IRS/DOL starts crackdown over independent contractors

BusinessWeek writes, “Get ready for an intense new round in the long-running fight over which workers are independent contractors … The IRS is taking a closer look at companies that use contractors.”

If you classify any workers as “independent contractors”—or have plans to do so—2012 is the year to make sure you get that classification correct.

A massive new “Misclassification Initiative” launched by the IRS and U.S. Department of Labor is targeting employers with more audits and closer scrutiny. The IRS estimates that 80% of workers classified as “independent contractors” are actually employees.

As part of the crackdown, the DOL hired 100 new auditors solely to investigate misclassifications. State investigators are also turning up the heat on employers. And all this attention is prompting more independent contractors—and their attorneys—to challenge their classifications in court.