Expect Increased Scrutiny of "Independent Contractors"

The IRS recently announced an intensified audit program designed to discover businesses that are misclassifying employees as independent contractors. The IRS is also coordinating with state officials and the U.S. Department of Labor to detect misclassification. The IRS has a form, Form SS-8, Determi...

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Bibliographic Details
Published inExecutive's Tax & Management Report Vol. 73; no. 6; p. 1
Main Author Chovanec, Robert J
Format Trade Publication Article
LanguageEnglish
Published Riverwoods CCH INCORPORATED 01.06.2010
Subjects
Bills
Classification
Employee benefits
Employees
Employers
Fines & penalties
Independent contractors
Litigation
Medicare
Revenue Acts
Taxes
Wages & salaries
Workers compensation
United States > US
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Summary:The IRS recently announced an intensified audit program designed to discover businesses that are misclassifying employees as independent contractors. The IRS is also coordinating with state officials and the U.S. Department of Labor to detect misclassification. The IRS has a form, Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding, that an individual can file, asking the IRS to determine whether that individual is an independent contractor or employee. Factors examined by the IRS, Social Security Administration, US Department of Labor, Wage and Hour Division, and courts are listed. Some businesses are under the impression that if an individual forms a corporation or LLC and the employer engages the entity there is no "misclassification" risk. Government agencies will "look through" the entity to determine the "true relationship" with the individual. The Employee Misclassification Prevention Act would require employers to notify all new employees and nonemployees who perform work of their "employee classification."
ISSN:1098-1594