With Obamacare looming, the Internal Revenue Service is giving employers a chance to come clean on the classification of their employees before ramping up enforcement to make sure all companies are complying with the 'employer mandates' of health care reform, 1200 WOAI news reports.
Tax attorney Joe Perera of the prominent statewide firm of Strasburger Price Oppenheimer Blend, says the IRS has offered employers a one time deal for a sort of 'amnesty.' Come clean about employees who are 'mistakenly' classified as 'contractors,' and we they will not audit the business and potentially extract huge fines and penalties.
"This gives that business the opportunity to come forard and voluntarily relassify these contractors as employees before the IRS begins to audit them," Perera said..
He says in order to clear their books, employers must pay a reduced liability, file 1099 firms on reclassified workers, agree to treat the workers as employees going forward, and have the IRS agree that they will nto audit the company for the previous three years.
Perera says it's a good offer, particularly because the IRS doesn't make it easy to determine how an employee should be catagorized.
"Sometiems its confusing to determine which worker should be classified as an employee, and which should be classified as an independent contractor."
Perera says the IRS is doing this now for one big reason. The Obamacare 'employer mandate' requires all employers to offer health insurance to 'full time' employees, or pay a substantial penalty. He says as a result, some companies my try to classify full time employers as 'contractors' or 'part time' workers, to avoid having to provide health insurance or pay the penalty, or in some cases, to stay below the threshold at which the employer mandate kicks in.
"There will definately be stepped up enforcement in this area, espcially because of health care reform," he said.