Misclassified Workers Result in Additional Taxes and Penalties<\/h2>\n![\"Chattanogoa](\"https:\/\/purplelawfirm.com\/law-and-you-chattanooga\/wp-content\/uploads\/sites\/2\/2011\/04\/corporate_small.png\" "\\"Corporations-Business-Attorneys\\"")
<\/a>Chattanooga Attorneys for Small Business<\/figcaption><\/figure>\nBut according to a recent ABA article<\/a>, for those who have misclassified their workforce<\/strong>, the glare of the IRS<\/strong> spotlight may soon be upon them. According to the article, over the next three years, the Internal Revenue Service is auditing<\/strong> 6,000 randomly selected businesses to determine whether they have workers who’ve been classified as contractors when they should be treated as employees. When appropriately done, classifying a worker as a contractor allows a business to escape unemployment, Social Security and Medicare taxes and overtime pay.<\/p>\nHowever, if a business has misclassified<\/strong> a worker, additional taxes, penalties and interest<\/strong> will be the result.<\/p>\nThe ABA reports that “The Department of Labor is also cracking down<\/span>,” says Annette Idalski, chair of the labor and employment litigation group at Chamberlain, Hrdlicka, White, Williams & Martin in Atlanta. “We’ve seen a 50 percent increase in our DOL activity. Several employers have been hit with DOL audits … and are facing devastating damages calculations on back pay alone.<\/p>\nConsult an Attorney Before Reclassifying Workers to Self-Employed<\/h3>\n
If you own a business and are considering reclassifying your employees to self-employed<\/strong>, independent contractors, there is a very complicated set of standards which must be applied to determine if the reclassification is proper and within the IRS guidelines.\u00a0 You should consult with an attorney<\/strong> or a Certified Public Accountant (CPA) before you decide to turn your employees into contractors. If you make the determination that you can reclassify employees to independent contractors make sure you retain an attorney<\/a> to prepare a written contract<\/a> to be entered between you and the independent contractor.\u00a0 This will not only help with a future IRS or DOL inquiry, but will also protect you and your self-employed contractors from other issues that may arise between you or other entities.<\/p>\nThis post is for informational purposes only, and is not intended to be legal advice, and should not be construed to be tax advice.\u00a0 For legal or tax advice consult with an attorney or a CPA.<\/h6>\n","protected":false},"excerpt":{"rendered":"
\u00a0Switching to Independent Contractors Draws Scrutiny from IRS and Department of Labor With the current state of the economy, shifting from full-time employees to independent contractors is a cost-cutting measure that some businesses have implemented.\u00a0 This saves the business money by shifting the burden of payroll taxes to the worker, and lowering or eliminating unemployment insurance premiums and\/or workers compensation premiums. Misclassified Workers Result in Additional Taxes and Penalties But according to a recent ABA article, for those who have misclassified their workforce, the glare of the IRS spotlight may soon be upon them. According to the article, over the next three years, the InternalRead More →<\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_uag_custom_page_level_css":"","ghostkit_customizer_options":"","ghostkit_custom_css":"","ghostkit_custom_js_head":"","ghostkit_custom_js_foot":"","ghostkit_typography":"","footnotes":""},"categories":[9,11,27],"tags":[53,101,196,197,198,205,220,226,231,286,297,300],"yst_prominent_words":[1733,417,440,1119,1741,1730,1734,1732,1740,1735,1731,1728,1736,1729,1737,1742,1743,948,1739,1738],"class_list":{"0":"entry","1":"post","2":"publish","3":"author-admin","4":"post-1108","6":"format-standard","7":"category-contracts-2","8":"category-corporations","9":"category-not_legal_advice","10":"post_tag-attorney-at-law","11":"post_tag-contracts","12":"post_tag-incorporate","13":"post_tag-incorporation","14":"post_tag-independent-contractors","15":"post_tag-irs","16":"post_tag-lawyer-legal-professional","17":"post_tag-legal-documents","18":"post_tag-legal-rights","19":"post_tag-reclassify-workers","20":"post_tag-self-employed","21":"post_tag-small-business"},"featured_image_src":null,"author_info":{"display_name":"Todd