Accession Number : ADA298408

Title :   Tax Administration: Improving Independent Contractor Compliance.

Corporate Author : GENERAL ACCOUNTING OFFICE WASHINGTON DC GENERAL GOVERNMENT DIV

PDF Url : ADA298408

Report Date : 23 JUL 1992

Pagination or Media Count : 16

Abstract : The General Accounting Office (GAO) investigates the misclassification of employees as independent contractors for federal income tax purposes. One of the issues we are addressing today is independent contractors who do not comply with federal tax laws. The purpose of the report is to identify options for improving independent contractor tax compliance. Our report discusses certain aspects of the Internal Revenue Service's (IRS) Employment Tax Examination Program (ETEP). A major focus of this program is to examine small business compliance in using the rules for classifying workers as either "employees" or "independent contractors" (self-employed individuals who provide services). The rules for classifying a worker as either an employee or an independent contractor come from the common law. Under the common law, the degree of control, or right to control, that a business has-over a worker governs the classification. If a worker must follow instructions on when, where, and how to do the work, he or she is more likely to be an employee. IRS has adopted 20 common law rules to help classify workers. If workers are determined to be employees, the business must withhold and deposit income and social security taxes from their wages. In addition, the business pays unemployment taxes and its share of social security taxes. If workers are determined to be independent contractors, they must on their own pay income and social security taxes on payments received from the business. (KAR) P. 3/4

Descriptors :   *CONTRACT ADMINISTRATION, *CONTRACTORS, *CLASSIFICATION, *COOPERATION, *FEDERAL LAW, *TAXES, CONTROL, COMMERCE, UNITED STATES GOVERNMENT, EMPLOYMENT, DEPOSITS, INTERNAL, ERRORS, SALARIES, PERSONNEL, INCOME, UNEMPLOYMENT, REVENUE SHARING, SOCIAL SECURITY.

Subject Categories : Economics and Cost Analysis
      Psychology

Distribution Statement : APPROVED FOR PUBLIC RELEASE