If a company wrongly classifies a worker, it may still avoid employment tax under Section 530 of the Revenue Act of 1978. The IRS auditor will provide written notice of these provisions. Section 530 relieves business tax but not worker’s employment tax liability. The consistency test and the reasonable basis test are the two requirements for Section 530.
The consistency test requires a business to have treated all workers in similar jobs in the same manner as workers in question, according to the IRS website. The reasonable basis test requires that a company treat the worker as a subcontractor due to relying on a court case or ruling, a prior IRS audit, a long-standing industry practice, or any other reasonable basis for treating the worker as a subcontractor.
If a business is unsure about whether it should classify a worker as an employee or a subcontractor the company can request an IRS opinion on your situation, according to the IRS website. A Form SS-8 may be filled out and sent to the local IRS office.
Read more at Suite101: Money Saving Business Tax Tips http://www.suite101.com/content/money-saving-business-tax-tips-a300736#ixzz13Oae1LuE
The consistency test requires a business to have treated all workers in similar jobs in the same manner as workers in question, according to the IRS website. The reasonable basis test requires that a company treat the worker as a subcontractor due to relying on a court case or ruling, a prior IRS audit, a long-standing industry practice, or any other reasonable basis for treating the worker as a subcontractor.
If a business is unsure about whether it should classify a worker as an employee or a subcontractor the company can request an IRS opinion on your situation, according to the IRS website. A Form SS-8 may be filled out and sent to the local IRS office.
Read more at Suite101: Money Saving Business Tax Tips http://www.suite101.com/content/money-saving-business-tax-tips-a300736#ixzz13Oae1LuE
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