The IRS is zeroing on companies that misclassify 'employees' as independent contractors by issuing them a 1099 instead of a W-2 to avoid reporting wages
Encino, CA (Vocus) July 22, 2010
The IRS is stepping up efforts to capture lost tax revenue, recently announcing it would embark on a three-year campaign to audit 6,000 businesses.
According to tax relief expert Michael Rozbruch, of most concern is any business with unpaid payroll taxes and delinquent employment taxes. Failure to pay these taxes can be detrimental to businesses and is considered theft in the eyes of the IRS—and a federal offense.
“The IRS is zeroing on companies that misclassify ‘employees’ as independent contractors by issuing them a 1099 instead of a W-2 to avoid reporting wages,” said Rozbruch, founder and CEO of Tax Resolution Services, Co. (TRS). “These companies are essentially cheating the government out of the withheld portion of paychecks including social security taxes.”
Trouble with delinquent employer taxes can be the downfall of many otherwise successful businesses as the IRS is very aggressive in their collection attempts for past due payroll taxes. The IRS not only has broad power to seize and liquidate, but it can also shut a business’ doors without a court order, seize equipment, intercept customer payments, and levy staggering financial penalties.
Since the IRS has prioritized business tax audits and the collection of unpaid payroll taxes and employment taxes, it has also accelerated the notice process. And if the IRS determines that employee misclassification has occurred, it can order an employer to provide benefits retroactively.
“We can expect the number of IRS audits to continue to rise for small-business owners in 2010,” Rozbruch said. “About 25 to 30 percent of our tax-relief clients are small businesses with tax problems, so I know how important it is to avoid or quickly resolve IRS audits or other tax problems that could be detrimental to your business.”
Tax Resolution Services, Co. is dedicated to providing affordable solutions to businesses and individuals alike who find themselves in trouble with the IRS. Their expert team of tax attorneys, CPAs, and Certified Tax Resolution Specialists has a success rate of 90% - second to none in the industry - and an Offer in Compromise Settlement Rate of $0.11 on the dollar. For more information or to receive a free tax relief consultation, visit TaxResolution.com or call 866-IRS-PROBLEMS.