FinanceRegs.com » Employee misclassification

Guidance on two key issues

Carol Katarsky — Fri, 24 Oct 2008 10:00:16 +0000

Make sure you get the latest guidance from IRS on these two employment tax issues companies have been submitting questions about:

IRS Headliner 246 provides expanded explanations on:

handling personal use of employer-provided cars — Personal use of the cars is a fringe benefit and, generally, fringe benefits are taxable unless specifically excluded by law. The guidance explains how to determine that value of the use of the car.
the Classification Settlement Program– The CSP allows eligible companies who apply to the program to receive reduced penalties for worker misclassification errors. CSP is available only for companies who have independent contractor/employee misclassification issues to clear up.

Visit IRS to see all the details.

Now states are auditing worker misclassifications

Carol Katarsky — Tue, 08 Jul 2008 10:00:05 +0000

It’s more important than ever to ensure your company’s employee/independent contractor (IC) classifications are bulletproof. New state task forces are stepping up enforcement along with the feds, and many companies have already been hit hard.

For example, in four months, a New York State task force initiated 17 investigations based on employee interviews. So far, $3 million in back taxes and penalties due to worker misclassification has been found.

And that’s just at the state level. Now that the errors have been exposed you can imagine what the federal tax hit will be.

And with that kind of “return on investment” there’s plenty of reason for auditors in all states to take a second look at this area of your tax compliance.