Doctors all have their own PC

[austin3515]

Doctors Group, Inc. is owned 50/50 by two Doctors. Another 4 Doctors work for Doctors Group, Inc. Each Dr. owns his own P.C. Doctors Group, Inc. pays the P.C. for their services based on contracts. These are not "management" services. The P.C.'s are being paid for the medical services their respective owners render.

Something doesn't seem right about this. Clearly it is an affiliated service group, except that the services rendered are not management services, they are actual medical services.

Perhaps the issue here is that they shouldn't even be using the P.C.'s because they are common law employees? The PC's do not do work for any other entity.

[Lou S.]

Isn't Doctors group inc the FSO (A-Org) and aren't each of the individual doctors B-orgs in this classic ASG?

https://www.irs.gov/pub/irs-tege/epchd704.pdf

[austin3515]

Aha - But no common ownership at all.

From your text:
"Ten percent or more of the interests in the organization must be held, in
the aggregate, by persons who are highly-compensated employees
(pursuant to IRC § 414(q)) of the FSO or A-Org."

[jpod]

Isn't this one of the "holes" which 414(o) was designed to fill? I would look at the proposed regs under 414(o) and see if they capture this situation. If they do, then the docs and their respective ERISA counsel need to make a judgment as to whether they will fall in line behind the proposed regs or say "the regs are merely proposed and we can ignore them."

[Mike Preston]

How can it be anything other than an ASG?

[jpod]

414(m) and the proposed regs under 414(m) don't catch them because the 4 other docs allegedly providing services through their PCs and Doctors Group, PC aren't connected by ownership.

[Mike Preston]

I suggest that ownership isn't necessary.

[Lou S.]

I agree with Mike. To go further, is 100% of the Drs individual corp income from services to Dr. Group Inc.?

If so they might be employees of Dr. Group Inc. improperly receiving payments to their corporation. But this isn't really my area of expertise. Just how it "looks" to me.

[Mike Preston]

Let's parse this a bit more. Going back to the original post (and reading more carefully) it looks to me like the payments being made to the individual doctors are going through their corporations. So, Doctor's Group, Inc. is filing 1099's for the amounts paid to the individual corporations.

If so, then if it can be established that the services being provided by the individual doctors are neither management services nor should they be considered employees of Doctor's Group, Inc. then I agree that it is not an ASG.

I would be very careful about representing that they are anything other than employees of Doctor's Group, Inc. and instead ask to see an analysis performed by legal counsel.

[austin3515]

I would be very careful about representing that they are anything other than employees of Doctor's Group, Inc. and instead ask to see an analysis performed by legal counsel.

If so they might be employees of Dr. Group Inc. improperly receiving payments to their corporation. But this isn't really my area of expertise. Just how it "looks" to me.

That's what I'm thinking... As far as I know, the PC's have no other "clients" aside from Dr. Group, Inc.

[Peter Gulia]

Beyond the IRC 414 and other issues that Doctors Group considers, each of the four workers with the corporations that are not shareholders of Doctors Group might ask for his or her lawyers' advice about the possible applications of Internal Revenue Code sections 269A, 482, and 7701(o).