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.”