Are you an Employee or a Contractor? It is time to get this right!


 

Do you pay your workers as EMPLOYEES or CONTRACTORS?

With the NEW YEAR now here, it's TIME TO GET THIS RIGHT!

One of the most recent HOT TOPICS with both the IRS and the DOL is to investigate businesses for the MISCLASSIFICATION of their WORKERS.

For the past few years, businesses have misclassified their workers as contractors instead of employees in order to save 7.65% in matching payroll taxes. Because these businesses have been able to get by without being monitored and corrected, these business owners have become comfortable with this process and don't think they are doing anything wrong.

In fact, because a lot of businesses have been operating this way, new business owners starting up the same business believe that it is ok to operate like this as well.

The IRS has been aware of this problem and now are about to use their newly hired employees to become very aggressive about correcting this KNOWN PROBLEM to assess back withholding taxes and penalties to those companies identified.


There are 3 tests that the IRS uses to classify workers:

BEHAVIOR: Is the worker's job "controlled" by the firm?; Are instructions on how to perform the work and are evaluations and training conducted?

FINANCIAL: Is the worker restricted to work for only one firm and provided tools by the company to do the work?

TYPE OF RELATIONSHIP: Does the worker receive paid sick and vacation days?; Was the worker hired to perform services for an indefinite time or specific time?

If you have a company and have been doing this for years, you may qualify for Section 530 relief for the misclassifications.

Also, if you don't qualify for the Section 530 relief by the IRS, there is a program that the IRS offers called a Voluntary Classification Settlement Program that will allow you to voluntarily correct errors, pay a modest penalty and receive audit protection for prior years. You must also agree to treat the workers as employees in the future and issue W-2s to them.

If you have misclassified your workers in the past, CORRECTLY CLASSIFY YOUR WORKERS now, BEFORE THE IRS FORCES YOU TO DO IT!

Contact me, TODAY, for assistance with PAYROLL TAXES, INCOME TAXES, BOOKKEEPING, BUSINESS CONSULTATION!

Be Well!

Bonnie

OTR Specialist

Dorseytaxplace.com

www.Dorseytaxplace.com

972-672-8850








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