Worker Classification

In the Worker Classification practice area, we are positioned to assist taxpayers in making important decisions as to the proper classification of workers. Traditionally, employers and workers have struggled in their efforts to determine whether a given individual is properly classified as an independent contractor or employee.

However, in recent years, as LLCs have become a popular entity of choice, LLC employers have struggled in determining whether a given individual is a self-employed partner (for federal tax law purposes) or merely an employee. Quite often, a W-2 is erroneously issued to an individual owning a membership interest in a LLC, even though this person is properly classified as a "partner" for federal tax law purposes.

We can provide you with written opinions and legal advice in the area of worker classification in the federal tax arena. Such opinions/ or advise may be of vital importance for those taxpayers wanting to act in "good faith" reliance when making any worker classification determination, so as to qualify for the protections under Section 530 against catastrophic, retroactive assessments of employment taxes.

See, e.g., VTA Management Services, Inc. v. U.S., 95 AFTR 2d 2005-XXXX (E.D.N.Y. 12/14/2004)(Section 530 does not allow for "ex post facto justification"; taxpayer failed to submit evidence sufficient to establish that they did, in fact, rely on the advice of counsel in making its worker classification decision).

If you need our assistance in making a worker classification determination or want to learn more about whether or not you or your company is eligible for Section 530 protection, please contact us.