Resolving Federal and State Employment Tax Matters: Worker Classification

This webinar will examine the complex and evolving standards governing worker classification for federal and state employment tax purposes. Our panel of notable tax attorneys will analyze how the IRS and states make worker classification determinations and the stark differences in those determinations.

Worker classification continues to pose significant compliance challenges as states adopt more rigid statutory standards that diverge from federal law. These differences create the potential for inconsistent classifications across jurisdictions and increased audit risk.

As the IRS explains, "There is no 'magic' or set number of factors that 'makes' the worker an employee or an independent contractor and no one factor stands alone in making this determination." At the same time, misclassification can result in exposure to back payroll taxes, penalties, and interest, as well as wage-related liabilities and multi-year assessments across jurisdictions.

Further complicating these determinations, states have issued their own guidelines for classifying workers. California, for example, relies on the ABC test that begins by assuming all workers are employees unless a worker satisfies three specific conditions. Businesses and tax advisers need to understand the distinctions between employee and independent contractor status as outlined under both federal and state rules.

Listen as our panel of tax controversy attorneys discusses how worker classification issues are evaluated across jurisdictions, including current enforcement trends and practical considerations for developing defensible and consistent classification positions.