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Business knowingly classifies employees as contractors. What happens?

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  • Business knowingly classifies employees as contractors. What happens?

    Hi everyone, the state is Texas

    My question is what specifically happens to a small business that knowingly classifies an employee as an independent contractor?

    The situation was: I was working for a small business and was being paid as an independent contractor with a business check. There is absolutely no doubt that I was an employee and not an indepent contractor. Taxes were not being withheld. I have copies of the checks btw. The reason he does this of course is to save on paying employment taxes, etc.

    The question is, if the owner is clearly paying employees as independent contractors, how exactly will IRS penalize him?

    I know he'll have to pay back taxes. How do they figure what additional penalties he'll have to pay?

    The business has being in operation for roughly 4 years. I do now know that he had done this with previous employees.

    I'm going to take this to the IRS. I'm just curious as to what should I expect also.


  • #2
    Independent Contractor

    Take a look at this website:
    Lillian Connell

    Forum Moderator


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