FinanceRegs.com » Are you on the list for an employment tax audit?

Are you on the list for an employment tax audit?

March 3, 2009 by Carol Katarsky
Posted in: 1099s, Best practices, Communication, Hiring & training staff, In this week's e-newsletter, IRS regs, Latest news & views, Tax compliance

Want a sneak peek at whom IRS is auditing this year? Be careful: It could be anyone.

IRS has warned its going to start doing random employment tax audits in 2010. It’s aim: To find out exactly how much tax revenue the feds are losing due to employees being misclassified as independent contractors (ICs).

IC classification has always been a gray area — which is why many companies have relied on making an educated guess and then knocking on wood. Without any other red flags, many potentially misclassified employees (and their employers) have flown under the radar.

Random audits could be done at any company — there’s no way to minimize your risk of getting flagged.

What you can do: Go through your hiring procedures now and review the work done by ICs. The first random audits won’t be done until around April 2010, so there’s still time to address any questionable classifications you have on your books.

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