Are you too cozy with your independent contractors?

January 1, 2015 is fast approaching, and with it, the first year the employer mandate applies to employers with 100 or more full-time employees (50 in 2016) – the “Play or Pay” rules. In preparation for this new law, employers should review the individuals they treat as independent contractors to be sure they can defend that classification if audited by the IRS. An employer with 90 full-time employees and 10 independent contractors may find itself subject to the employer mandate if those contractors are really common-law employees (as defined by the IRS).
Beginning in 2015, an employer must cover 70% of its full-time employees, 95% in 2016. It’s important that your employee count be accurate, or you risk paying a penalty tax. Besides ensuring compliance with the employer mandate, worker misclassification may cause additional tax liability if the company is audited by the IRS and the IRS decides that individuals should have been treated as employees and not independent contractors for all tax periods open to audit.

Read the full story at Are you too cozy with your independent contractors?