Independent contractors face scrutiny...againSubmitted by cthomas on Tue, 05/04/2010 - 16:31
It seems like they threaten to do this every couple of years, and it's that time again: The IRS is threatening to audit contractor/subcontractor relationships. No one want to fill out tax paperwork when the sunis shining and we could be working...who wants to sit around evaluating how to pay someone for work when its a blessing that there's work to be done at all?
Perhaps the most frightening aspect of these tax regulations is the fact that they're enforced differently every time they're enforced. The potential costs of unpaid payroll taxes and insurance--not to mention fines and interest--are huge. Even worse, it looks like more than one agency is going to be in on it:
Most states are now sharing data with the IRS, and may have set up task forces specifically [to address] misclassification. It used to be that if a business ran into trouble with a state labor department or with the IRS, the issue was isolated. Now, now any kind of audit or compliance finding can set up a domino effect...
This kind of thing can be a contractor's nightmare. Who really wants to spend all of the time satisfying tedious and hard-to-follow regulations? On the other hand, a visit from your friendly neighborhood IRS man can also be one of those "one bullet" issues. Just like stray bullets, IRS regulations might not be part of your day-to-day thought process, but it only takes one to make things go downhill in a hurry.
Who knows if they'll actually follow through this time, or if the concern will die down after a few weeks? But, with the economy still struggling and government tax revenue in the tank at all levels, it's certainly worth some thought. Click through the link at the top of this post for the full article.