IRS To Intensify Attack On Worker Misclassification

If your company is a staffing agency contracting with independent contractors to provide services to third parties or you regularly contract with independent contractors to fill staffing needs, be prepared for a new and aggressive attack by the Internal Revenue Service ("IRS").

As noted in the Kiplinger Tax Letter, dated August 2, 2013, and Bloomberg Businessweek dated August 14, 2013, the IRS has made it clear that the agency intends to devote major audit resources to investigate worker misclassification, and it appears the focus will be on small businesses. Much of the impetus results from a study the IRS began several years ago, as well as a report issued by the Treasury Inspector General for tax administration, dated June 14, 2013, detailing how employers do not always follow IRS worker determination rulings in response to the determination of the Worker Status Program, better known as the SS-8 Program.