Over the past year, I have been interviewing accountants and labor, corporate and health care lawyers about engaging in 1099 relationships in professional offices. After speaking to 100’s of you who have those relationships, I can now say with a great degree of certainty that most of you are not compliant and leave yourself open to serious tax penalties, kickback allegations and corporate fraud issues.
My research has revealed that in 2017, the IRS and, subsequently, the carriers will be focusing on this at a much higher level and if you are not within the many different agencies' guidelines, it can cost you anything from too much to everything. One simple “tell” if you are not functioning within the laws/guidelines is if your 1099 doctor sees your patients and they come in on indivudal schedules.
The simplest solution and the only “safe harbor” is to have each doctor on a W-2. The only exception in the above scenario is locum tenens for vacation or illness coverage. There are many more tests for a compliant 1099 relationship and I will outline them in a future consultation.
However, no matter the laws, guidelines or regulations, I urge all of you to have every associate doctor in your office on a W-2 as that is the safest, most conservative environment in which to function. There are many ways to make money and “push the envelope.” This is not one of them as the risk is too great and the law is open to too much interpretation leaving those with more money and power the ability to have your circumstances interpreted against you.
Mark Studin DC, FASBE(C), DAAPM, DAAMLP
Adjunct Assistant Professor of Chiropractic, University of Bridgeport, College of Chiropractic
Adjunct Professor, Division of Clinical Sciences, Texas Chiropractic College
Educational Presenter, Accreditation Council for Continuing Medical Education Joint Partnership with the State University of New York at Buffalo, School of Medicine and Biomedical Sciences
Academy of Chiropractic
US Chiropractic Directory