For the past several years, the Internal Revenue Service (“IRS”) has been devoting considerable attention to worker classification issues involving the misclassification of employees as independent contractors. These misclassifications are important to the IRS and the federal government because they often lead to underreporting and underpayment of taxes. Traditionally, the IRS has sought to address worker classification issues through the audit process, which can quickly become costly for employers that are assessed unpaid taxes, penalties and interest for workers who are reclassified as employees by the IRS.
