Employment status questions can arise for accountants

Article Abstract:

Accountants should avoid misclassifying workers as independent contractors instead of employees because this could result in significant liabilities arising from delinquent taxes, interest and penalties. They should be doubly careful now that the IRS is taking a militant stance against businesses that misclassify workers as independent contractors. Under common-law rules, if business owners have the right to exercise control over where, when and how someone works, then that person is a mere employee. Revenue Ruling 87-41 and 58-504 can be used as a guide in determining if a worker should be considered an independent contractor or an employee while Sec. 530(a)(1) of RA '78 indicates possible exception. Pertinent court cases are 'Youngs' and 'Darrell Harris Inc.' Suggestions on how to prove that accountants are independent contractors are given.

Accounting, auditing, & bookkeeping, Accounting & Auditing Services, Accounting, Tax Preparation, Bookkeeping, and Payroll Services, Accountants

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Keeping independent contractors from being reclassified

Article Abstract:

Determinations of whether workers are independent contractors or employees require an examination of statutes. An application of the common law test of control will be needed if statute fails to give an answer. However, application of the common law test of control often fails to yield conclusive results. Certain workers are considered employees regardless of the common law control test, including corporate officers, full-time insurance salesmen, and travelling salesmen soliciting orders full-time. In addition, three test are required for workers other than corporate officers: contract of service, investments, and continuity of relationship. Statutory independent contractors include real estate agents and direct sellers. The common law control test used by the IRS contains 20 factors, including training, integration, and instructions.

Laws, regulations and rules, United States. Internal Revenue Service

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