Misclassifying workers is one of the costliest mistakes in all of personnel management. Even as the cost of employing workers rises, facing an audit of workers you put on 1099 can mean an expensive payroll tax assessment – one that often ends in bankruptcy. Although the IRS has remained relatively consistent in their evaluation of working relationships, many states are forcing more and more workers to be put on payroll.

What makes an independent contractor? Most of the answer is in that title itself. In order to establish that a worker is not an employee, you must show independence in the working relationship. That is, what factors (pay, tools and equipment, work hours, manner and means of performing services, etc.,) does the worker have some or all control over? Then you need to consider the contract under which the worker and the business are bound by.

What You’ll Learn:
– Misclassification Facts – IRS estimates of lost revenue
– Who Cares? – Variety of agencies that audit for this and why
– FIT definition of employee
– FICA/FUTA definition of employee
– IRS 3 Part Test – the minimum standard for federal and state purposes
– IRS pub 1779VII. State Determinations – how they are being narrowed year by year
– Exposure – How to determine your vulnerability to audit
– Procedures for ensuring proper classification – how to tighten up your company procedures
– Ancillary Issues
– Electronic Filing and TIN matching
– Backup Withholding