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IRS Guideline Requirement

 

Contract fees are necessary to remain compliant with federal law.  As a former Genesis Agent (contractor), IRS guidelines require that an “Opportunity for profit or loss” exists within the line of work in order to strengthen compliance with federal tax law.  This is considered an important compliance factor.  

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When Agents are not able to meet the terms of their agreements (i.e. work requirements, duration of agreement, etc.), we exercise termination fees in order to systematically protect the Agent and Company.  Termination fees invoke “the possibility of incurring a loss” for Agents and facilitates compliance for both parties.  Otherwise, the Financial Control relationship remains unbalanced.

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Tax Deductible

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However, your early termination fees are tax deductible.  You can utilize your Agent Invoice as documentation when filing your next tax return to recover fees incurred.  Contact your tax advisor for details.  We have included a reference to assist you with that process:

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“Penalties and fines. Penalties paid for late performance or nonperformance of a contract are generally deductible. For instance, you own and operate a construction company. Under a contract, you are to finish construction of a building by a certain date. Due to construction delays, the building isn’t completed and ready for occupancy on the date stipulated in the contract. You are now required to pay an additional amount for each day that completion is delayed beyond the completion date stipulated in the contract. These additional costs are deductible business expenses”.

 - IRS, “Miscellaneous Expenses”, "Penalties and fines", Chapter 11, Publication 535
 

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Kind regards,

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Contract Compliance
Genesis Call Center, LLC