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The Battle Between W-2 & 1099 (Not Available)

Author: Marcia Miller

CPE Credit:  2 hours for CPAs
2 hours Federal Tax Law for CTEC
2 hours Federal Tax Related for EAs and OTRPs

Today's employers must be aware of the complex compliance issues relating to the proper classification of employees versus independent contractors. The IRS plans to flag employers for audit should they issue both a 1099 and W-2 to the same identification number.

BEWARE! The IRS has also begun a coordinated effort of enforcement and sharing of information with the DOL (Department of Labor) and the States. Join this informative webcast so that you will be prepared to recognize the unique differences between your employees and independent contractors.

Publication Date: January 2015

Designed For
Attorneys, CFOs, CPAs, Enrolled Agents, Accounts Payable and Human Resources Department Heads.

Topics Covered

  • Defining Employees versus Independent Contractors;
  • IRS "Right-to-Control" Test: Rev. Rul. 87-41 - 20 Common Law Attributes;
  • Department of Labor "Economic Reality" Test;
  • Modernized Twenty Factor Test: Three Categories of Evidence as they appear on Form SS-8 (Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding);
  • Costly Consequences of Mis-classifications of Employees;
  • Safe Harbor Rules & Remedies - Section 530 & Form 8919;
  • Notable Court Decisions;
  • IRS Voluntary Worker Classification Settlement Program (VSCP);
  • 2015 Legislative Updates.

Learning Objectives

  • Recognize the Internal Revenue Service's plan to minimize the "tax gap".
  • Recognize the new regulations regarding 1099 Compliance to avoid costly penalties.
  • Describe how the IRS differentiates independent contractors from employees and the rules applied to only an employee
  • Recognize who faces the burden of uncollected tax revenue when a worker is misclassified as an independent contractor
  • Identify when either a worker or an employer submits to the IRS to determine whether the worker is an employee or an independent conractor
  • Evaluate what is included in both the Economic Reality Test and the 20-Factor Test
  • Identify which corporation won its case and is able to continue to classify its workers as independent contractors
  • Recognize what legislation replaces the Sec 530 relief requirements
  • Differentiate the tax gap that is of such great concern to the IRS
  • Identify an automatic red flag for the IRS
  • Recognize what government agency is concerned with the proper classification of workers besides the IRS
  • Describe which factors indicate that a worker is an independent contractor
  • Differentiate what is included in both the ABC Test and the Economic Reality Test
  • Recognize one of the major categories the courts use in common law rules to establish three categories to determine employee status
  • Describe an example of financial control
  • Identify what an independent contractor can attach to their Form 1040 if they want to pay their share of social security that would have been deducted from payments by employers on their Form W-2
  • Describe workers that have been compared to hair stylists when judging their employee status
  • Evaluate the result of filing Form 8919



Instructional Method

NASBA Field of Study
Taxes (2 hours)

Program Prerequisites
A basic understanding of W-2s and Form 1099.

Advance Preparation

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