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How to survive an employee classification audit

July 14, 2017

Hiring independent contractors instead of W-2 employees can save you a lot of money.

How?

By letting you avoid paying Social Security and Medicare taxes, state unemployment compensation insurance, workers’ compensation insurance, and more.

But be careful! If the IRS conducts an employee classification audit and finds that your independent contractors are really employees, you could owe Uncle Sam a whole lot of money!

Want to stay on the right side of the law? Read my new article titled Tax Tips: Beating Penalties for Misclassifying W-2 Workers as 1099 Contractors.

Three ways our fact-filled article can help you:

  1. We’ll tell you what you’re risking (It’s a lot!) If you come out the wrong end of an employee classification audit, you’ll be on the hook for the withholding and FICA taxes you failed to remit to the IRS. You’ll get all the facts when you read the full article.
  2. You’ll learn how to avoid paying the tax bill Uncle Sam says you owe. If you can show that your workers paid their taxes, you aren’t liable for them. An important rule prevents the taxes from being paid twice which is only fair. All will be explained when you read the full article.
  3. We’ll show you how the Mescalero Apache tribe beat the IRS. The IRS conducted a worker classification audit and reclassified many of the tribe’s independent contractors as employees. This left the tribe with a massive tax bill. But all was not lost. The Mescalero Apaches used Form 4669 to prove that many of the contractors had paid their taxes. What’s more, the tribe forced the IRS to disclose worker tax information which set an important precedent. We’ll give you all the details when you read the full article.

Filed Under: Audits, Employees, Filing tips, Independent Contractor, Payroll, Tax Planning

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