Before you face the IRS in connection with tax challenges regarding your legal relationship with the workers who call you their employer, you need to determine whether you have hired an independent contractor or an employee. Your tax liability and the worker’s tax filing requirements will differ depending on the answers to these questions:
- Does the company direct when, where and how work is done?
- Are workers requested to undergo company-provided training?
- Are the workers’ services integrated into business operations?
- Does the company insist that particular people do particular jobs, or is the worker allowed to assign work to anyone?
- Does the company hire, supervise and pay a worker’s assistants?
- Is the worker-company relationship continuous?
- Is the worker’s schedule rigid or flexible?
- Does the company require full-time work?
- Is the worker required to work on the company premises?
- Does the company require work to be done in a certain order?
- Is the worker required to provide written or oral reports on the status of a project?
- Is pay given to the worker on an hourly, weekly or monthly basis?
- Does the company reimburse travel expenses?
- Is most of the work done using company-owned tools?
- Does the employer provide work facilities?
- Do the workers receive predetermined earnings?
- Do the workers work exclusively for one company, or simultaneously for different companies?
- Does the worker provide services to the general public, or only to the particular employer?
- Does the company have the right to discharge a worker?
- Can the worker terminate their work without liability?
To sum up the issues that are reflected in answers to these questions, the IRS considers a worker to be your employee if you have the right to control not only what work will be done, but also how the worker will do it. If you treat a worker as an independent contractor, but the IRS decides you have sufficient control over the worker to create an employment relationship, the IRS can hit you with a costly bill for the employment taxes you should have been withholding and paying.
If Your Independent Contractor Is Actually Considered an Employee of Your Company, What Can You Do About the Worker Classification? Lawyer Lawrence Brown Can Assist.
Your company may have been targeted in an employment tax audit. You may have hired independent contractors who the IRS says should have been classified as employees. You need qualified legal counsel to prevent a small problem from gaining steam and getting big.
Attorney Lawrence Brown brings knowledge gained as a former trial lawyer for the Department of Justice Tax Division to the task of representing employer clients with tax problems. He brings more than 20 years of experience to bear on every case as well as testimony from necessary tax experts such as CPAs, auditors and former IRS agents. We can defend you before the IRS while working to resolve your case.
Brown, PC, serves individuals and businesses in the Dallas-Ft. Worth Metroplex, statewide in Texas, and nationwide. Contact Lawrence Brown at 888-870-0025 to arrange a confidential consultation about your impending IRS audit or appeal.