al for either the purchase or sale of anagency• Any other inform<strong>at</strong>ion th<strong>at</strong> insultsyour sensibilities as a professional independentbusiness owner.IRS Form 3949 A can be completedonline <strong>at</strong> www.irs.gov. To access theform, enter 3949 A in the search box andclick on the “search” button. The formwill come up online, and you’ll be able tocomplete it and print it. Once you havecompleted and printed it, mail the formalong with any supporting documents tothe following address:Internal Revenue ServiceFresno, CA 93888As mentioned previously, followingth<strong>is</strong> article you will find a hypotheticalexample of IRS Form 3949 A. The responseson the sample are wh<strong>at</strong> we believemay represent predictable answersbased on inform<strong>at</strong>ion sent to NAPAAby agents regarding the employee-typecontrols agents are subjected to on adaily bas<strong>is</strong>.Th<strong>is</strong> “Inform<strong>at</strong>ion Referral” form allowsindividuals to send pertinent inform<strong>at</strong>ionto the IRS directly. If you wantto submit copies of emails, communic<strong>at</strong>ionsor directives th<strong>at</strong> support the m<strong>is</strong>classific<strong>at</strong>ionof the agency force, youshould submit any document<strong>at</strong>ion withIRS Form 3949 A. The process <strong>is</strong> easy;complete and print the form, <strong>at</strong>tach theproof, and drop it in the mail.When should Allst<strong>at</strong>e agents stop reportinginappropri<strong>at</strong>e behavior by Allst<strong>at</strong>emanagers? The answer <strong>is</strong> simple – whenthe following creed becomes a reality:I Am An IndependentContractor…1. I am an independent contractorand business owner of an insuranceagency offering Allst<strong>at</strong>e insurance productsto consumers in my community.2. The oper<strong>at</strong>ion of my agency <strong>is</strong>subject only to my own professionaljudgment.3. I am free to determine the hoursof oper<strong>at</strong>ion for my office, as well as theholiday schedule for my office.4. It <strong>is</strong> my dec<strong>is</strong>ion to offer 24 hourservice to my customers through the Allst<strong>at</strong>eCIC, or not to.5. I will produce insurance applic<strong>at</strong>ionsin compliance with Allst<strong>at</strong>e’sguidelines, but will establ<strong>is</strong>h my ownbusiness practices regarding how, when,and where the work will be done.6. I am not subject to quotas or minimumproduction standards.7. I am not subject to superv<strong>is</strong>ion,direction, or performance reviews fromAllst<strong>at</strong>e managers.8. I do not provide reports to thecompany, outside of premium remittancereports.9. I am available to meet with companymanagement from time to time <strong>at</strong>a mutually agreed place and time, but<strong>at</strong>tendance of company meetings andtraining sessions are <strong>at</strong> my option.10. I may staff my agency with workersof my choosing. Allst<strong>at</strong>e will providebinding authority approval subject tolicensing requirements and backgroundcheck inform<strong>at</strong>ion only. All hiring, trainingand evalu<strong>at</strong>ion of my staff are <strong>at</strong> mysole direction.11. I am afforded the ability to contractwith other insurance providers of mychoosing for the purpose of securing coveragewhere Allst<strong>at</strong>e has refused applic<strong>at</strong>ionfor coverage (right of first refusal).12. Having made significant investmentto acquire prospect and lead inform<strong>at</strong>ion,all personal inform<strong>at</strong>ion andquotes prepared for prospective buyers bymy agency are the property of my agencyand may not be shared with call centersor others for any purpose.13. I own the policy renewals for accountsin my agency, and have the rightto transfer any such business to other insurancecarriers <strong>at</strong> policy renewal upontermin<strong>at</strong>ion of my agent contract withAllst<strong>at</strong>e.14. My contract with Allst<strong>at</strong>e may notbe termin<strong>at</strong>ed by Allst<strong>at</strong>e without cause,except in the event th<strong>at</strong> Allst<strong>at</strong>e no longeroffers insurance in my st<strong>at</strong>e. “Cause”<strong>is</strong> specified in my contract and not subjectto change without prior consent ofboth parties to the contract.15. As an Allst<strong>at</strong>e agent in goodstanding, I am an approved buyer for thepurchase of additional Allst<strong>at</strong>e agencies,or books of business.16. I am free to sell my agency withoutunreasonable interference from Allst<strong>at</strong>e.No buyer may be denied approval to purchasemy agency without cause. “Cause”<strong>is</strong> specified in writing in my contract andnot subject to change without prior consentof both parties to the contract.Until then…As long as Allst<strong>at</strong>e continues to wieldextensive control over the agency force,then we, as employees, will demand restor<strong>at</strong>ionof all the benefits enjoyed by othercompany employees, including healthinsurance, 401k plans, pensions, paidvac<strong>at</strong>ions, protection from age or otherforms of d<strong>is</strong>crimin<strong>at</strong>ion, workers’ comp,employer-paid Social Security, Medicare,unemployment benefits, and all otherbenefits th<strong>at</strong> were m<strong>is</strong>appropri<strong>at</strong>ed fromagents <strong>at</strong> the time of the sham conversionto IC st<strong>at</strong>us nearly ten years ago.In conclusion:Regardless