Couvillon","author_link":"https:\/\/purplelawfirm.com\/law-and-you-chattanooga\/author\/admin\/"},"uagb_featured_image_src":{"full":false,"thumbnail":false,"medium":false,"medium_large":false,"large":false,"1536x1536":false,"2048x2048":false,"hoot-small-preview":false,"hoot-large-preview":false,"hoot-medium-preview":false,"hoot-wide":false,"hoot-extra-wide":false,"hoot-boxcontent":false},"uagb_author_info":{"display_name":"Todd Couvillon","author_link":"https:\/\/purplelawfirm.com\/law-and-you-chattanooga\/author\/admin\/"},"uagb_comment_info":0,"uagb_excerpt":"\u00a0Switching to Independent Contractors Draws Scrutiny from IRS and Department of Labor With the current state of the economy, shifting from full-time employees to independent contractors is a cost-cutting measure that some businesses have implemented.\u00a0 This saves the business money by shifting the burden of payroll taxes to the worker, and lowering or eliminating unemployment…","_links":{"self":[{"href":"https:\/\/purplelawfirm.com\/law-and-you-chattanooga\/wp-json\/wp\/v2\/posts\/1108","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/purplelawfirm.com\/law-and-you-chattanooga\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/purplelawfirm.com\/law-and-you-chattanooga\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/purplelawfirm.com\/law-and-you-chattanooga\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/purplelawfirm.com\/law-and-you-chattanooga\/wp-json\/wp\/v2\/comments?post=1108"}],"version-history":[{"count":0,"href":"https:\/\/purplelawfirm.com\/law-and-you-chattanooga\/wp-json\/wp\/v2\/posts\/1108\/revisions"}],"wp:attachment":[{"href":"https:\/\/purplelawfirm.com\/law-and-you-chattanooga\/wp-json\/wp\/v2\/media?parent=1108"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/purplelawfirm.com\/law-and-you-chattanooga\/wp-json\/wp\/v2\/categories?post=1108"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/purplelawfirm.com\/law-and-you-chattanooga\/wp-json\/wp\/v2\/tags?post=1108"},{"taxonomy":"yst_prominent_words","embeddable":true,"href":"https:\/\/purplelawfirm.com\/law-and-you-chattanooga\/wp-json\/wp\/v2\/yst_prominent_words?post=1108"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
<\/a>But according to a recent ABA article<\/a>, for those who have misclassified their workforce<\/strong>, the glare of the IRS<\/strong> spotlight may soon be upon them. According to the article, over the next three years, the Internal Revenue Service is auditing<\/strong> 6,000 randomly selected businesses to determine whether they have workers who’ve been classified as contractors when they should be treated as employees. When appropriately done, classifying a worker as a contractor allows a business to escape unemployment, Social Security and Medicare taxes and overtime pay.<\/p>\n However, if a business has misclassified<\/strong> a worker, additional taxes, penalties and interest<\/strong> will be the result.<\/p>\n The ABA reports that “The Department of Labor is also cracking down<\/span>,” says Annette Idalski, chair of the labor and employment litigation group at Chamberlain, Hrdlicka, White, Williams & Martin in Atlanta. “We’ve seen a 50 percent increase in our DOL activity. Several employers have been hit with DOL audits … and are facing devastating damages calculations on back pay alone.<\/p>\n If you own a business and are considering reclassifying your employees to self-employed<\/strong>, independent contractors, there is a very complicated set of standards which must be applied to determine if the reclassification is proper and within the IRS guidelines.\u00a0 You should consult with an attorney<\/strong> or a Certified Public Accountant (CPA) before you decide to turn your employees into contractors. If you make the determination that you can reclassify employees to independent contractors make sure you retain an attorney<\/a> to prepare a written contract<\/a> to be entered between you and the independent contractor.\u00a0 This will not only help with a future IRS or DOL inquiry, but will also protect you and your self-employed contractors from other issues that may arise between you or other entities.