Changing Employees to Independent Contractors? What are the Ramifications?
An employer made the decision to change the status of their workers from employees to independent contractors and it ended up backfiring.
An at-home nursing service provider owed almost $1.3 million in back employment taxes and penalties for a misclassification of 99 nurses. The taxpayer, for reasons that were unclear, made the decision in 2016 to switch their employees to independent contractors. After this decision, in the years at issue, the taxpayer did not make any federal employment tax deposits due to their change in the employment status of their workers.