Don’t Get Yourself In Trouble With The IRS By Misclassifying Your New Home Inspector Hires!
It’s important to fully understand the distinction between an employee and an independent contractor.Â This is especially if you’re hiring new home inspectors for your firm.Â This will let you and your business avoid complications from the Internal Revenue Service. With everyone looking to cut costs and the IRS conducting payroll audits on worker misclassification, let’s take a look at the difference between full-time staff and contractors.
According to the IRS,” in general, someone who performs services for you is your employee if you can control what will be done and how it will be done.”
Nearly 30% of all firms misclassified contractors. Consequently, this amount equals to billions of dollars in unpaid taxes, and the IRS is working hard to intervene.
An additional $900 million per year would go towards the IRS, if the tax agency were to modify its “safe harbor” rules. This makes it difficult for employers to classify workers as independent contractors.
Misclassifying your workers may result in owing back payroll taxes, interest, and stiff penalties.
- Since September 2011, there were more than 11,400Â misclassified workers. As a result, the government has collected $9.5 million in back wages.
- If employers were forced toÂ rightfully classify workers,Â theÂ US Treasury will be able to to collect an estimateÂ $8.71 billion of tax revenue
- It’s estimated that $8.71 billion of tax revenue will be collected over the next 10 years by the US Treasury by forcing employers to rightfully classify workers.
- 1000 small businesses have signed up for an extended amnesty program. That way some penalties to encourage employers to voluntary reclassify contractors as employees.
NOTE: Experts advise – Be sure to consult a tax expert or legal counsel before you take action!Â This is when you decide to reclassify your contractors or bring them onto payroll.
We interviewedÂ Savvy Inspector Partner Vendor,Â Steve Brewer, CPA, toÂ give you some greater clarity on this issue. This also can help usÂ understand more about the classification process.
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