Independent contractors are on the radar.
- There is a new initiative to have owners that are improperly treating workers to come forward and admit their mistake. The cost would be penalty of 10% of the payroll tax due for the prior 12 months. This is an effort by the IRS to allow businesses to get it right before they start a hard clamp down on worker classification.
- The IRS is now doing an extensive study sampling worker classification
- Estimates are that $64 billion is being lost in payroll taxes by misclassification.
- Hard lobbying in Washington to eliminate the Section 530 Relief.
- Efforts by the IRS to find employers that are improperly classifying workers:
- Independent research study on the issue
- New IRS specialist to help field auditors with the issue
- More exams
- 1099/W-2 comparisons within individual industries
- Working with the states on classification. States are getting much more active
- Flagging businesses with more than 5 1099's showing more than $20,000; thus indicating the use of independent contractors and workers.
