SESKStuff Everyone Should Know
SESK: Stuff Everyone Should Know · sesk.info/founder-misclassification-tax-liability

If you treat an employee as a contractor with no reasonable basis, what can the IRS hold you liable for?

The employment taxes for that worker.

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  1. Nothing, if the worker signed a contract
  2. The employment taxes for that worker ✔
  3. Only a $50 late form fee

Why: Employers must withhold and pay Social Security, Medicare and other employment taxes for employees. Misclassify someone with no reasonable basis and you may owe those taxes yourself, without the IRS relief provisions.

Huh, didn't know that: Section 530 relief also requires consistent tax reporting and consistent treatment of workers in substantially similar positions.

The dad joke
Why did the payroll clerk carry a pencil and eraser? To fix every mistake before tax day.
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References

Answer: The employment taxes for that worker. Employers must withhold and pay Social Security, Medicare and other employment taxes for employees. Misclassify someone with no reasonable basis and you may owe those taxes yourself, without the IRS relief provisions.

  1. IRS: Independent contractor (self-employed) or employee? www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-or-employee
    you have no reasonable basis for doing so, then you may be held liable for employment taxes for that worker
    Checked 2026-10-11.

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