Challenging the IRS on the Status of Independent Contractors

摘要

After a routine audit, the Internal Revenue Service (IRS) determined that the City of Dana Point's recreation class instructors were improperly classified as independent contractors and should have been classified as employees for federal employment tax purposes. The city has appealed this decision by filing a petition in the U.S. Tax Court (Cify of Dana Point v. Commissioner of Internal Revenue, U.S. Tax Court Docket No. 3457-10). It appears that the IRS intends to aggressively take this position with other public agencies that provide recreation classes. This article explores the significant ramifications of the IRS's actions and suggests possible strategies.