If you think that the government doesn't know that a lot of workers are being misclassified and that a lot of that money is not being reported, you are wrong. Obama is trying to fix this by requiring verification of worker status and possible withholding.
The proposal in his budget would require independent contractors who receive payments of $600 or more from a business to provide a certified taxpayer identification number (TIN) to the business. The business would then be required to verify the contractor’s TIN with the IRS, and, if the TIN cannot be verified by the IRS, the business would be required to withhold a flat-rate percentage of the gross payments.
Contractors could also require businesses to withhold a flat-rate percentage of their gross payments. The contractor could choose withholding at a 15%, 25%, 30% or 35% rate.
This is just proposed for now and would have to get through Congress. We will watch this for you.
Larry Kopsa CPA
