{"id":3159,"date":"2019-06-05T07:40:06","date_gmt":"2019-06-05T11:40:06","guid":{"rendered":"https:\/\/keysolutions.us\/blog\/?p=3159"},"modified":"2019-06-05T07:40:14","modified_gmt":"2019-06-05T11:40:14","slug":"pa-employers-independent-contractors-learn-from-nj-audits","status":"publish","type":"post","link":"https:\/\/keysolutions.us\/blog\/pa-employers-independent-contractors-learn-from-nj-audits\/","title":{"rendered":"PA EMPLOYERS & INDEPENDENT CONTRACTORS – LEARN FROM NJ AUDITS"},"content":{"rendered":"\n

NJ WARNS EMPLOYERS & ACCOUNTANTS WHO ISSUE FORM 1099-MISC TO EMPLOYEES<\/strong><\/p>\n\n\n\n

NJ says employers are misinformed if they believe that by simply reporting a worker’s earnings to the federal government using Form 1099, as opposed to Form W-2, that the worker becomes as an independent contractor.<\/p>\n\n\n\n

NJ SOLICITS HELP OF ACCOUNTANTS ABOUT EMPLOYERS WHO MISCLASSIFY INDEPENDENT CONTRACTORS<\/strong><\/p>\n\n\n\n

The New Jersey Department of Labor recently released a message to NJ\u2019s licensed accountants regarding misclassifying employees as independent contractors. NJ is solicitating the assistance of the state\u2019s accountants to educate their business owners as to who is an employee and who is an independent contractor. The misclassification of workers is not a new issue to our firm. We have previously discussed the rules in our August 19, 2011<\/a>, October 15, 2012<\/a>, September 10, 2013 <\/a>and February 15, 2015<\/a> posts.<\/p>\n\n\n\n

JOINT AUDIT EFFORTS OF U.S. DEPT. OF LABOR (DOL), IRS & STATE DOL<\/strong><\/p>\n\n\n\n

What is important about this NJ announcement is that the state realizes it is losing tax revenues (uncollected unemployment compensation and disability benefits tax funds) and will focus its audit exams on small business owners misclassifying their employees. Now, in addition to the IRS and U.S. Department of Labor audits looking for employer misclassifications of its workers, NJ employers will see NJ auditors in their rear view mirrors. <\/p>\n\n\n\n

WILL PA EMPLOYERS BE NEXT?<\/strong><\/p>\n\n\n\n

States are copycats. If NJ is \u201cseeing the light\u201d and collecting additional tax revenues, soon other states will be doing the same.<\/p>\n\n\n\n

STATE TAX REVENUES ARE AT RISK<\/strong><\/p>\n\n\n\n

NJ says it has seen a number of cases where small and medium sized employers believe that by simply making the decision to report a worker’s earnings to the federal government using Form 1099, as opposed to Form W-2, a potential employer may  unilaterally deem that individual to be an independent contractor, thereby  avoiding the responsibility under N.J.S.A. 43:21-7 to make contributions respecting that individual to the unemployment compensation and State disability benefits funds. <\/p>\n\n\n\n

EMPLOYERS NEED TO UNDERSTAND AN AUDITOR’S APPROACH <\/strong>
<\/p>\n\n\n\n

If a service is performed for remuneration or under any contract of hire, written or oral, express or implied, it is considered to be covered W-2 employment<\/strong>, unless the potential employer is able to establish the following with regard to the service at issue and the individual providing that service<\/strong>:

(A) Such individual has been and will continue to be free from control or
direction over the performance of such service, both under his contract of
service and in fact; and

(B) Such service is either outside the usual course of the business for which 
 such service is performed, or that such service is performed outside of all 
 the places of business of the enterprise for which such service is performed; 
  AND<\/strong>

(C) Such individual is customarily engaged in an independently established
trade, occupation, profession or business.

