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Employee or Independent Contractor? - IRS View

The Law Offices of Peter Stanwyck assists small businesses in evaluating employee versus independent contractor issues, drafting both employment contracts and independent contractor agreements, and assisting with audits, investigations and legal actions by the IRS, FTB, EDD and Labor Commissioner. LINK TO OUR   EMPLOYEE AND INDEPENDENT CONTRACTOR SERVICES



The Internal Revenue Service has published for public consumption its 160 page training manual developed to train its agents for performing investigations and audits to determine if workers should have been treated as employees rather than 1099 independent contractors.


LINK:  IRS РIndependent Contractor or Employee Training Material


It is important to note that other governmental agencies with an interest in the distinction between employees and independent contractors may rely on different standards, tests and approach. ¬†For example, California’s EDD when auditing for compliance with¬†worker’s¬†compensation insurance may place different value and importance on different issues. ¬†Nonetheless, if you’re willing to slog through all 160 pages of this manual, you’ll gain a much better understanding of this area. ¬†The temptations for a small business to classifying workers as independent contractors rather than employees is great with very substantial financial savings and reduced rules and regulations. ¬† ¬†But if tha independent contractor position is found to be wrong, the consequence are VERY substantial. ¬†With large penalties and interest added on, the burden FAR exceeds the financial impact if ¬†these workers had been treated as employees in the first instance.



Disclaimer: The materials  in this blog entry do not constitute legal advice, do not necessarily reflect the opinions of the Law Offices of Peter M. Stanwyck or the author of the material if not Peter Stanwyck and  is guaranteed to be correct, complete, or up-to-date. As with all matter, consult with a qualified attorney to address the specifics of your circumstances.


Posted 05 / 19 / 2012


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