Comments on: Ask the taxgirl: Responsibility to Ensure Independent Contractor Files? http://www.taxgirl.com/ask-the-taxgirl-responsibility-to-ensure-independent-contractor-files/ Paying taxes is painful... but reading about them shouldn't be. Sat, 07 Nov 2009 20:18:36 -0500 http://wordpress.org/?v=2.8.5 hourly 1 By: Liz http://www.taxgirl.com/ask-the-taxgirl-responsibility-to-ensure-independent-contractor-files/comment-page-1/#comment-8383 Liz Tue, 20 Jan 2009 18:26:27 +0000 http://www.taxgirl.com/?p=2218#comment-8383 That said, if you have misclassified employees as contractors, you could have exposure for risk of a different kind. The IRS or another tax agency might audit the contractor, or the contractor might fill out an SS-8 or an 8919 form to protest their classification, and this might result in a misclassification audit for you. Here is a site that goes over contractor classification and the potential consequences for getting it wrong: http://www.mbopartners.com/learning/compliance.html That said, if you have misclassified employees as contractors, you could have exposure for risk of a different kind. The IRS or another tax agency might audit the contractor, or the contractor might fill out an SS-8 or an 8919 form to protest their classification, and this might result in a misclassification audit for you. Here is a site that goes over contractor classification and the potential consequences for getting it wrong:
http://www.mbopartners.com/learning/compliance.html

]]> By: Kelly http://www.taxgirl.com/ask-the-taxgirl-responsibility-to-ensure-independent-contractor-files/comment-page-1/#comment-8166 Kelly Thu, 08 Jan 2009 14:26:11 +0000 http://www.taxgirl.com/?p=2218#comment-8166 You can be subject to a penalty for not obtaining a contractor's taxpayer identification number. The taxpayer may also be subject to backup withholding. As to whether there is a difference between the rental property versus business, I'd say no. However, to the extent that the person is an actual employee versus independent contractor, I'd say yes. IMO, you run a greater risk of being cited for noncompliance for an employee (though that's certainly not always true). You can be subject to a penalty for not obtaining a contractor’s taxpayer identification number. The taxpayer may also be subject to backup withholding.

As to whether there is a difference between the rental property versus business, I’d say no. However, to the extent that the person is an actual employee versus independent contractor, I’d say yes. IMO, you run a greater risk of being cited for noncompliance for an employee (though that’s certainly not always true).

]]> By: Mary Kay Foss http://www.taxgirl.com/ask-the-taxgirl-responsibility-to-ensure-independent-contractor-files/comment-page-1/#comment-8097 Mary Kay Foss Tue, 06 Jan 2009 01:57:21 +0000 http://www.taxgirl.com/?p=2218#comment-8097 Here's a follow up question. Let's say that the contractor won't give you a SSN. If you file the Form 1099 without it, are you liable for back up withholding? Would it make a difference if the contractor helped out with your rental property (not always treated as a trade or business) versus your business? Here’s a follow up question. Let’s say that the contractor won’t give you a SSN. If you file the Form 1099 without it, are you liable for back up withholding?

Would it make a difference if the contractor helped out with your rental property (not always treated as a trade or business) versus your business?

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