Worker Classification Errors Are Destroying Businesses That Do Not Know They Made Them

You call them independent contractors. You pay them with a 1099. You do not withhold taxes. You do not pay the employer side of FICA.

The IRS and most state labor agencies may disagree with how you have classified them.

Worker misclassification is one of the most common and most expensive compliance errors a business can make. And it is frequently discovered not during a routine audit... but during an unemployment claim, a workers' compensation dispute, or a Department of Labor investigation initiated by a disgruntled worker.

The Cost of Misclassification

When the IRS or a state agency determines that workers classified as independent contractors should have been treated as employees, the business owes back payroll taxes, the employee share of FICA, interest, and penalties for every year the misclassification existed.

In egregious cases, the responsible party faces the same personal liability as a Trust Fund Recovery Penalty assessment.

Voluntary Correction Is Always Better Than Forced Correction

The IRS offers the Voluntary Classification Settlement Program, which allows businesses to reclassify workers prospectively and resolve prior-year exposure for a fraction of what enforcement would cost. But the program is only available before the IRS initiates an audit.

At The Fixer Firm, we assess your worker classification risk, identify exposure, and guide you through voluntary correction before enforcement forces the issue.

The 1099 You Issued May Be the Most Expensive Document in Your Files

Find out before the IRS tells you. Contact The Fixer Firm for a worker classification review.

Schedule your Strategy Session today. www.thefixerfirm.co/startyourfix

This article is for informational purposes only and does not constitute legal or tax advice. The Fixer Firm™ | Alpharetta, Georgia | www.thefixerfirm.co