United States Government Publishing Office publisher pbl distributor dst United States Government Accountability Office General Government Division author aut Government Organization text government publication eng GAOREPORTS Legislative Agency Publications gao legislative 2010-08-12 U.S. Government Printing Office 1996-06-20 monographic deposited born digital 21 p. GA 1.13:T-GGD-96-130 https://www.govinfo.gov/app/details/GAOREPORTS-T-GGD-96-130 P0b002ee18038ddbf f:gg96130t DGPO 2010-08-12 2011-03-23 GAOREPORTS-T-GGD-96-130 machine generated eng fdlp REPORT GAOREPORTS-T-GGD-96-130 T-GGD-96-130 Tax administration Social security taxes Taxpayers Personnel classification Tax return audits Income taxes Tax law Contractors Tax nonpayment Noncompliance IRS Employment Tax Examination Program Testimony GGD GAO discussed the classification of workers as employees or independent contractors for federal tax purposes. GAO noted that: (1) the Internal Revenue Service (IRS) has adopted 20 common law rules to help employers classify workers; (2) the rules require employers to withhold and deposit income and social security taxes, and pay the unemployment and social security taxes for workers determined to be employees; (3) employers that use independent contractors do not have these responsibilities because they pay their own social security and income taxes; (4) classifying a worker as an employee or independent contractor depends on the employer's circumstances, and the extent to which the worker accepts the classification; (5) in 1984, IRS estimated that about 756,000 employers misclassified their workers as independent contractors; (6) this noncompliance resulted in an estimated tax loss of $1.6 billion; (7) misclassifications occur because it is cheaper to hire independent contractors, but the rules for doing so are unclear; (8) IRS completed 12,983 employment tax examination program audits from 1988 to 1995, and recommended $830 million in employment tax assessments and that 527,000 workers be reclassified as employees; and (9) IRS is revising its training program to better ensure consistent application of common law rules, circulating a draft of its training program so that employers know how to interpret the rules, and testing ways to expedite disputes over worker misclassifications. https://www.govinfo.gov/content/pkg/GAOREPORTS-T-GGD-96-130/html/GAOREPORTS-T-GGD-96-130.htm https://www.govinfo.gov/content/pkg/GAOREPORTS-T-GGD-96-130/pdf/GAOREPORTS-T-GGD-96-130.pdf GAO/T-GGD-96-130 https://www.govinfo.gov/app/details/GAOREPORTS-T-GGD-96-130 Testimony GAO/T-GGD-96-130; Tax Administration: Issues in Classifying Workers as Employees or Independent Contractors; Tax administration Social security taxes Taxpayers Personnel classification Tax return audits Income taxes Tax law Contractors Tax nonpayment Noncompliance IRS Employment Tax Examination Program