Over the last few weeks, the Internal Revenue Service has announced further details about its plan to conduct a three year nationwide employment tax audit initiative beginning this month. The audit initiative will focus on 6,000 businesses across the country and across industries, 2,000 businesses each year. Though the majority of the businesses will be small companies, the IRS will audit larger companies as well. The initiative grows out of a continuing research effort within the IRS called the National Research Program (NRP) and is designed to address a perceived tax shortfall in the collection of employment taxes due primarily to misclassification of employees as independent contractors. Some of us will recall a similar audit effort about 25 years ago; many of these audits focused on the classification issue.
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