Monday, November 26, 2007

States and IRS join forces to crack down on employment-tax violations

The IRS recently signed information-sharing agreements with agencies in 29 states as part of an increased effort to uncover employment-tax violations.

One of the major issues is whether companies are correctly classifying independent contractors. Unlike for employees, companies don't withhold Social Security, payroll taxes or other taxes from independent contractors' pay.

The states that have signed the agreement so far are: Arizona, Arkansas, California, Colorado, Connecticut, Hawaii, Idaho, Kentucky, Louisiana, Maine, Massachusetts, Michigan, Minnesota, Nebraska, New Hampshire, New Jersey, New York, North Dakota, Ohio, Oklahoma, Rhode Island, South Carolina, South Dakota, Texas, Utah, Vermont, Virginia, Washington and Wisconsin.