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CalAttorney2
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Category: Business Law
Satisfied Customers: 10238
Experience:  I am a businesses law attorney, with experience advising and representing owners and investors.
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If a 1099-MISC contractor or volunteer VOLUNTARILY pays for

Customer Question

If a 1099-MISC contractor or volunteer VOLUNTARILY pays for equipment/supplies on their own accord, outside of the business (LLC), is the LLC legally responsible to reimburse the contractor/volunteer?
Submitted: 1 year ago.
Category: Business Law
Expert:  CalAttorney2 replied 1 year ago.
No, an independent contractor by their terms is responsible for providing their own equipment and supplies. While a business can provide certain supplies or equipment (for reasons such as quality control purposes) the independent contractor has a general obligation to provide their own equipment.See generally: http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Behavioral-Control
Customer: replied 1 year ago.

Here is the situation:

There is a youth sports organization....The first 3 events were fully paid for from the LLC. Based on lack of payment from the team members, future events/tournaments were not paid for. The independent contractor/volunteer paid $10,000 worth of events/tournaments on their own accord to secure position/spots. Now they are seeking reimbursement. 90% of funds have been paid, but the sports organization has used funds to support paying off LLC debt and other business expenditures. They are threatening legal action, but the LLC would like to take care of the advertised services they committed to providing before paying off contractor/volunteer.

Is the LLC legally obligated to reimburse contractor/volunteer? Should the legal priority be to satisfy the customer/member of the organization first and provide what was advertised?

*LLC/organization plans to reimburse the contractor/volunteer ASAP, but wants to know if they are legally allowed to prioritize the members of the organization who paid for services , before reimbursing the volunteer/contractor.

Expert:  CalAttorney2 replied 1 year ago.
The volunteer/contractor made a gift to the organization. The organization does not have a legal obligation to repay this gift. It may be wise to do so for non-legal reasons, and the contractor may even have a claim under "equitable" (quasi-contractual law) for repayment, but their claim can certainly be second to prior formal contractual obligations made by the organization.The Organization does not yet have a formal legal obligation to pay these debts in a formal order, but it can use the above principles to help it create a basis to pay debts in order.

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