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Miami Accounting Firms and IRS Looking Closely at Independent Contractors

Miami Accounting Firms and Internal Revenue Service are casting a skeptical eye on many companies’ attempts to classify employees as independent contractors.

Miami Accounting Firms say the IRS “focus on the withholding, the FICA taxes, Medicare taxes,” said Gustavo Viera CPA, partner-in-charge Miami Accounting Firm VieraCPA, during a Florida Society of CPAs conference Thursday on taxation for individuals. “They’re drilling down on compensation, on withholding. They come prepared and they do their work. These agents can have files with a tremendous amount of documentation.”

It’s not only low-level staff who can be the subject of such audits. High-level executives can also come under scrutiny. Miami Accounting Firms warned about golden parachute issues. “If you take an excess parachute payment, there’s an excise tax on the employer and on the executive,” he cautioned. “They look at non-cash fringes like housing, loans, gross-ups to cover certain tax payments they have to make. There’s a lot going on here that the agents are looking at.”

VieraCPA noted that Miami Accounting Firms can do planning for their clients, helping them update their processes and procedures. He advised checking the payroll system for temps, alternative workers and contingent workers.

“When you have a contract with someone that says they’re going to be treated as an independent contractor, that is not enough,” he said. “You have to drill down. The contracts are getting more specific. You have to look at the written documents and at the actual work.”

About the Author

Gustavo VieraGustavo A Viera is the managing partner of Gustavo A Viera, PA. His experience spans more than 25 years. He started his career in public accounting at PriceWaterHouseCoopers where reached the level senior audit manager. His Fortune 500 experience includes positions as CFO - Latin America Region for both Hewlett Packard and Telefonica of Spain. Gustavo also writes a blog twice a week that addresses trending accounting and tax issues. He is an SBA Advisor and teaches workshops for aspiring entrepreneurs. His office is located at One Alhambra Plaza Floor PH Coral Gables FL 33134, and is admitted to practice in the State of Florida as a licensed Certified Public Accountant. Gus welcomes questions and he can be reached at 786-250-4450.View all posts by Gustavo Viera →