of your political persuasion,the time for th<strong>is</strong> action <strong>is</strong> now. There maynever be another time in your Allst<strong>at</strong>e careerswhen you have the opportunity toachieve and preserve your independentcontractor rights. Th<strong>at</strong> <strong>is</strong> why it <strong>is</strong> criticalth<strong>at</strong> every Allst<strong>at</strong>e agent particip<strong>at</strong>eby sending in the petitions from our lastmagazine, completing IRS Form 3949 A,which can be found on the next page of th<strong>is</strong>magazine, and by completing and sendingin a letter to the <strong>at</strong>torney general in yourst<strong>at</strong>e, such as the sample th<strong>at</strong> <strong>is</strong> included inth<strong>is</strong> <strong>is</strong>sue of Exclusivefocus magazine.Remember, there <strong>is</strong> nothing to fearbecause documents such as these can besent anonymously.NAPAA has provided th<strong>is</strong> article forinform<strong>at</strong>ional purposes only. The contentsshould not be construed as legal advice fromNAPAA or its <strong>at</strong>torneys or accountants,and NAPAA expressly d<strong>is</strong>claims any suchadvice. NAPAA recommends th<strong>at</strong> agentsconsult with their professional adv<strong>is</strong>orsbefore taking any action th<strong>at</strong> could affecttheir tax or legal st<strong>at</strong>us. NAPAA encouragesagents to read IRS Notice 989, CommonlyAsked Questions When IRS DeterminesYour Work St<strong>at</strong>us <strong>is</strong> “Employee.” Beaware th<strong>at</strong> the consequences of reclassific<strong>at</strong>ionmay include tax ramific<strong>at</strong>ions fromprior years.26 — Exclusivefocus Winter 2009/2010
Form 3949 A(2-2007)1. Taxpayer Namea. Street Addressb. City/St<strong>at</strong>e/ZIPc. Social Security Number (SSN)d. Occup<strong>at</strong>ione. D<strong>at</strong>e of BirthDepartment of the Treasury – Internal Revenue ServiceInform<strong>at</strong>ion Referral(See instructions on reverse)2. Business NameThe Allst<strong>at</strong>e Corpor<strong>at</strong>iona. Street Address2775 Sanders Roadb. City/St<strong>at</strong>e/ZIPNorthbrook, IL 60062-6127c. Employer Identific<strong>at</strong>ion Number36-0719665d. Principal Bus ActivityInsuranceOMB # 1545-19603. Marital St<strong>at</strong>usMarried Single Head of HouseholdDivorced Separ<strong>at</strong>ed4. Alleged Viol<strong>at</strong>ion of Income Tax Law (Check all th<strong>at</strong> apply).False Exemption Unsubstanti<strong>at</strong>ed IncomeFalse Deductions KickbackMultiple FilingFalse/Altered DocumentsOrganized Crime Failure to Pay Tax3a. Name of SpouseUnreported IncomeNarcotics IncomePublic/Political CorruptionFailure to File Return✔ Failure to Withhold TaxWagering/GamblingEarned Income Credit✔ Other (Describe below)5. Unreported Income and Tax Years (Fill in Tax Years and dollar amount(s), if known, e.g., TY2005 $10,000)TY 03 $ TY 04 $ TY 05 $ TY 06 $ TY 07 $ TY 08 $a. Comments (Briefly describe the facts of the alleged viol<strong>at</strong>ion - Who/Wh<strong>at</strong>/Where/When/How. Attach another sheet, if needed).Allst<strong>at</strong>e Insurance Company reports its captive agents to the IRS as 'independent contractors.' However, Allst<strong>at</strong>ecaptive agents are subjected to employee-style controls including annual performance reviews; instruction,training and evalu<strong>at</strong>ion for work performance; mand<strong>at</strong>ory hours and oper<strong>at</strong>ing schedule, control of after hourstelephone service, sales quotas, required reporting of work tasks including prospecting calls, number of quotesand policy sales; mand<strong>at</strong>ory <strong>at</strong>tendance <strong>at</strong> meetings and training sessions; and <strong>at</strong> will termin<strong>at</strong>ion of the agentcontract subject only to 90 day prior written notice. The agency d<strong>is</strong>tribution system <strong>is</strong> an integral part of theoper<strong>at</strong>ion of the company and the agency contract provides for a continuing rel<strong>at</strong>ionship between the agent andthe company. Allst<strong>at</strong>e agents work implicitly for Allst<strong>at</strong>e, with approx 95% of income derived solely from Allst<strong>at</strong>e.b. Are books/records available?✔ Yes Nod. Banks, Financial Institutions used by the taxpayer:Name:Address:City/St<strong>at</strong>e/ZIP:c. Do you consider the taxpayer dangerous?Yes ✔ NoName:Address:City/St<strong>at</strong>e/ZIP:e. Please describe how you learned and/or obtained the inform<strong>at</strong>ion in th<strong>is</strong> report (Attach another sheet, if needed):I have been an Allst<strong>at</strong>e agent for (__) years. I have witnessed employee-style control behavior firsthand and amincluding a copy of a recent company communic<strong>at</strong>ion/directive th<strong>at</strong> exhibits these alleg<strong>at</strong>ions. By m<strong>is</strong>classiyingapprox 14,000 workers, Allst<strong>at</strong>e has avoided years of Unemployment, Social Security and Medicare taxes.6. Your Name: Withheld for fear of retali<strong>at</strong>ion, possibly resulting in the termin<strong>at</strong>ion of my contract.a. Address:b. City/St<strong>at</strong>e/ZIP:c. Telephone Number (Please include the Area Code):For Mailing Address, see InstructionsFor Paperwork Reduction Act, see InstructionsC<strong>at</strong>alog Number 47872E Form 3949 A (Rev. 2-2007)Winter 2009/2010 Exclusivefocus — 27
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