business
IRS offers deal on misclassified employees
NEWS IN BRIEF — Posted Oct. 10, 2011
The Internal Revenue Service announced Sept. 21 that companies, including physician practices, that have misclassified workers as independent contractors when they should have been called employees will be able to resolve the issue voluntarily at a lower cost than if the problem were discovered during an audit.
Differences in how independent contractors are taxed can make the designation appealing for both employees and employers, but a misclassification can lead to expensive fines for companies.
Medical practices may run afoul of the IRS' classification system if a nurse practitioner, physician assistant or administrator has an independent contractor agreement but is treated like an employee and should be classified as such. Generally, if a practice is able to control how a worker performs his or her job, provides supplies for the job and gives benefits such as vacation, that person would be an employee.
For instance, a practice's accountant who works off-site and has many other clients would fall into the independent contractor category. But a practice's biller who works on-site and gets workplace benefits most likely should be classified as an employee.
More information about the Voluntary Classification Settlement Program is available online. (link)
Note: This item originally appeared at http://www.ama-assn.org/amednews/2011/10/10/bibf1010.htm.