In the last 10 years, the IRS has stepped up their enforcement of employee classification, and have audited many lifelong learning programs.
Out of nearly 200 participants, 12 people or 6 percent said the IRS had audited them and challenged their classification of instructors as independent contractors. Of the 6 percent that had been audited, none had won their case with the IRS and had therefore been forced to pay penalties and to reclassify their independent contractors as employees.
The reasons for an audit can vary, but some are simply random, and therefore it is critical that you know whether your practice with regard to employee status conforms to IRS requirements. For more information on the IRS requirements, members can find a report by LERN in the Knowledge Base, accessible as a link from the LERN home page, www.lern.org.
Several LERN members who have been audited have expressed a willingness to talk with others who may be involved currently in an audit. For a list of these members, contact Tammy Peterson at info@lern.org.
Guidelines for employee classification can be found at http://art.mt.gov/artists/IRS_20pt_Checklist_%20Independent_Contractor.pdf
