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If your organization uses independent contractors, watch out: Starting in February, the IRS will begin intensive audits of 6,000 randomly selected employers. One key target: identify employers that are improperly misclassifying employees as independent contractors.

These National Research Program (NRP) audits are the IRS’ “most significant audit initiative in decades,” according to a report by law firm Morgan Lewis. The audits will generate the IRS’ first statistical snapshot of employment tax compliance since 1984.

In addition to independent contractor status, the audits—which will stretch across all industries and company sizes—will examine compliance in payroll taxes, fringe benefits and executive compensation. The audits will mainly focus on tax years 2007 and 2008 and include face-to-face interviews, plus a line-by-line review of the company’s employment tax returns. 

Misclassification on the rise. IRS offic...(register to read more)

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