Affiliate Service Group and Independent Contractor

[Guest MarcA]

Hi, I'm a new member and first time poster. I have a situation where I am trying to confirm whether or not an independent contractor is part of an ASG.

I have two doctors each with their own professional corporations (PCs). The PCs are the two members (50/50) of an LLC, and the LLC performs medical services. Each doctor is the sole employee of his PC. I am pretty sure the two PCs and the LLC constitute an ASG. The doctors want to associate with another doctor who also has his own PC but will be an independent contractor (I/C) with the LLC. Neither the new doctor nor the new doctor's PC will have any ownership of the LLC. The new doctor will not be a manager or officer of the LLC but the new doctor will perform most if not all of his medical service through the LLC. The new doctor wants to be an I/C because he maintains a separate defined benefit plan that he is max funding. The LLC has employees - nurses, nurse practitioners, physicians assistants.

Question: Is the new doctor's PC part of an affiliated service group with the LLC or the other PCs?

[Blinky the 3-eyed Fish]

Both a-orgs and b-orgs require ownership between the orgs and the FSO. Management groups do not, so I will leave that for you to explore. Watch out for the 414(o) avoidance catch-all though, which is why you should take my advice with a pillar of salt and probably run this by an attorney or apply for an IRS ruling if there is any doubt.

[Tom Poje]

tripped across the following in the ERISA Outline Book 2006 edition

page 1.14 2.a "....if the physician is an independent contractor of the hospital, the physicians should be able to maintain a plan with respect to that independant practice"

this is from the section of deinitions on Affiliated Service Groups.