Worker Classification Still Hot Federal-State Audit Issue

Whether a worker is an employee or an independent contractor is intensely interesting to federal and state regulators, according to two tax consultants speaking at the APA’s 40th Payroll Congress, May 10.

Both the IRS and the Labor Department audit employers to uproot worker misclassification, said Mindy Mayo, a managing director with KPMG LLP. And both agencies believe there is money to be found, with the IRS collecting lost tax revenue and the Labor Department collecting fines related to wage and hour violations for workers who have been treated as independent businesses but who are actually employees.

States follow suit, ...