Sunday, June 23, 2013

IRS Reignites Employee vs. Independent Contractor Debate

Independent Contractor v. Employee. This fight has been going on between the IRS and the business for as long as anyone can remember. Even cities are not safe from scrutiny. Safe Harbors, amnesty programs, voluntary classification program - the IRS refuses to recognize independent contractors that are used on a routine basis.

Lets review a couple of things on this issue:

  1. The IRS has preference for classification of workers as employees for tax collections purposes.
  2. More and more workers are working at a number of different jobs for multiple employers, and many from home - this is the new economy.
  3. Many states are now interested in classifying workers as employees - we recently saw a case with the Texas Workforce Commission that classed workers as employees independent of an IRS involvement.
  4. Obamacare is right around the corner - employers will adapt to get under the 50 employee threshold. 

Employers, better gear up for a fight on this issue. Document your files. Review the safe harbor policies on classification. Re-class if necessary.

Have questions on this tax issue? Contact Tax Attorney Martin Cantu for a consult today.