IRS establishes new procedures for optional program on worker classification

Article Abstract:

The IRS has established a classification settlement program to help taxpayers comply with IRC section 3121 and other worker classification laws. Employers that may feel that their treatment of workers as independent contractors may be vulnerable to IRS audit and that have an open case with Appeals or Examination can apply for the program. After reviewing the case, the IRS examiner will offer a settlement based on the strength of the position taken by the taxpayer. The inquiry focuses on common law factors as well as reporting consistency, prior rulings and industry practice.

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Court applies preponderance standards under section 530 of 1978 Revenue Act

Article Abstract:

The US Court of Appeals for the Eighth Circuit rejected the taxpayer's argument in Boles Trucking, Inc. v. United States that the preponderance standard used in other tax cases should not apply in cases regarding the safe harbor exceptions under section 530 of the Revenue Act of 1978. The safe harbors under section 530 establish when an employer can prove a reasonable basis for treating a worker as an independent contractor. The Eighth Circuit reversed the trial court's decision in finding that section 530 cases should be treated no different than other tax cases.

Burden of proof

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New IRS initiatives may help resolve worker classification issues

Article Abstract:

Two voluntary compliance programs announced by the IRS will provide employers with opportunities to resolve potential employee classification disputes. A classification settlement program will allow employers to request a determination of whether workers are properly classified as independent contractors under section 530 of the Revenue Act of 1978. Early referral procedures are also being established for employment tax issues to allow employers to request to have issues transferred to the IRS Appeals Division.

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