The Department of Labor has released an approximately 100 page summary of their budget for the next fiscal year. One of the items of interest is the $10 million being allocated to boost states’ enforcement of existing worker classification rules. The program is aimed as an incentive for states to identify companies that fail to pay their fair share of taxes due to misclassifying workers as independent contractors (ICs) when they should be classified as employees. States will be able to use these incentive funds to upgrade their misclassification detection and enforcement programs.

It is important to remember that worker classification has even greater relevance because of the Patient Protection and Affordable Care Act (commonly referred to as “Obamacare”) since it requires “large businesses” to either provide health insurance for their “full-time” employees or pay a penalty beginning in 2015.

Additionally, some states such as Massachusetts have separate rules for classification. As many businesses have found, misclassification can be very costly.

The determination of whether a worker is an employee or independent contractor can be complicated. Worker classification will be a key topic that is covered at the 2013 Year-End Planning Seminars which are rapidly approaching. Seminar space is limited, so be sure to register ASAP by clicking here.

If you have immediate questions on this or any other tax situation, please call our Tax Department at (781) 407-0300.