How to Avoid an IRS Audit: Ask the Right Questions Regarding the Questionable Employment Tax Practices Initiative

In 2007, the IRS launched the Questionable Employment Tax Practices initiative. This program includes agreements between the IRS, Department of Labor, and several state agencies (including Colorado) to collaborate during investigations involving employment tax schemes. The primary focus is directed towards employers who, intentionally or not, avoid employment related taxes by incorrectly classifying workers as independent contractors rather than as employees.

Employers face liability for 100% of the tax not withheld, as…