Worker Classification

Worker Classification:

Employee or Independent Contractor

The classification of workers is an evergreen problem for employers. A worker is subject to proper classification as either an employee or an independent contractor.

Employers have every incentive to prefer the benefits of independent contractor status -- no income tax withholding, no payroll or employment tax obligations, no worker’s compensation, among others.

The gravity and consequences of misclassification are significant.  When a worker is improperly misclassified as an independent contractor, the employer becomes liable for failure to withhold income taxes and pay employment taxes, both federal and state, and may have potential exposure on employee benefit plans and employment claims.

Worker classification may be challenged in various ways, and the stakes are high.

Our firm offers assistance with the following worker classification services:

  • Handling disputes involving independent contractor vs. employee worker status
  • Advice on structuring worker classification arrangements
  • Advice on IRS Voluntary Classification Settlement Program (VCSP) applications

The IRS VCSP program allows businesses to voluntarily reclassify workers as employees for future tax periods for employment tax purposes.

 

What's next? Contact us today!

Petrova Law is a boutique business law firm focused exclusively on tax and business law matters. The firm assists businesses with tax strategy, IRS representation, sales and purchases of businesses (M&A), and general corporate law from startup launch through growth and maturation to exit and succession.