For a long time, the Internal Revenue Service has been chasing after firms that misclassify employees as independent contractors. Despite sequestration and government closure, the service has performed thousands of random audits, looking also at executive pay and fringe benefit reporting. They expect help from state agencies that operate similar programs.

In many cases, the IRS cannot reclassify contractors as employees if the business has filed 1099s for them and treated all such workers as contractors. Firms often rely on prior court decisions or long-standing industry practice.

Penalties are reduced if worker misclassification is unintentional. Firms not under audit can voluntarily correct any errors and pay a low penalty. To qualify, they must have consistently treated workers as independent contractors and given them 1099s for three years.

For nearly 30 years, Mike Nickerson has owned and managed a small, full-service accounting practice in the Midcoast. He holds a bachelor's degree in accounting from University of Southern Main and a master's degree in financial planning from Bentley University.

He is a past board member and president of the Maine Society of Certified Public Accountants and currently serves on the Maine Board of Accountancy.

An aged rock musician, Nickerson now finds musical enjoyment playing upright and electric bass in a variety of bands spanning folk to jazz music genres. He and his wife have three grown children, and they enjoy their free time hiking, kayaking, golfing, bicycling and motorcycling.

http://www.nickersonpa.com/