IRS Offers Employers Amnesty On Worker Classification.

The Internal Revenue Service has launched a partial amnesty program for employers who voluntarily reclassify independent contractors as employees for future tax years.

Common Law Test.

That could be good news for some independent contractors who really are working like employees and should get the rights and benefits that come with it.

Unlike independent contractors, employees are covered by wage and hour and antidiscrimination laws, workers’ compensation and unemployment insurance programs. Employees are often entitled to paid vacation, sick leave, health and pension benefits and company stock plans; contractors usually are not. Employees pay only half of Social Security and Medicare tax and their employer pays the other half. Independent contractors have to pay both halves.

The rules for determining whether a worker is an employee or independent contractor have never been clear cut.

If the IRS audits an employer and decides it should have been treating independent contractors as employees, the employer can be liable for all or a portion of the federal income and employment taxes it should have paid or withheld from those workers — plus interest and penalties on that amount.

Under the amnesty program, if an employer that is not already being audited voluntarily reclassifies its employees, it will pay a fraction of the employment taxes due for the most recent year, no interest or penalties and will not be subject to an IRS employment tax audit for past years.

But it’s not a get-out-of-jail-almost-free card.  Read the full text at The Republic, Columbus Indiana here.


Posted on October 12, 2011, in Employee Relations, HR Management & Leadership. and tagged , , , , , , . Bookmark the permalink. Leave a comment.

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