IRS Calls Bluff: City Contractors are Misclassified

Tax Audit Results in Misclassification Penalties

The IRS is calling on the city of Pine Bluff, AR, or rather auditing and assessing fines on the city’s 2007 payroll and contractor taxes.  There is currently a $63,803 price tag on the initial assessment which the city hopes to minimize.

City Contractor Use Not Safe From Federal Scrutiny

This audit is one of many being done at the city level by the IRS. Recent city audits of misclassified workers include Santa Fe, NM and Atlanta, GA who has taken steps to correct the issue.  It may be worth looking into the correct classification of their workers for many city governments; if not to prevent fines, to prevent bad press and potential headaches from union guilds.