Employee vs. Independent Contractor: Achieving Success in a Worker Classification Audit (EMIC)

Overview

The IRS believes, perhaps with some justification, that many workers classified as independent contractors are actually employees and should be treated as such for tax purposes. The result is that worker classification audits are frequent and often costly for business clients, both in terms of time as well as money expended. This program prepares tax practitioners to assist their clients with worker classification audits, and to avoid them if possible, by discussing and explaining the circumstances under which workers will most likely be characterized as employees or as independent contractors. The program also deals with the first line of defense against the IRS in worker classification audits — Section 530, as well as the common law factors distinguishing an employee from an independent contractor. This program also explores the IRS Voluntary Classification Settlement Program and discusses whether a practitioner should advise a client to request admission into this program.

Major Topics:

• The 20 common law factors in a worker classification audit that are used to distinguish an employee from an independent contractor
• How disgruntled independent contractors can use IRS Form 8919 against a former employer
• When and how to use §530 as a defense in worker classification audits
• What is "industry practice" for §530 purposes
• Common sense steps that will avoid the recharacterization of workers treated as independent contractors to employees
• The IRS’s Voluntary Classification Settlement Program — advantages and disadvantages

Learning Objectives:

• Advise clients with respect to the risks associated with their treating workers as independent contractors rather than employees
• Understand how to employ Section 530 for purposes of defending against an IRS allegation that one or more workers are employees and not independent contractors