Independent Contractor or Common Law Employee? The I.R.S. Guidelines

Everyday employers face the decision to treat a relationship with a worker as an independent contractor or employee. This decision is motivated by many factors including tax and benefit costs associated with adding an employee versus treating the worker as a contractor. In some cases the employer wishes to classify a worker as an independent contractor due to the number of hours or days the person will work. These are not the factors used to determine if a worker is a contractor or employee.

The three primary considerations regarding contractors vs. common law employees are behavioral control, financial control and type of relationship of the parties. In this session we explore how those apply and how the I.R.S. applies these principals.

The I.R.S. has targeted this issue as one of its top priorities and has committed personnel and resources to collect the over 150 Billion in uncollected revenue it believes are lost every year due to the misclassification of employees as contractors. This does not include the additional 75+ Billion in uncollected self- employment taxes that are not paid. Employers who are being audited for contractor compliance are experiencing adjustments in the millions if they are found out of compliance. In addition to the I.R.S. fines and penalties the employer may have liability involving employee benefits.

The decision a business has to make regarding an employee or contractor is not an arbitrary choice. The I.R.C. has specific guidance regarding the standards that have to be met to classify someone as an independent contractor.

Any US based company or international groups with workers in the US that pay individuals and report those payments on a 1099 Misc.

In this webinar we will discuss:

• The eight factors the I.R.S. uses to determine if the worker is a contractor.
• The six things the I.R.S. recommends to protect against reclassification of contractors.
• The importance of the W-9
• The use of Section 530 Relief to avoid audit adjustments.
• The four industries that have the highest risk.

www.irs.gov Click here

		Gary Garner Illuminare Group, Inc. View Profile