Bloomberg Tax
Feb. 28, 2023, 8:43 PM

IRS to Clarify Guidelines for Misclassification Safe Harbors

Andrés Alejo
Andrés Alejo

The IRS Small Business/Self-Employment Division has agreed to improve its internal procedures for granting safe harbor relief for employee misclassification, following an audit by the Treasury Inspector General for Tax Administration. SB/SE has agreed to implement a series of corrective measures to clarify the process used to grant employers relief under Section 530 of the Revenue Act of 1978, with changes expected by Nov. 15, 2023.

Employers are generally required to withhold taxes from their employees and remit these withholdings to the treasury on their employees’ behalf. SB/SE examines some of these employment tax returns to determine if reporting is ...