor customer service? Don't get mad; get video.
No matter how many times TS/MSI says this change will "serve to protect" us, the independent contractors, their argument fails to support that assertion in any tangible or believable manner. I trust my accountant's professional opinion -- as well as my interpretation of the IRS information I have personally read -- and I still will not acquire an EIN. (Of course I would be happy to sign a W-9, as I have already done for other MSCs.)
This has become incredibly boring because the same old song and dance has been rolled out for years now. The only asses they are trying to cover are their own and the only MSCs who should live in fear are the ones who pay substandard fees with minimum on-site time requirements which combined with bogus and unneccessary deductions for anything and everything under the sun result in contractors working for below minimum wage. Let me see now, Trendsource comes to mind as being guilty of all of the above and they sunk so low as to have bidding wars on shops with the jbos going to low bids such as 50 cents.

Personally I am even more sick to death of the Kool-Aid that is they are protecting us as well. Sorry, I ain't drinking it.

Equal rights for others does not mean fewer rights for you. It's not pie.
"I prefer someone who burns the flag and then wraps themselves up in the Constitution over someone who burns the Constitution and then wraps themselves up in the flag." -Molly Ivins
Never try to teach a pig to sing. It's a waste of your time and it really annoys the pig.
Lisa, I like the part where they say if you had to become an employee, you couldnt pick and choose shops, work for more then one. Reality is, if you became an employee, they would have to pay everyone alot more then they do now.

and you forgot the part where they inflate the reimbursement part so it looks like the shop, excuse me I mean project now, pays more.

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There are no stupid questions, but there are a lot of inquisitive idiots
When you try to please everybody, you end up pleasing nobody
I would much more impressed if they would include a bit of honesty. The fear-mongering smacks of Chicken Littlewinking smiley

Equal rights for others does not mean fewer rights for you. It's not pie.
"I prefer someone who burns the flag and then wraps themselves up in the Constitution over someone who burns the Constitution and then wraps themselves up in the flag." -Molly Ivins
Never try to teach a pig to sing. It's a waste of your time and it really annoys the pig.
techman -- Trendsource has got some real bad legal counsel if they think that is the only thing that determines whether an IC is an employee. It has nothing to do with picking and choosing what shops to do. It has to do with who has control over how and when things are done.
When I worked as an IC for a telemarketing company (see General Chat if interested) the agents went through a similar situation. Our company didn't want to require us to get an EIN. They went to great lengths to prevent it. I believe it was 2009 that there was a lot of talk that the Obama Administration didn't like the set up of ICs, because was easy for companies to hire offshore ICs and 2. companies could get by without paying minimum wage. The company encouraged us all to write letters to our congressmen to complain. I think there was a bill going to Congress at the time, but I can't remember the number. The bill would have made it harder for companies to have ICs. The company as well as other telemarketing companies had a pretty hard lobby against the bill. I don't know if the bill passed or not, as I left the company before I heard the outcome.

There were two other telemarketing companies that required EINs during that time, and one of those actually made you incorporate. The other one was just starting the process of requiring the EINs for it's agents, and now they require you to be an employee.

I suspect that Trendsource is trying to cover their backs in the event this bill ever does go into law. The IRS has had a hard time defining ICs with regards to income tax, so I suspect clarification will become an issue in the future.

Edited 1 time(s). Last edit at 05/04/2012 04:27AM by Reporter.
Actually, the IRS does not have a hard time defining ICs. There are specific criteria that are used to determine if someone is an IC or an employee. If, when working for the telemarketing company, you were required to go to their office or be available during a certain timeframe on particular days and could not set your own schedule, the IRS would probably have said that you were an employee not an IC and that the company mischaracterized your status. It is not a matter of being incapable of deciding the status of employees, it was the unwillingness of upholding the IRS' regulations. This changed with the Obama administration. Whether you use your SSN or use an EIN has no bearing on a person's employment status. They may think they're going to protect themselves with the EIN requirement, however, if they have people working for them as ICs who would be classified as employees under the IRS rules, they're going to be in big trouble.
The telemarketing company that I was an IC for did allow you to set your own schedule. I could work, or I didn't have to work. I could schedule, or I didn't have to schedule. I didn't have to work a certain amount of hours. We were told that the IRS had trouble defining any IC, because the rules were so vague. That is why Congress wanted to pass a new law.

