Worker classification
Who is an employee? Who is an independent contractor? The IRS is keeping after companies regarding worker classification determinations. Treasury inspectors noted that some employers failed to follow up after the IRS reclassified the individuals as employees, rather than contractors.
Apparently, as many as 15 percent of those employers continued to send 1099s to their workers instead of giving them W-2 forms. The IRS is planning an outreach program to remind the companies and warn that noncompliance will lead to audits.
The general rule regarding an independent contractor is that the payer has the right to direct the result of the work but not what will be done or how. Once the employer directs the details of what can be done and when, then the worker is an employee. Also at issue, of course, are payroll taxes: the employer's half of FICA contributions, plus any other local or state taxes.
For nearly 30 years, Mike Nickerson has owned and managed a small, full-service accounting practice in the Midcoast. He holds a bachelor's degree in accounting from University of Southern Main and a master's degree in financial planning from Bentley University.
He is a past board member and president of the Maine Society of Certified Public Accountants and currently serves on the Maine Board of Accountancy.
An aged rock musician, Nickerson now finds musical enjoyment playing upright and electric bass in a variety of bands spanning folk to jazz music genres. He and his wife have three grown children, and they enjoy their free time hiking, kayaking, golfing, bicycling and motorcycling.
