In this episode of Resilience and Resolve, tax attorney Lance Drury breaks down the costly risks of misclassifying employees as independent contractors. He explains the key legal differences between employees and contractors, why the IRS focuses heavily on worker classification, and the financial consequences of getting it wrong. From back payroll taxes and penalties to whistle blower-triggered audits, Lance reveals why businesses need to be proactive and correct worker classification mistakes before the IRS steps in.

00:00:20 – The legal difference between an employee and an independent contractor

00:01:24 – Why calling someone a contractor doesn’t always protect a business

00:01:48 – Why the IRS aggressively targets worker misclassification

00:02:25 – How the IRS determines whether someone is truly a contractor

00:03:06 – Potential penalties and payroll tax liabilities for misclassification

00:04:22 – Why some businesses misclassify to avoid payroll tax headaches

00:04:32 – Can workers face problems for being misclassified?

00:05:00 – How businesses can fix past misclassification mistakes

00:05:32 – IRS limitations on how far back they review past payroll issues

00:06:41 – Why the IRS may not pursue older tax years due to staffing constraints

00:06:45 – Do voluntary corrections reduce penalties with the IRS?

00:07:09 – Why Lance rarely sees misclassification cases in his practice

00:07:50 – What triggers an IRS audit for worker misclassification

00:08:30 – When businesses should consult a tax attorney on contractor relationships

About the Show:

Get legal guidance on worker classification: lancedrurylaw.com

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