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Starting Feb. 1, the IRS will begin intensive audits looking into employment tax compliance of 6,000 randomly selected employers. The audit project, which was quietly announced by the IRS in October, is the tax agency's "most significant audit initiative in decades," according to a report by the Morgan Lewis law firm.

These National Research Program (NRP) audits will generate the IRS’ first statistical snapshot of employment tax compliance since 1984. According to Morgan Lewis, the audits are expected to initially focus on the following four areas before expanding to other issues:

1. Worker classification / independent contractors. The focus will include traditional misclassification of employees as independent contractors (IC) and exclusion of misclassified workers from benefits, as well as possible focus on three-party relationships, W-2 vendors and staff leasing relationships.

2. Executive compensation. The IRS will a...(register to read more)

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