Here is a link to some discussion on some of the bills.




The bill:


Edited 4 time(s). Last edit at 05/04/2012 05:17AM by Reporter.
avitoots Wrote:
> Whether you use your
> SSN or use an EIN has no bearing on a person's
> employment status. They may think they're going
> to protect themselves with the EIN requirement,
> however, if they have people working for them as
> ICs who would be classified as employees under the
> IRS rules, they're going to be in big trouble.

That sums it up perfectly! They control shoppers like an employee and think that having a different number on the tax form will save them.

To sum up the discussion, I will offer a simpler translation of the TS platform:

"If you shoppers loose your IC status, we may have to pay a fair wage. We don't like that idea."

I've said this elsewhere but it bears repeating. Shoppers in Nevada are employees. They make a better wage overall, are still able to pick and choose jobs just as we do, and work for multiple companies. How is that possible?

The answer is that the PI firms work as shell companies for the shoppers. That's all that would happen is the IC status was removed. There would be a few payroll companies that would hire shoppers and subcontract the work from the MS companies.

It will, however, help to put an end to non-paying MSCs. Can you imagine never having to fight a company to get paid again?
It astounds me that some shoppers just believe anything they are told by a mystery shopping company. There is no change coming for IRS regulations to require independent contractors to have EINs. The only way other mystery shopping companies will require EINs is if it works out for Trendsource. Trendsource is not looking out for you they are looking our for Trendsource. You can't believe everything you are told. You have to do the research.

Here is what I believe Trendsource is trying to do. When all shopper have EINs Trendsource will start reverse bidding for all shops (projects). Shops will go to the lowest bidder. Trendsource will claim they are contracting out to the lowest bidding business. Since they are contracting to other businesses they don't have to provide any 1099s or have to prove that their projects qualify as independent contracting work. All of these things will be the burden of the "business" (you) who completes the project. This could bring you to the attention of the IRS or other agencies. I don't need this kind of hassle. If Trendsource gets away with it then yes, other shopping companies will try it. For them it's an opportunity to pay you less and get out of all the regulation and paperwork....... and put the burden on you.
I owned my own business for 25 years and was frequently audited by the IRS. The last time I was audited was 2000. Maybe things have changed, but at that time the definition of an IC was "hiring a person for a specific, non-recurring job". The definition of an "employee" was hiring a person to do a job that required regular attendance for a specific purpose in order to perform regular, specified duties. I could hire IC's to do "odd or occasional jobs", and, as long as they did not make more than $600 per year, I was not required to issue a 1099.

Caveat - I have not checked the tax codes since 2000.
Same here. You have to comply to gov regulations. If you get caught in Audit they will take everything you own. Don't cheat. They will catch you.
I'm sorry to use foul language, but Trendsource is full of @#$%&! That explanation that they hope is helpful is nothing but spin...spin...spin.

As I've previously stated, I have an EIN for another business and I could EASILY provide it to Trendsource. I have NO intention of doing so.

For all I care, the greedy MSCs can call go out of business because they clearly have sub-par advisors and they won't survive additional overhead. The cost will increase for clients because the pay will increase for us.

Costs will increase until they become more efficient. The strong will survive. If they think that requiring an EIN will help them survive, they're completely wrong. Their attempt to scramble & explain this to shoppers is indicative that they are weak and will be one of the dinosaurs that collapse when new requirements are standard.

Good riddance to them. If they think they're 'trend'-setters, why has no one else jumped on just yet? Also, why did they release an explanation? The only logical reason is that shoppers are rebelling.

I'm pissed. Can you tell?
Any Government regulation of Mystery shops might not be justified if the mystery shopping company would offer more than $2 and $4. That is outright abuse of human labor. It would cost the clients far more to perform the tasks. Employees can not mystery shop as they would have a biased opinion.

The Government will never achieve control over individual contracts as true independent contractors have the right to set their own terms and either party can reject those terms.

It is just a shame that Mystery shopping companies prey on those people like college students and seniors that did not plan to live that long to the point they ran out of money.

