1099 Worker Classification Audits on the Rise!
A Special Alert for PSN Clients and Friends!
By Jeanne Knutzen, CEO, Founder
As we have discussed on multiple occasions, the wrong classification of workers continues to be an audit target for federal and state unemployment agencies, impacting any employer who uses 1 or 20 independent contractors as a way of doing business.
When workers who are essentially treated as W2 workers, but who are misclassified as 1099 independent contractors, both federal and state agencies lose payroll tax revenue along with their ability to protect and insure the individual from workplace accidents and claims of unemployment. These issues have gotten their attention for some time, resulting in the passage of new legislation in 2014 that will provide additional funding for 2015 audits and new ways of syncing up federal and state tax authorities to identify potential offenders.
Although Worker Classification Audits are not new and have been in play for decades, third-party administrators everywhere are putting their clients on notice to expect a significant increase in the number of employee classification audits. Targeted audit strategies will be able to focus on employees most likely to be misclassified, making it increasingly important for employers to make accurate determinations of “worker type” at point of hire—going thru all details of the 20 point test suggested by the IRS as an acceptable classification process.
States who have already volunteered to be a part of the new audit process include Alabama, California, Colorado, Connecticut, Florida, Hawaii, Illinois, Iowa, Louisiana, Maryland, Massachusetts, Minnesota, Missouri, Montana, New Hampshire, New York, Utah and Washington.
We wanted all our clients and friends to know that we are in one of the states who will be increasing its “watching”…plus, to also let you know the PSN team has a solution!
The PACE Staffing Network has been providing “Employer of Record” services for companies with “suspect” 1099 workers since 2000. Our Employer of Record Service Packages can include a quick audit of your current 1099 workers, but most importantly provides an easy and low cost remedy for any exposure to unpaid taxes or penalties you want to avoid NOW. For more information on Employer of Record Services and to put them to use quickly, contact our Partnership Development Team at 425-637-3312 or by emailing firstname.lastname@example.org.
This article was written by Jeanne Knutzen, founder and CEO of the PACE Staffing Network.