Who thought this was a good idea?
In this case they were treating its officers as contractors which was causing headaches for a corporation that owned and operated day care centers.
The corporation didn’t pay any salary to a couple who were its sole shareholders and officers. Instead, the couple got $200,000 in management fees and were treated as independent contractors. The company owes back employment taxes and penalties, the Tax Court decides.
The couple performed substantial management, supervisory and day-to-day services, and they are deemed to be employees.
Blossom Day Care Centers, TC Memo. 2021-86