The IRS is watching — How contractors can cope with employee misclassification

Description

Abstract: Contractors who misclassify a bona fide employee as an independent contractor could suffer a number of costly fates. However, if they do inadvertently fall afoul of the rules, there is now a way to potentially mitigate the damage. This article lists the three primary categories of criteria the IRS looks at when determining whether a worker is properly classified, and how contractors who accidentally violate the rules can seek to lessen penalties through the IRS’s Voluntary Classification Settlement Program. A sidebar offers four ways to avoid misclassifying workers.