Mitigating IRS Reclassification Risk
One must determine if an evaluation of a worker’s classification is necessary. Independent contractors on an approved vendor list, or whose services are on an exempt services list, may not require an evaluation. Also, independent contractors immediately willing to become W-2 employees through a Portable Employer of Record will not require an evaluation. If the analysis is necessary, a qualified Compliance Officer attempts to produce an accurate judgment of the workers classification, and delivers his or her written recommendation to the employer.
A Compliance File, including all necessary supporting documentation for the compliant independent contractor, is kept on file in the event of an audit.
Read more about this topic: Misclassification Of Employees As Independent Contractors
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