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IRS to Audit 6,000 Companies

Construction company owners listen up.  According to an article in Finance Review, the IRS is undertaking 6,000 additional random audits over the next 3 years in order to recoup part of the $14 billion that they estimate owners in a wide variety of industries like construction have underpaid on their taxes by misclassifying their employees as independent contractors.  Even though they say that the audits will be random, you can bet that they will concentrate on those business where the workforce is filled with “independent contractors” in order to avoid the tax and benefits burden.

According to the article, the last time that the IRS made an estimate of the magnitude of the misclassification problem they estimated that 15% of the owners misclassified 3.4 million workers.

In the current environment where the IRS is hiring 16,000 additional agents, you can bet that our industry will be a big target along with Wall Street.  So, alert your team for when the phone rings and the person on the other end of the line says,

Hello, I am with the IRS and you are one of the companies that we have randomly selected for a misclassification audit of the last 5 years.


Comments

Anonymous's picture

Now heres an industry that needs an audit. Ive been working as a cable guy installing in Florida. Ive had titles as Supervisor and New Hire Trainer, Asst Manager all being paid 1099. Always the company never called me an employee but treated me aswell as the other 1500 workers of this company. And when I fell off a ladder and got hurt, of course the company told me your a contractor we cant help you. I wouild like to know who in the IRS i can contact to point them in the right direction with these compaines. Over the past 10 years ive been exposed to alot of these types of places. 6000 audits would only affect 1/3 of the companies who are operating like this accross the usa.

As for the IRS and taxes. All the cable guys i know never paid any taxes and almost all of them filled fasle tax returns wiht false deductions on there Sched C's. Also I bet the unemployment rate would got down a few points if they classiified them correctly instead of contractors.

Mike S
Pinella Florida

Administrator's picture

One resource you could use is the IRS whistleblowers website that explains how you can report tax fraud.  Alternatively you could report the company to an Interfaith Worker Justice group in your area so that they can contact the Department of Labor.  Good luck!

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