New law liberalizes worker classification rules

Article Abstract:

The US Congress has provided clarifications regarding safe haven guidelines that should help employers question increased IRS scrutiny of taxpayers that classify workers as independent contractors. This issuance is a big relief to businesses because the treatment of workers as employees or independent contractors can substantially affect them. Congress introduced certain protections for taxpayers in Sec. 530 of the Revenue Act of 1978 against IRS challenges on the classification of workers and to enforce a moratorium on the IRS against Rulings and Regulations on employment status. These safeguards have been extended for an indefinite period and expanded by the Small Business Job Protection Act of 1996.

Tax Law, Public Finance Activities, Administration of General Economic Programs, Jobs & Employment, Taxation, Employment, Employers, Tax havens

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Worker status test unchanged by Supreme Court

Article Abstract:

The case of Nationwide Mutual Insurance Co versus Darden raised the issue of workers' classification as independent contractors or employees, placing special emphasis on the effect of classification on workers' pension plan eligibility and on employment taxes. The Supreme Court's ruling on the case was marked by the pronouncement of general standards to determine worker status, based on the ERISA of 1974, in cases where no statutory definition of employees is specified. The standards, however, pose significant risk to employers with pension plans that base employment taxes and plan eligibility of workers on Section 530's three statutory safe harbors for workers treated as independent contractors.

Fire, marine, and casualty insurance, Holding companies, not elsewhere classified, Accident and health insurance, Cases, United States. Supreme Court, Nationwide Mutual Insurance Co.

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