<\/p>\n \u00a0Switching to Independent Contractors Draws Scrutiny from IRS and Department of Labor With the current state of the economy, shifting from full-time employees to independent contractors is a cost-cutting measure that some businesses have implemented.\u00a0 This saves the business money by shifting the burden of payroll taxes to the worker, and lowering or eliminating unemployment insurance premiums and\/or workers compensation premiums. Misclassified Workers Result in Additional Taxes and Penalties But according to a recent ABA article, for those who have misclassified their workforce, the glare of the IRS spotlight may soon be upon them. According to the article, over the next three years, the InternalRead More →<\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_uag_custom_page_level_css":"","ghostkit_customizer_options":"","ghostkit_custom_css":"","ghostkit_custom_js_head":"","ghostkit_custom_js_foot":"","ghostkit_typography":"","footnotes":""},"categories":[9,11,27],"tags":[53,101,196,197,198,205,220,226,231,286,297,300],"yst_prominent_words":[1733,417,440,1119,1741,1730,1734,1732,1740,1735,1731,1728,1736,1729,1737,1742,1743,948,1739,1738],"class_list":{"0":"entry","1":"post","2":"publish","3":"author-admin","4":"post-1108","6":"format-standard","7":"category-contracts-2","8":"category-corporations","9":"category-not_legal_advice","10":"post_tag-attorney-at-law","11":"post_tag-contracts","12":"post_tag-incorporate","13":"post_tag-incorporation","14":"post_tag-independent-contractors","15":"post_tag-irs","16":"post_tag-lawyer-legal-professional","17":"post_tag-legal-documents","18":"post_tag-legal-rights","19":"post_tag-reclassify-workers","20":"post_tag-self-employed","21":"post_tag-small-business"},"featured_image_src":null,"author_info":{"display_name":"Todd Couvillon","author_link":"https:\/\/purplelawfirm.com\/law-and-you-chattanooga\/author\/admin\/"},"uagb_featured_image_src":{"full":false,"thumbnail":false,"medium":false,"medium_large":false,"large":false,"1536x1536":false,"2048x2048":false,"hoot-small-preview":false,"hoot-large-preview":false,"hoot-medium-preview":false,"hoot-wide":false,"hoot-extra-wide":false,"hoot-boxcontent":false},"uagb_author_info":{"display_name":"Todd Couvillon","author_link":"https:\/\/purplelawfirm.com\/law-and-you-chattanooga\/author\/admin\/"},"uagb_comment_info":0,"uagb_excerpt":"\u00a0Switching to Independent Contractors Draws Scrutiny from IRS and Department of Labor With the current state of the economy, shifting from full-time employees to independent contractors is a cost-cutting measure that some businesses have implemented.\u00a0 This saves the business money by shifting the burden of payroll taxes to the worker, and lowering or eliminating unemployment…","_links":{"self":[{"href":"https:\/\/purplelawfirm.com\/law-and-you-chattanooga\/wp-json\/wp\/v2\/posts\/1108","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/purplelawfirm.com\/law-and-you-chattanooga\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/purplelawfirm.com\/law-and-you-chattanooga\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/purplelawfirm.com\/law-and-you-chattanooga\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/purplelawfirm.com\/law-and-you-chattanooga\/wp-json\/wp\/v2\/comments?post=1108"}],"version-history":[{"count":0,"href":"https:\/\/purplelawfirm.com\/law-and-you-chattanooga\/wp-json\/wp\/v2\/posts\/1108\/revisions"}],"wp:attachment":[{"href":"https:\/\/purplelawfirm.com\/law-and-you-chattanooga\/wp-json\/wp\/v2\/media?parent=1108"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/purplelawfirm.com\/law-and-you-chattanooga\/wp-json\/wp\/v2\/categories?post=1108"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/purplelawfirm.com\/law-and-you-chattanooga\/wp-json\/wp\/v2\/tags?post=1108"},{"taxonomy":"yst_prominent_words","embeddable":true,"href":"https:\/\/purplelawfirm.com\/law-and-you-chattanooga\/wp-json\/wp\/v2\/yst_prominent_words?post=1108"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Consult an Attorney Before Reclassifying Workers to Self-Employed<\/h3>\n
This post is for informational purposes only, and is not intended to be legal advice, and should not be construed to be tax advice.\u00a0 For legal or tax advice consult with an attorney or a CPA.<\/h6>\n","protected":false},"excerpt":{"rendered":"