Subject: Josh independent contractor status
From: "Patty Dailey Lewis" <[email-masked]>
To: "Hallie Biden" <[email-masked]>, "Hunter Biden" <[email-masked]>, "Fred Sears" <[email-masked]>
Date: Sat, 11 Aug 2018 08:46:13 -0400

Good Morning: 

Yesterday we went through the first day of the in-person interviews for the certified audit. Just as a reminder the certified audit is necessary for a couple of reasons, but at this point because BBF is applying for a Longwood Foundation grant, and the certified audit is a requirement. Generally the certified audit is required for large grants, and for any government grants, as well as for charitable ranking assessments, for example, Charity Navigator. 

I will tell you that this was a painful process, and its in the early stages. That said the audit has raised some significant issues, and the most concerning to me is the independent contractor status of Josh. As you may recall, Josh has a firm, JMA. Josh’s monthly pay, at his request, is paid to JMA. He then has at least 2 other contracts, one with the PAC and one with our contractor First Pic. The First Pic contract for $9,000, ( $9000 to Josh and another $1000 to First PIC for management) was to bridge the difference between his BBF income and the PAC income to maintain the $174,000 “salary.” Are any of you aware if Josh has a contract with BBF or with the PAC that may have been established prior to my coming on board in 2016? The IC status is also determined in part by the existence of a contract.

 The PAC and First Pic appear to be appropriately categorized as independent contractor work under the IRS rules.  An improper characterization of employees can lead to significant issues, the greatest of which is IRS penalties. While I understand that the IC status gives Josh greater flexibility with regard to expenses and income, I am not comfortable that it is in the best interest of the foundation. Josh is very upset about this issue and what will lead to his having less income should he be paid by BBF as an employee versus an independent contractor. I am not sure why he can’t be an employee with BBF and maintain is outside JMA independent contractor status for his 2 other income sources, thus be able to enjoy the benefits he does under the independent contractor status. 

This leads to another issue, the Board must establish an audit committee. This committee will oversee the audit process and insure the implementation of the audit. Clearly, I am fully cognizant of the implementation needs and will begin implementation today. For example, we did not know that we need to keep hard records on employee leave. I know what people have and what they have used, but we did not  know that at the end of the year any leftover leave was to be calculated on the books as a liability of the foundation. As the COO that is Josh’s responsibility.  ( The COO title is another issue that indicates that Josh is an employee and not and independent contractor.)  The good news is that last year Claudine used all of her leave, and as an independent contractor Josh was not entitled to “paid leave.” (which was also upsetting).   I will waive any leave owed for myself, so other than preparing the document 2017 it will be good. For 2018, and ongoing I will insure that document is prepared. I will now require written leave requests that identify leave used and balances available. 

Please let me know who will be on the audit committee. It only needs to be a few people, and Fred, the treasurer is the preferred chair of that committee for obvious reasons. So we need to get two more people assigned. I am more convinced than ever that we need a bookkeeper. It only needs to be a part-time person, but the auditor indicated that a third person would significantly improve our financial controls. As you may recall in late 2016 I ended the one person handling all finances; I  took over approving all invoices and writing the checks, which breaks up the one person process involving all incoming and outgoing funds. But, as anticipated the auditor indicated that the presence of a third party in this process is best practices. 

I look forward to hearing your thoughts. 

Have a great weekend. 

Best—

Patty 

Patricia Dailey Lewis, Esquire
Executive Director
Beau Biden Foundation for the Protection of Children

www.beaubidenfoundation.org <http://www.beaubidenfoundation.org/>
[email-masked] <mailto:[email-masked]>

“We have seen the progress that can be made when society commits to shining a bright light on a crime like domestic violence, and we are seeing the beginning of what can be accomplished if we continue shining that bright light on child abuse. As adults, we have a legal and moral obligation to stand up and speak out for children who are being abused. These children cannot speak for themselves.” —Beau Biden

> Begin forwarded message:
> 
> From: John Still <[email-masked]>
> Subject: Beau Biden Foundation
> Date: August 10, 2018 at 5:07:53 PM EDT
> To: Patty Dailey Lewis <[email-masked]>, Joshua Alcorn <[email-masked]>
> 
> Patty and Josh,
>  
> I attached the IRS checklist that has questions regarding independent contractor vs employee status. Please review it and let me know which questions are answered “Yes”.
> I attached a word document with a number of items I need to test for when I come out here Thursday.
>  
> I will also send samples for Revenue items (contributions and event income) and expense items early next week.
>  
> Thanks,
>  
> John H. Still III, CPA
> Master, Sidlow & Associates, P.A.
> 2002 W. 14th Street
> Wilmington, DE  19806
> Phone 302-652-3480
> Fax 302-652-8778
>  
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