Subcontract for H1B Resources

[msp5005]

Hello,

I am an employer and coming across a rather odd situation. To give you background my company (let's say Company A) has a subcontract with Company X to provide software development services. Company X provides services to Federal Government (so in turn Company A and all of the resources provide end services to Federal Government). Company A (me) has identified couple of part-time resources with the right skillset and knowledge base required to meet the requirements and deliverable. The individuals identified by Company A are on current and valid H1B visas. To receive services from these individuals on part-time basis, Company A has signed consulting agreement (1099) with these individuals' employer (Company C) and receives invoices and makes payment to Company C as part of subcontractor payments.

Additionally, these individuals only provide software development related services and do not have access to any federal government data, equipment, or access to government owned facilities. On paper this arrangement looks something like this Federal Government awarded contract to Company X, Company X subcontracted services out to Company A, Company A further subcontracted out to Company C for software development services. 

Considering the above situation, does this arrangement have any flaws or issues with IRS or USCIS especially concerning H1B status of the individuals providing services? Does Company A or Company X need to report anything to USCIS or any other authority? Can this arrangement continue to work as long as deemed necessary? 

 

Thanks, 

 

[JoeF]

Where do these people perform their work?

Who directs their work?

Under the rules, company C, their employer, has to have the right to direct and control the work that their employees do. If these people work at a client site, their employer has to be able to show up there and inspect or direct their work.

I suggest you discuss your particular situation with a good immigration lawyer. As a business, the lawyer fees are even deductible for you.