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IRS Examines the Entire Relationship with and Independent Contractor
The IRS recently
announced it is closely examining worker classifications as part of its
National Research Program (NRP) Payroll Audit. The three-year NRP payroll tax
audit began back in February, 2010. As part of the program, the IRS is
randomly selecting 2,000 returns from various employers in the private,
not-for-profit and government sectors.
Reason: The IRS
frequently maintains that employees have been misclassified as independent
contractors. It estimates that employment tax under-reporting accounts for about
$54 billion of the $345 billion tax gap (which is the difference between what
taxpayers owe and what they pay).
Are you at Risk? To read whole article and see what how to properly classify your workers to avoid IRS re-classification, you can find the article in the Members Only Public Section of your Client Portal under the Business tab | 
