by Angela Rud, Esq.
In the past two years, the IRS and state agencies have penalized an increasing number of employers for using “independent contractors” who really should have been classified as employees.
The number of Fair Labor Standards Act () case filings involving misclassification challenges has nearly quadrupled since the late 1990s. It was up over 20% in 2010 alone. And the IRS says it plans to audit 6,000 businesses by 2013 to determine whether taxes, fines and penalties may be due. State agencies are planning to do the same.
Recently, the IRS unveiled a new Voluntary Classification Settlement Program (VCSP), which allows eligible taxpayer employers to voluntarily reclassify workers as employees for federal employment tax purposes. The program features partial amnesty for past misclassifications, limiting an employer’s liability. (See “Feds offer amnesty for contractor misclassification”.)
Even so, the rece...(register to read more)