VIDEO – Business Owners need to beware of how they’re classifying employees

Historically in the past, this was not an issue for the IRS. That was due in large part to the fact that there was the complimentary self-employment tax. So the general prevailing thought was it’s a wash.

That shifted in recent years and we now see that as the progression of being an audit topic. That’s because the growing perception is misclassifying workers is not simply failing to pay the employment taxes, but doing so undermines competitors. So, conceptually the employer is paying their staff as independent contractors and not paying employment taxes or worker compensation. Then the competitors are, they’ve unfairly competed with them, and the IRS is getting in the business in that regard.

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