The Peck Group, LC
Free 30 minute telephone consultation
770-884-6914 / email us E-mail Maps
Practice Areas

Worker misclassification and employment, payroll taxes: when the IRS finds a mistake

Worker classification is an important issue for employers as there are tax implications that have to be considered. For workers classified as employees, there are income taxes that must be withheld or paid, including payroll taxes for Social Security and Medicare. Employers who fail to withhold payroll and income taxes for employees can face issues with the IRS, but there is no such requirement for independent contractors.

One problem in this area is that the difference between employees and independent contractors is not always clear, and is highly dependent on the facts and circumstances surrounding the work performed. Generally speaking, the key factors are the degree of control exercised by the employer and the amount of independence exercised by the worker. The more control the employer has over the worker, the more likely it is that the worker should be classified as an employee. 

In some cases, employers can make mistakes about the proper way to classify a worker. When the IRS discovers this in an audit, there can be unexpected tax costs for the employer. When an employer is found to have misclassified a worker, the employer is required to pay employment taxes unless it is able to show that the worker or workers have already done so, which can be a challenge for the employer. When an employer is unable to locate misclassified workers to document their payment of required taxes, employers can end up paying taxes twice.

In our next post, we’ll look at a recent tax case which is favorable for businesses and the importance of working with an experienced attorney on employment tax issues.

No Comments

Leave a comment
Comment Information

Talk to an Attorney

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

contact us via email

Contact Us

5855 Sandy Springs Circle N.E., Suite 190
Atlanta, GA 30328

Phone: 770-884-6914
Fax: 770-933-2369
Atlanta Law Office Map

back to top
The Peck Group, LC

Serving You

Located in Atlanta, The Peck Group, LC, represents clients nationwide. Regionally, we are committed to serving clients in Fulton County and throughout the state of Georgia.