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Independent Contractor v. Employee - IRS Program May Be Worth Considering

Posted Monday, September 26, 2011 by Michael A. Larson

alt text One of the most perplexing questions for many businesses is whether a worker is properly classifed as an employee or an indepndent contractor. Many businesses falsely believe that they have an option to treat workers as independent contrators or employees. Instead, there are rules that must be applied on a case by case basis. The rules for making this determination are difficult to apply and workers are often misclassified by businesses. Unfortunately, the cost of making the wrong call can be ruinous, with back employment taxes and penalties totalling up quickly to thousands of dollars.

The IRS is currently offering a new program, whereby business owners can reclassify independent contractors as employees and avoid significant liability for past payroll taxes. Per the IRS, businesses need only pay 10% of the past tax liability for payroll taxes without interest or penalties.

I have had experience making these critical distincitons between contractors and employees and I can help you to analyze the decisions that have been made to classify workers. Further, I can help you to navigate the process to avoid potentially significant past tax liabilities. Call me at 206-805-1490 if you are interested in discussing contractors, employees and avoiding past tax liabilities.

Here is a link to a Wall Street Jorrnal article that discusses the topic in more depth. WSJ Article

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