STAFFING ALERT
Registry -VS- Employer
IRS Crackdown on Misclassifying Independent Contractors

The IRS has long recognized the tax advantages that tempt Staffing Companies and other employers to classify workers as independent contractors rather than employees. 

If the worker is classified an independent contractor, the Staffing Company simply writes a check to the worker and files an annual 1099 miscellaneous income form.  The Staffing Company does not withhold Federal or State Unemployment Tax, Income Tax, or FICA.  The Staffing Company may also avoid providing other benefits such as Over-Time and Workers' Compensation Insurance.  The worker becomes responsible for paying Income Tax, Self-Employment Tax and Social Security Tax.

According to the IRS, billions of dollars of taxes are uncollected as a result of "misclassification".  The IRS has approximately 400 Officers nationwide investigating employers who misclassify workers as independent contractors.

CUSTOMERS using Staffing Companies may be unaware that the workers coming into their Facilities are classified as independent contractors.  This creates potential Risks for the Customer who may be liable for payroll taxes and other employer obligations!  It is important for the Customer/Facility to know how supplemental staff is classified by the Staffing Company.

HOW TO MAKE THE DETERMINATION BETWEEN EMPLOYEE & INDEPENDENT CONTRACTOR
Under the rules applied by the IRS, a worker's status generally depends on whether the employer controls both what the worker does and how the work is performed.  The greater the control, the more likely the worker will be classified as an employee.  The IRS Agents apply these common-law rules:

• Is the worker given instructions on how, where and when to work?
• Was the worker trained in order to have work performed correctly?
• Is the worker's services a vital part of your company's operations?
• Is the worker prevented from delegating work to others?
• Is the worker prohibited from hiring, supervising or paying assistants?
• Are the hours set for the worker?
• Is the sequence of work controlled or scheduled?
• Is the worker required to submit written or oral reports?
• Is the worker paid by the hour, week or month?
• Are the worker's business and travel expenses covered?
• Are tools or equipment furnished for the worker?
• Do you have the right to discharge the worker at will?
• Can the worker end the relationship without incurring any liability?

If the answer to any of these questions is "YES", you should be suspicious of any claim that the worker is an independent contractor.  
 
The role of the Staffing Company is to provide supplemental staffing while relieving the Customer of Workers' Comp., Unemployment Compensations, Liability Coverage, Payroll Taxes and Withholdings for the worker assigned.  Suwannee Medical Personnel classifies its professional and paraprofessional staff as employees and follows the common-law factors of the IRS.