The Louisiana Department of Revenue (DOR) has joined forces with other Louisiana agencies to crackdown on employee misclassification and failure to withhold payroll taxes. The GAME ON (Government Against Misclassified Employees Operational Network) Task Force is an interagency network made up of members of the Louisiana Workforce Commission’s (LWC) Unemployment Insurance and Office of Workers’ Compensation divisions and the DOR. The task force also collaborates with the IRS and the U.S. Department of Labor’s (DOL) Wage and Hour Division.
Most employee misclassifications involve employers improperly labeling employees as independent contractors. In an October 25, 2017 press release, the LWC touted that it has led the nation in audit-based discoveries of misclassified employees over the last several years and plans to ramp up its efforts in 2018.
After the task force determines that an employer has misclassified employees, the DOR can readily determine if the employees paid income tax on their wages. If not, the DOR can seek to collect the tax from the employer, whose failure to withhold payroll taxes in accordance with the law renders the employer responsible for those taxes. The employer’s liability, however, is not limited to back taxes. The DOR can seek to collect interest and both delinquent payment penalties and delinquent withholding penalties.
The DOR has all of its tax collection remedies at its disposal, including filing lawsuits. On January 30, 2018, the DOR issued a press release serving notice to employers that the DOR recently filed three lawsuits against businesses it accuses of evading taxes by not withholding and remitting payroll taxes from their employees’ earnings. The lawsuits seek almost $250,000 in taxes, penalties and interest. The DOR says several other audits are currently in progress.