Does your firm use independent contractors? If so, the feds may want to talk to you soon.
With federal tax coffers dwindling because of the recession, the IRS has embarked on a new enforcement initiative to identify independent contractors that should actually be classified as employees.
You know why: Employers don’t have to pay unemployment insurance, workers’ comp costs or payroll taxes on independent contractors.
The IRS push, which is scheduled to randomly audit 6,000 companies, is expected to raise $7 billion in taxes over the next decade.
The feds are targeting industries where — they allege — employers commonly misclassify workers as independent contractors. The list:
- child care
- home health care
- grocery stores
- janitorial services
- poultry and meat processing, and
For an overview of the IRS rules concerning independent contractors, go here.