Tuesday, November 15, 2011


I spoke with the Commissioner of the Small Business about the frustration that salon owners have with employees going to booth rental. I gave him my card and he said he would check this out and get back to me. I will keep you posted on what I hear back from him.

Independent contractors are on the radar.

There is a new initiative to have owners that are improperly treating workers to come forward and admit their mistake. The cost would be penalty of 10% of the payroll tax due for the prior 12 months. This is an effort by the IRS to allow businesses to get it right before they start a hard clamp down on worker classification.

The IRS is now doing an extensive study sampling worker classification

Estimates are that $64 billion is being lost in payroll taxes by misclassification.

Hard lobbying in Washington to eliminate the Section 530 Relief.

Efforts by the IRS to find employers that are improperly classifying workers:
- Independent research study on the issue
- New IRS specialist to help field auditors with the issue
- More exams
- 1099/W-2 comparisons within individual industries
- Working with the states on classification. States are getting much more active.
- Flagging businesses with more than 5 1099's showing more than $20,000; thus indicating the use of independent contractors and workers.