Are Companies Really Being Audited for IC Misclassification?”
I get this question every time I speak with a new client and I always have a tough time answering without sounding like I am trying to avoid the question.
The answer is a resounding yes. But it gets tricky in the details.
As we have all heard, the IRS has hired a number of new auditors (we hear over 100) to focus just on this issue. They are well on their way toward investigating 6,000 randomly selected companies between 2009 and 2013. We’ve also all heard of many cases where ICs are being found to be misclassified – and cases where the courts are making the decisions. And we hear about new legislative activity from the states almost weekly. In fact, the New York Times featured one company’s story of juggling the need for ICs , with fear of IRS exposure, just today.
But none of these are audits. Audits can come from claims where workers file for unemployment when they were never an employee according to company records. Or, they can happen when a worker is injured and files a Worker’s Comp claim – which often triggers an audit into their classification status. They can also happen when the IRS gets a state’s claim that reveals a misclassified worker, or when a worker files an SS-8 form to request a classification determination.
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News and notes for independent professionals and their clients. This is our November 21, 2016 edition.