Q & A – What can happen if I misclassify an employee as an independent contractor?

Q: What can happen if I misclassify an employee as an independent contractor?

A: If the IRS or state agency discovers that a business has not properly classified a worker as an employee, it may file charges against the business to collect back taxes, penalties, and any expenses for unpaid federal taxes, unemployment taxes, and workers’ compensation penalties, fees, or expenses.  The worker may also file suit against the business for its failure to provide the worker with benefits.