Independent Contractors “Safe Harbor” Continues Washington Scrutiny


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All the time, it's the only way I get things done. Sometimes, I try not to but sometimes I can't help it. Never, I just can't do more than one thing at a time.

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Independent Contractors “Safe Harbor” Continues Washington Scrutiny
By: Staff
Issue: 2010mar

President Obama has weighed in on endorsing Senate legislation to repeal the “safe harbor” practice that allows businesses to treat individuals as independent contractors instead of employees if it has been a long-standing industry practice.

In President Obama’s 2011 proposed budget, he included language that endorses the approach of legislation introduced in January by Senator John Kerry (D-MA) in the Taxpayer Responsibility, Accountability and Consistency Act. Similar legislation, H.R. 3408, was introduced by Representative Jim McDermott (D-WA) in 2009.

The Internal Revenue Service (IRS) also is launching a National Research Program (NRP) audit program to determine whether businesses are properly classifying individuals as employees or independent contractors. Two thousand businesses will be selected at random this year for the audit and 2,000 more each over the next few years.

IRS examiners will also be looking at executive and officer compensation and whether fringe benefits are being properly reported as taxable or nontaxable income. The IRS Publication 15-B, Employer’s Tax Guide to Fringe Benefits, at www.irs.gov, explains the basic rules for fringe benefits. The executive and officer compensation issue pertains specifically to S corporations.

Two PPAI Law Action Alerts with sample letters for senate and house members can be found at ppailaw.org. Industry members are encouraged to contact their members of Congress to voice concern over the potential end to the safe harbor practice.

Comments (1)

3/5/2010
Denny Leary (denny@peakpromotionalgroup.com)
company: Peak Promotional Group
title: President
"Just another example of the Obama administration trying to destroy small business and pay for his Obamacare that will destroy OUR Country"

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