If you provide anything to the contractor to do the job other than the truck they are leasing the IRS says they are employees.
Wrong. Dead wrong. And I'll tell the IRS, your accountant and your lawyer if you want me to.
You as an owner can provide
anything you want to an independent contractor and they will still remain independent, as long as you don't
mandate to them the things you provide.
Take tie-down straps and a pallet jack, for example. If you provide them, either free or for a fee, it has zero effect on their employment status. On the other hand, if you provide them, either for free or for a fee, and you tell the drivers they
must use
your tie-downs and your pallet jack, and not their own, then you're getting into "ways and means" of performing the job, which makes you an employer. But the mere fact that tie-downs and a pallet are in the truck that is leased is irrelevant, whether you charge for them or not, as long as the driver has the option of using them or not, or of using their own.
You can charge an "equipment use" fee if you like (good luck with that, BTW), or not, as it doesn't matter. It's only if you mandate the use of the tools you provide, and do not allow them to use their own, where the "ways and means" (behavior control) of performing their job would make them employees. LLC or anything else has nothing to do with it.
If you do, in fact, charge an "equipment use" fee and
at the same time try to tell the driver they must pay it and cannot use their own equipment, not only are you dabbling across the line of "ways and means" (behavior control), but also dabbling in "financial control" of the contractor, which they aren't at that point, and are instead employees.
The correct classification of a worker as an independent contractor depends on a combination of factors with the key question being the amount of control the business has over the worker. The three primary factors the IRS uses to determine independent contractor or employee status are: behavioral control, financial control, and type of relationship. "Equipment use" fees can, depending on the type of relationship, be classified as behavior control (ways and means), so charging for that could actually do the opposite of what you are being told.
While employees are provided the tools to do the job by the employer, independent contractors
tend to have their own tools and equipment, and usually have an investment in those tools, but it not a requirement that they provide their own tools at all (because the ways and means of performing the job is totally up to the independent contractor). If you want to provide some or all of the tools necessary, that's fine, totally up to you, as long as you don't mandate their use as an employer would, and if you charge for them you have to give the drivers the option of not using yours and of using their own tools instead. Many construction employees have a significant investment in their tools, yet are still considered employees nonetheless, whereas there are also independent contractors who have little or no investment in their tools. So who provides the tools, and whether a usage fee gets charged is really and truly irrelevant, unless you start mandating the use of the tools you provide.
If you lease out a truck that has some of the tools of the trade included in or on the truck, like straps or a pallet jack, those tools of the trade are considered a part of the truck, not separate tools.
If you would prefer to lease the truck without any straps or a pallet jack and expect the independent contractor to provide their own instead of using yours, there's nothing wrong with that, either. However, if you lease a truck with no load locks, straps, pallet jack, GPS, TV, fridge, microwave, CB, inverter or any other tools of the trade or comfort incentives, good luck in recruiting and keeping drivers.
