FedEx Ground vs USA
Documents
This is a continuation of the 1991 Roadway Package Systems Inc. v USA case before the United States Court of Federal Claims.
In December 2007, FedEx Corp announced the IRS audited FedEx Ground for 2002 and found the drivers to be employees and not "independent contractors." FedEx Corp made this announcement in its legal filings with the Securities and Exchange Commission and set the financial press and Wall Street analysts off. Negotiations between FedEx and the IRS are planned for "spring of 2008 and that a final resolution of this matter will not occur for some time."
As FedEx's own spokespodperson has said, "We'll meet with the IRS. If we can't come to an agreement, there is a second or third level of process within the IRS." If nothing can be worked out, "then we can go to court." This resource page will be a placeholder for the proceedings until FedEx goes to court.
The IRS audited RPS for 1985 and 1986 and found the drivers to be employees and not "owner operators." RPS filed a complaint against the Dept of Treasury to get a refund of the taxes, penalties and interest stemming from that audit. RPS and the IRS agreed to settle in 1995 and the case was dismissed. See the document "RPS-IRS 1995 Closing Agreement" for the settlement language as filed by FedEx in its appeal at the California Unemployment Insurance Appeals Board.
In the Estrada class action lawsuit in California, the trial judge reviewed the probative value of including the RPS-IRS 1995 Agreement into evidence in 2004. The judge concluded, "If one actually reads the letter, it is not terribly convincing...I quote, ‘This letter does not preclude any owner-operator from filing an SS-8 to request an employment status determination of the relationship with RPS. The determination of employment status by the Service will be based upon an analysis of the facts as presented by the worker and RPS'...In effect, what you have here is an opinion based upon the representations and statements made by the lawyers for RPS...The fact the IRS believed such status was not static is based upon the next to last paragraph which I read into the record. As such I believe the letter is relevant only to show that RPS received this letter and it therefore goes to the beliefs of the parties. But as an opinion in and of itself, I think it is really not worth the paper it is written on."