IRS Poised to Audit Businesses for Worker Misclassification and Unpaid Payroll Taxes

The Jan. 31 deadline for filing Form 1099s for independent contractors is around the corner. A major target on the IRS hit list is worker status.

Why would the IRS care how a business owner classifies workers? Because the tax burden on the owner changes dramatically depending on how a worker is classified. The IRS is on the lookout for worker misclassification—it doesn’t matter if it is deliberate or inadvertent—to capture all past due employment taxes owed.

Business owners must withhold and pay Social Security and Medicare taxes, income taxes and unemployment taxes on wages paid for employees. Independent contractors shoulder these taxes themselves, and employers must send them Form 1099 to declare their wages.

It can be tempting for an employer to save money by classifying employees as independent contractors. It is also tempting, in this tough economy, for workers to agree to be classified as independent contractors and take the financial hit just to have a job. And then, some business owners may just be unclear on the law.

When a business is audited, the IRS looks to the totality of a worker’s relationship with the business, including but not limited to the control the company has on the worker, who supplies the tools and materials for the job, and whether expenses are reimbursed.

The IRS assigns a much higher priority to collecting past due payroll taxes than income taxes. If you owe back taxes or delinquent payroll taxes, it is important to seek out the advice of an expert Certified Tax Resolution Specialist or qualified tax attorney to resolve payroll tax debt problems swiftly to protect the future of your company.

For more information, on worker misclassification and how it is determined by the IRS, visit

Tax Resolution Services, Co., is dedicated to providing affordable solutions to businesses and individuals alike who find themselves in trouble with the IRS. Our tax attorneys, CPAs, and tax relief professionals have successfully resolved thousands of cases since 1998 and are committed to making sure our clients’ experiences exceed their expectations. For more information or to receive a FREE tax relief consultation, visit or call (888) 699-7630.

More Tax Help, IRS News and Tax Relief Tips:

  1. Michael Rozbruch Interviewed in Opportunist Magazine
  2. Tax Help News: 13% of Americans Find Tax Evasion Acceptable as IRS Audits Increase
  3. Tax Help News: IRS Continues To Zoom In on Tax Cheats in the Millionaire Category
  4. Release Your IRS Bank Levy: How a Tax Attorney or Certified Tax Resolution Specialist Can Give You an Advantage
  5. Last Minute Tax Help Tips For Taxpayers As April 15th Deadline Nears

Tags: , , , , , , , , , , , ,

Bookmark and Share

One Response to “IRS Poised to Audit Businesses for Worker Misclassification and Unpaid Payroll Taxes”

  1. Tax News: Tax Return Tips for Self-Employed: Changes for 2010 Tax Returns | Tax Attorney and Tax Resolution Services: IRS Help Blog Says:

    [...] for any professionals, self-employed or working for a company to file a correct tax return. The IRS are auditing more and more individuals and businesses this year. Avoid any red flags for your business, do your [...]

Leave a Reply