IRS cracks down on contractor employee misclassification

The Internal Revenue Service is stepping up audits on small businesses to examine their payrolls in search of misclassified employees.

March 26, 2013

The Internal Revenue Service is stepping up audits on small businesses to examine their payrolls in search of misclassified employees. The crackdown is part of a government effort to look for workers incorrectly classified as independent contractors as a way for employers to avoid withholding payroll and income taxes. Studies show that anywhere from 10 to 60 percent of small-business employees may be misclassified.

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