| Watchful Eye: You can't escape the IRS. If you make | | | | misclassified workers if they meet all three |
| a small bookkeeping error, the IRS will know. One of | | | | requirements described in Sect. 530: |
| the most common mistakes is misclassifying an | | | | The employer must have reasonable basis for not |
| employee as an independent contractor. If you're | | | | treating the workers as employees |
| found guilty of this, you face severe penalties. But | | | | The employer must have treated the workers and |
| there is good news. The IRS offers a second chance | | | | any similar workers as independent contractors for all |
| for people who make mistakes. | | | | applicable periods |
| Steps to Take: | | | | The employer must have filed Form 1099 MISC |
| -Fill out form 4670, "Request for Relief from Payment | | | | (Miscellaneous Income), for each worker, if required |
| on Income Tax." | | | | Watch your Back: The Section 530 relief provision |
| -Fill out Form 4669 "Statement of Payments | | | | doesn't apply in some cases. If you're a worker who |
| Received" | | | | provides technical services for the client as a drafter, |
| -Provide Documents supporting your case | | | | computer programmer, or engineer, or any other skilled |
| Friendly Note: | | | | worker in a similar field, the provision will not apply for |
| An employer will not owe employment taxes for | | | | you. So be careful! |