IRS Develops New Form for Misclassified Workers

By Alistair M. Nevius, J.D.

The IRS announced on December 20, 2007, that it has developed a new form for employees who have been misclassified as independent contractors to report their share of uncollected Social Security and Medicare taxes: Form 8919, Uncollected Social Security and Medicare Tax on Wages.

Misclassifying employees as independent contractors is a constant temptation to employers, who then avoid having to collect and pay income, Social Security, Medicare, and unemployment taxes on the employees’ income.

Use of Form 8919 will ensure that a worker’s Social Security and Medicare taxes will be credited to his or her Social Security record. The form should be attached to the taxpayer’s Form 1040, U.S. Individual Income Tax Return. Form 8919 requires the employee to indicate why he or she is filing the form. The reasons include that the employee filed Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding, and received a determination letter that he or she is an employee (or has not yet received a reply from the Service) or that he or she received other correspondence from the IRS determining that he or she is an employee. In general, the IRS wants an employee who is filing Form 8919 to also file a Form SS-8.

In the past, misclassified workers sometimes used Form 4137, Social Security and Medicare Tax on Unreported Tip Income, to report their share of Social Security and Medicare taxes, but the Service says they should no longer use that form.

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