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1099 Risk Blog
IRS Enforcement
June, 17 2010
There is movement in independent contractor legislation pending in Congress: the Senate Committee on Health, Education, Labor and Pensions conducted hearings today focused on the Employee Misclassification Prevention Act, or EMPA. The hearing was titled, "Leveling the Playing Field: Protecting Workers and Businesses Affected by Misclassification." That link hosts a video showing highlights of the hearing. If passed, the Employee Misclassification Prevention Act (EMPA) would amend the Fair Labor Standards Act to criminalize . . .
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June, 9 2010
The impacts of the new healthcare laws on contingent workforce management will not be fully understood for some time. But some provisions of great concern are approaching rapidly, including a little understood 1099 reporting provision slated to take effect on January 1, 2012. Like the proposed Employee Misclassification Prevention Act (EMPA) bill, this new requirement would “pierce the corporate veil” hiding independent contractor vendors and require immediate discovery and control over challenging spend categories such as statement of work consultants and sub-contractors.
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March, 10 2010
For any large organization, managing the risks of using independent contractors is a tremendous burden. The whole question of 1099 vs W-2 worker classification is perplexing, and the co-employment aspect of 1099 risk plus the fear of contractor lawsuits makes things even murkier. But for federal contractors the bar is set much higher, and the consequences for getting things wrong are far more worrisome. So what's so special about 1099 risk for federal contractors?
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February, 3 2010
Monday's release of Obama's 2011 Budget has generated a flurry of excitement regarding an increase of $25 million for the Department of Labor (DOL) to go after worker misclassification in a joint effort with the Treasury. The efforts are expected to increase Treasury receipts by more than $7 billion over a ten year span. But the $25 million line item in the budget doesn't tell the whole story of what's intended for the future of worker classification enforcement in Obama's 2011 budget. Hey . . . what's this $8 billion for the IRS to target critical areas of non-compliance? And why isn't anyone excited about that?? Read on . . .
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September, 23 2009
The IRS will audit as many as 6000 companies for employment tax compliance and proper worker classification -- starting in November of 2009. The audits are part of the Treasury's National Research Program and will be the first study of worker misclassification since 1984. Is your company on the list, and do you have a formal process in place for addressing worker misclassification? Read more about contractor and employee classification in the New GAO Report on Employee Misclassification.
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September, 10 2009
The GAO recently published a new report on worker classification, and here it is in full text for you: GAO-09-717 Employee Misclassification: Improved Coordination, Outreach, and Targeting Could Better Ensure Detection and Prevention. It seems that the leadership of DOL, OSHA, and IRS agree with the recommendations, and there is energy for the reform of independent contractor classification and compliance. The congressional requesters were Senators Kennedy (may he rest . . .) and Durbin, and Representatives Woolsey and Andrews. This bodes well for H.R. 3408 or similar to make progress . . .
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August, 13 2009
Congressman Jim McDermott (D-Wash) introduced H.R.3408, The Taxpayer Responsibility, Accountability and Consistency Act of 2009 in Congress. Sound familiar? This is substantially the same piece of legislation as H.R.5804 of the same title from 2008. The bill would repeal Section 530 (Safe Harbor) of the Revenue Act of 1978. The bill has 6 co-sponsors, compared to H.R.5804 which had won the support of 37 co-sponsors before dying an untimely death . . .
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April, 10 2009
As our senior management representative handling new customer implementations, I’m privy to some of the best facial expressions business executives have to offer. A few weeks ago, I visited a new customer to begin implementing our Independent Contractor Compliance services, which included...
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April, 3 2009
Last fall, I learned of a curious event in the world of Independent Contractor risk: a government agency was being audited by the IRS for its use of Independent Contractors. The audit found the agency to be liable, and the IRS levied penalties. Although the fines did not seem to be of the level I have seen with private industries, it did come with the stipulation that the agency clean up its act in the next six months or it would...
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March, 27 2009
The IRS was alerted to a growing epidemic of worker reclassification by a Treasury Department report issued last month. In our last blog post on misclassification, we discussed why employee reclassification was on the rise in America. In the second part of this short series, we will look at...
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Recent NewsNew Study Details Strategies for Managing the Contingent Labor Umbrella, Including Independent Contractors
August 12, 2010 -- New research on contingent workforce management from Aberdeen highlights a new trend in independent contractor and SOW consultant management: a dramatic increase in the use of Independent Contractor Engagement Specialists (ICES) that help businesses reduce the risks of engaging independent contractors and other contract workers, including misclassification and co-employment risk.
Read the press release >
Visit the newsroom > New ResearchManazing the Complexities of the Contingent Labor Umbrella
This latest research from Aberdeen reports on the dramatic growth in the use of independent contractors, SOW consultants, and services spend, and gives insights on how Best-in-Class organizations are navigating the contingent labor landscape. This year, the report has an expanded scope to include new categories of spend in the contingent workforce, including project / services spend.
Download MBO White PaperMaximizing Talent, Minimizing Risk: Approaches for Compliant Independent Contractor Engagement
Conventional Contingent Workforce Management (CWM) approaches are weak when it comes to independent contractors. But recent innovations are being integrated into VMS/MSP programs with powerful results. This whitepaper shows how to focus on the root cause of independent contractor challenges, rather than symptoms, and reap significant risk mitigation.
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