I wanted to get this out there, because in this industry, independent contractors are what companies use to fill out their work force overseas. But doom on the company that has improperly classified their workforce as independent contractors. If you are a small business owner, or even one of the larger companies, it looks to me like the government is now on the war path to square this stuff away and get some revenue. What will be interesting is to see how the IRS is able to re-interpret gray areas, to get that revenue. Hopefully companies have done their homework and are squared away, but just a heads up, they are on the hunt.
Of course actions like this will impact business and their ability to hire more folks. And in a climate where jobs are a premium, I wonder if this is kind of a form of robbing peter to pay paul again? But all in all, I like the fact that the government is trying to clamp down on these practices, because at least this will force companies to pay into government systems that were designed to support folks when they retire. (medicare, social security, etc.) That’s if these companies are using folks more like employees, and less like IC’s. We will see if this turns into a which hunt, or they actually do catch folks who are cheats.
On the flip side, you now have another tool in your kit to get back at companies that are screwing you over. Especially if you are a 1099 guy. If your company is not playing by the rules, and has been playing some unethical games with you, then I am sure the IRS would love to hear what you know. Of course do it anonymously to protect yourself, and mention any intentional misclassification actions that your unscrupulous company is performing. lol
And hey, for those CEO’s and managers that are reading this, or even those contractors that think I am anti-PMC or something stupid like that, think about this. I want companies to do things right and treat their people with respect. I also want companies to be successful and profitable. But I do not want companies to break the law or get unethical in the way they do business, all because they think they have to do that in order to succeed. Not to mention that when you get caught, then the industry gets another black eye because of your actions.-Matt
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Obama Cracks Down on Use of Contractors
The IRS plans to audit 6,000 companies over the next three years in a bid to crack down on companies that erroneously classify employees as independent contractors.
By Courtney Rubin | Feb 18, 2010
President Barack Obama’s proposed 2011 budget suggests tough times ahead for employers who rely heavily on independent contractors in order to keep down labor costs.If the budget is approved, the Internal Revenue Service will add 100 new enforcement personnel as part of a $25 million plan to crack down the misclassification of workers as independent contractors. Though it’s a mere drop in the $3.8 trillion spending plan, it’s expected to more than pay for itself: Obama claims stronger misclassification enforcement will add $7 billion to the federal bank account over 10 years. (more…)