1099 Vetting
Misclassification of a company’s 1099 workforce can be a tremendous economic burden. Audits by the IRS are skyrocketing, with 30% of audits being related to worker classification. Atrium offers a thorough, proven vetting solution that will protect companies from audits and co-employment lawsuits.
Risk Factors Associated with Misclassified Independent Contractors:
- One-in-three companies fail a worker classification audit; burden of proof is on the Client/Company
- 46% of IC’s reviewed are determined to be misclassified
- Defense takes years and invaluable internal resources
- Financial consequences: fines, penalties, interest payments, back taxes
- Benefit Inclusion - Reclassified IC’s have to be treated as an employee for benefits
- Class action lawsuits by groups of IC’s requesting employee status
What Triggers an Audit?
- Unemployment or Worker Compensation claims
- A W-2 and 1099 issued for the same worker by the same company in the same year
- All tax audits by the government require a 1099 audit to be conducted
- New IRS Whistleblower Award Program
Solution:
The most effective way to deter future audits by state and federal agencies is to implement a best-in-class third party vetting program. This will dissuade auditors from engaging and, if necessary, defeat them with the automatically archived defense files created on every IC processed through a vetting procedure.
Return on Investment for our Clients:
- An outside vetting program will allow a client to recoup hard-dollar spend from the following:
- Client’s time in collection of documents, manual process of worker classification determination and responding to audits
- Cost avoidance of co-employment, potential legal fees, penalties, back taxes as a result of tax audits
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