The Internal Revenue Service is cracking down on the "independent contractor vs employee" question in a new program. As a result, small and large businesses alike are on their toes.
Watch out for misclassification of employees and workers.
It's a huge money-saver for a small business to get into the practice of working with independent contractors. There is a lower tax bill, less withholding to be responsible for, and in some states, fewer obligations under workers' compensation requirements.
So, small businesses do what they think is a smart thing to do. They "hire" independent contractors and tell the contractors to be responsible for their own taxes.
Now, the IRS is catching on, while hoping to catch some employers with discrepancies. Although employment law is an area of law that stands on its own, the laws differentiating between employee status and independent contractor status are governed, in part, by tax law concepts.