IRS Targeting Independent Contractors

Small businesses have been increasingly relying on independent contractors: they’re cheaper, by up to 30 percent, and they're more flexible, particularly for a company on a small budget. But the IRS is turning its attention to “permalancers”: independent contractors who remain on the payroll for months or even years. Most of the IRS focus will be on small businesses and independent owners, says the General Accounting Office (GAO).

Unfortunately, small business and independent owners, who don’t have access to the numbers of attorneys and tax specialists that the large corporations do, are often nearly clueless when it comes to understanding the complex tax rules covering freelancers.

Business Week