These are the people who take the $2 and $4 shops.
The word "fair" has been used in this thread, in my opinion, in an incorrect manner. As shoppers, we are self-employed contractors, and as such have the total freedom to apply for or reject any offers we receive. No MSC has the slightest obligation to treat us in, according to what we consider, an equitable fashion. Their responsibility is to their shareholders, to, through following a profitable business model, increase equity.

I have not, nor will I comply with any request to apply for an EIN, BUT, that's my prerogative. In addition, I've no interest in working to aid schedulers or MSCs in their pursuit of success by accepting work that isn't profitable; I work only for Bob and to increase his net worth.
They've extended the deadline to get an EIN, which seems to infer that a lot of folks aren't complying.
Let's see if they will pay "minimum hourly wage" per hour as per state laws if we become employees...LOL....
Maybe they will keep extending the deadline until it disappears altogether. I stopped checking their boards because I won't get an EIN but I guess I can start checking again. LOL. But I can't do onsite inspections because I won't pay for another background check if I won't be able to take jobs in the near future.
Has anyone thought of this?

When the last part of Obamacare goes into effect in 2014, one of the requirements is that you provide insurance or pay into a penalty fund. By having an ein, will this force you to offer yourself insurance and if you don't, will you have to pay into that fund?

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There are no stupid questions, but there are a lot of inquisitive idiots
When you try to please everybody, you end up pleasing nobody
techman01 Wrote:
> Has anyone thought of this?
> When the last part of Obamacare goes into effect
> in 2014, one of the requirements is that you
> provide insurance or pay into a penalty fund. By
> having an ein, will this force you to offer
> yourself insurance and if you don't, will you have
> to pay into that fund?

Those requirements are for companies with 50 or more employees. Self employed people will most likely see a tax benefit from Obamacare.
Discussions like this one are incredibly helpful for newer shoppers like me.

Thank you for giving me this information about Trendsource.

I keep seeing them on the MS list and thinking, "I should sign up with them" - then I remember the EIN issue and the whole bidding down fiasco.

Again, very helpful. Many thanks.
SteveSoCal -- I think you may misunderstand "Obamacare." You would still have to provide insurance for yourself or pay a fine whether you have an EIN or not. The fine is an incentive to get people who think they don't need insurance to buy into the insurance market and was put into the bill to make the insurance companies happy. The insurance companies didn't want to have only older, and presumably people with more medical issues and therefore more expensive, on the insurance rolls. They were worried about not making enough of a profit off of the insureds.
avitoots -- I think you may have misunderstood the question I answered. Techman was asking about if an EIN would force shoppers to offer themselves insurance an an EMPLOYER.

The fact is that it would not, but there would be significant tax incentives for providing yourself insurance as a sole proprietor if you chose to do so.

The thread is about the possibility of the EIN becoming a necessity and the impact of that...not the requirements of the Affordable Health Care Act.

Can we please keep this thread from devolving into a political argument?
Stevesocal -- I actually was responding to both you and Techman. Techman brought up health insurance under AHCA and made it sound like you would only need to carry insurance if you had an ein and were considered a business. You responded by stating the size of the company that would be required to buy insurance for employees. I thought it was necessary to point out that everyone would need to carry the insurance and would face fines if they did not carry the insurance. Techman did not seem to understand that everyone would be required to carry insurance not just if we had EINs and were considered businesses. I was just giving the reason why the requirement was there, not passing judgment on the Act. I know passing judgment on it would open a can of worms that wouldn't be appropriate here. However, there has been a lot of misinformation being shared on this board recently. Everything from ein requirements to the demise of the mileage deduction so I thought it was appropriate to provide facts which I did.
Fair enough, avitoots. I was just initially responding to the idea the then EIN would add some additional responsibility (it would not) and hoping to avoid a can of worms for breakfast.

Agreed that there is a lot of misinformation out there.
Their own words defeat their purpose.

>>>>an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done.<<<<<

We ARE told what, how ,when. how to dress,what questios to ask, given scenarios, guidelines, and reports which are pre-made and pre-printed which may be rejected
if not inclusive of how you are told to do the shop, when you are told to complete the shop, what scenario you are told to present, and what to ask.

An Independent Contractor would make their own report in their own words and be told simply " go to store ABC and find out what they are doing with our product".

We are not indendent contractors. You can call a raccoon a bear, but it's still a raccoon.
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