Accordingly, where an employer fails to meet any one<\/strong> <\/u>of the three criteria listed above with regard to an individual who has performed a service for remuneration, that individual is considered to be an employee<\/strong> and the service performed is considered to be employment subject to all payroll withholding taxes. <\/strong> <\/p>\n\n\n\n

If you would like to discuss your business or personal tax planning<\/a>, tax preparation<\/a> and other financial concerns with an experienced tax professional, we invite you to call 610-594-2601<\/a> today to make an appointment at our Exton PA CPA office<\/a> to discuss your situation. You can also schedule a consultation at Click Here<\/a>. <\/p>\n\n\n\n

Copyright \u00a9 2019 Keystone Financial Solutions, Inc.  All rights reserved.  BE SURE TO READ THE DISCLAIMER PAGE: Content in this blog is for educational purposes only and should not be considered as the rendering of tax, legal or investment advice. The publisher of this blog makes no representations as to the accuracy or completeness of any information herein, will not be liable for any errors or omissions, and shall not assume liability for any losses, injuries, or damages from the display or use of this information.<\/strong><\/p>\n\n\n\n

About F. Bryan Haarlander, EA, CTRS:<\/strong><\/p>\n\n\n\n

Bryan\nHaarlander is an IRS licensed Enrolled Agent and who owns and operates a\nspecialized tax services firm serving clients in the western suburbs of\nPhiladelphia, PA, which includes the cities of Chester Springs, Coatesville,\nCollegeville, Devon, Downingtown, Exton, Frazer, King of Prussia, Paoli, Philadelphia,\nPhoenixville, Pottstown, Radnor, Reading, Wayne, West Chester in Berks,\nChester,  Delaware, Montgomery and\nPhiladelphia Counties, as well as clients in Delaware, New Jersey, New York and\nthroughout the continental USA. <\/p>\n\n\n\n

A Certified Tax Resolution Specialist, Bryan is well-known for his IRS tax resolution expertise and his book How to Resolve Your IRS Tax Debt Problems. <\/strong><\/a><\/em><\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

NJ WARNS EMPLOYERS & ACCOUNTANTS WHO ISSUE FORM 1099-MISC TO EMPLOYEES NJ says employers are misinformed if they believe that by simply reporting a worker’s earnings to the federal government using Form 1099, as opposed to Form W-2, that the worker becomes as an independent contractor. NJ SOLICITS HELP OF ACCOUNTANTS ABOUT EMPLOYERS WHO MISCLASSIFY […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[61,4,56],"tags":[132,69,73,63,33,34,21,64,71,31,72,66,23,41,65,32,40,39,67,68,38,70,201,200,202,151,37,36,35,150,42,28],"class_list":{"0":"post-3159","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-local-tax-news","7":"category-pennsylvania-tax-news","8":"category-state-tax-news","9":"tag-accuracy-related-penalty","10":"tag-audits","11":"tag-bankruptcy","12":"tag-bryan-haarlander","13":"tag-chester-county-cpa","14":"tag-exton-accountant","15":"tag-exton-cpa","16":"tag-f-bryan-haarlander","17":"tag-first-time-abatement","18":"tag-frank-haarlander","19":"tag-innocent-spouse","20":"tag-installment-agreements","21":"tag-irs","22":"tag-irs-tax-debts","23":"tag-irs-tax-payments","24":"tag-keystone-financial-solutions","25":"tag-offer-in-compromise","26":"tag-oic","27":"tag-partial-installment-agreements","28":"tag-penalty-abatement","29":"tag-philadelphia-cpa","30":"tag-reasonable-cause","31":"tag-reasonable-compensation","32":"tag-s-corporations","33":"tag-self-employment-taxes","34":"tag-tax-adviser-near-me","35":"tag-tax-blog","36":"tag-tax-expert","37":"tag-tax-planning","38":"tag-tax-professional-near-me","39":"tag-tax-resolution","40":"tag-west-chester-cpa","41":"entry"},"aioseo_notices":[],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p9W9tf-OX","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/keysolutions.us\/blog\/wp-json\/wp\/v2\/posts\/3159","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/keysolutions.us\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/keysolutions.us\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/keysolutions.us\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/keysolutions.us\/blog\/wp-json\/wp\/v2\/comments?post=3159"}],"version-history":[{"count":23,"href":"https:\/\/keysolutions.us\/blog\/wp-json\/wp\/v2\/posts\/3159\/revisions"}],"predecessor-version":[{"id":3239,"href":"https:\/\/keysolutions.us\/blog\/wp-json\/wp\/v2\/posts\/3159\/revisions\/3239"}],"wp:attachment":[{"href":"https:\/\/keysolutions.us\/blog\/wp-json\/wp\/v2\/media?parent=3159"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/keysolutions.us\/blog\/wp-json\/wp\/v2\/categories?post=3159"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/keysolutions.us\/blog\/wp-json\/wp\/v2\/tags?post=3159"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}