Subscribe (Free) to
Daily or Weekly Newsletters
Post a Job

Featured Jobs

Defined Benefit Plan Consultant

Sentinel Benefits & Financial Group
(Remote / Wakefield MA / Melville NY / Bingham Farms MI)

Sentinel Benefits & Financial Group logo

Compliance Analyst - 401(k) Administration

Ubiquity Retirement + Savings
(Remote / San Francisco CA)

Ubiquity Retirement + Savings logo

Retirement Plan Administrator

Nicholas Pension Consultants
(Remote / Rancho Cordova CA / Corona CA)

Nicholas Pension Consultants logo

Plan Consultant

Sentinel Benefits & Financial Group
(Remote / Wakefield MA)

Sentinel Benefits & Financial Group logo

Senior Retirement Plan Administrator

Enhanced Retirement Solutions
(Rochester NY)

Enhanced Retirement Solutions logo

Defined Benefit Pension Consultant

The Ryding Company
(Remote / Westlake Village CA)

The Ryding Company logo

Benefits Supervisor

NFL Player Benefit Office
(Baltimore MD)

NFL Player Benefit Office logo

DC Plan Administrator

Retirement, LLC
(Remote / Oklahoma City OK)

Retirement, LLC logo

DC Administrator

United Benefit Pensions Inc.
(Remote / Melville NY)

United Benefit Pensions Inc. logo

Senior Plan Consultant

Sentinel Benefits & Financial Group
(Remote / Wakefield MA)

Sentinel Benefits & Financial Group logo

Retirement Plan Administrator

Hessel & Associates, LLC
(Remote / IL)

Hessel & Associates, LLC logo

Senior Administrator / Site Manager

Nicholas Pension Consultants
(Remote / AZ / ID / NM / NV / UT)

Nicholas Pension Consultants logo

Manager - Defined Contribution Plans

M2B Retirement Consulting LLC
(Remote / Wexford PA)

M2B Retirement Consulting LLC logo

Senior Actuarial Analyst/ Project Manager

Van Iwaarden Associates
(Remote / Minneapolis MN)

Van Iwaarden Associates logo

Sr. Retirement Plan Administrator

Tycor Benefit Administrators, Inc.
(Berwyn PA)

Tycor Benefit Administrators, Inc. logo

Junior Implementation Specialist - 401(k) Administration

Ubiquity Retirement + Savings
(Remote / San Francisco CA)

Ubiquity Retirement + Savings logo

Distribution \ Loan Clerk

Retirement, LLC
(Remote / Oklahoma City OK)

Retirement, LLC logo

View More Employee Benefits Jobs

Free Newsletters

“BenefitsLink continues to be the most valuable resource we have at the firm.”

-- An attorney subscriber

Mobile App image LinkedIn icon
Twitter icon
Facebook icon

BenefitsLink > Q&A Columns >

Who's the Employer?

Answers are provided by S. Derrin Watson, JD, APM

Expense Sharing Arrangements As ASGs

(Posted July 3, 2002)

Question 208: Joe owns an incorporated law firm. So does his friend Bill. Joe and Bill are unrelated and practice law at separate locations. The two firms each own half of a LLC. Through the LLC, they share the cost of malpractice insurance and of computerized legal research. The LLC has no employees. The LLC's income consists of reimbursements from the firms. Do the law firms and the LLC constitute an affiliated service group?

Answer: No, they do not.

This question comes up frequently. There are two ways to approach it, either of which arrives at the same point.

The IRS "check-the-box" entity regulations are very clear that an unincorporated expense sharing arrangement is disregarded as an entity. That, of course, is exactly what the LLC is -- an expense sharing arrangement. Instead of filing a separate partnership return, the LLC's expenses should simply be reported on the returns of the two firms.

Of course, if the LLC is not an entity, it is not an "organization" and cannot be a FSO, A-Org, or B-Org under the ASG rules. All you have left are the two firms, and they do not have any common ownership. Accordingly, there is no ASG.

Let's take it from another approach for a moment. Ignore what I've just said and pretend that the LLC is treated as an entity, as an organization. Does it perform or provide services, either for the firms or the public? No. (It's hard to perform services without employees.) Do the firms perform services for it? No. That being the case, it cannot be a member of a traditional ASG.

The entity rules and the regulations that govern them are discussed in chapter 1 of my book, Who's the Employer. Affiliated service groups are discussed in chapter 13.


Important notice:

Answers are provided as general guidance on the subjects covered in the question and are not provided as legal advice to the questioner or to readers. Any legal issues should be reviewed by your legal counsel to apply the law to the particular facts of this and similar situations.

The law in this area changes frequently. Answers are believed to be correct as of the posting dates shown. The completeness or accuracy of a particular answer may be affected by changes in the law (statutes, regulations, rulings, court decisions, etc.) that occur after the date on which a particular Q&A is posted.


Copyright 1999-2017 S. Derrin Watson
Related links:

(restricted access)

(restricted access)

© 2022 BenefitsLink.com, Inc.