The Department of Labor (DOL) and IRS recently issued an updated memorandum of understanding (MOU) regarding the way the two agencies identify and enforce employee misclassifications.
The agencies make clear in the notice that they will continue to combat employee misclassification through a series of efforts. The first is that the agencies are introducing a more “streamlined” process for identifying instances of wrongful employee classifications.
As part of the initiative, the IRS will be held accountable for three main duties:
- Evaluate employment tax referrals sent by the DOL-Wage and Hour Division (WHD) that meet standardized criteria, in addition to conducting exams to ensure compliance with various employment law
- Provide reports that summarize results achieved through the tax referrals to the WHD annually
- When requested, communicate to the DOL new or revised employment tax updates, training, and other relevant information
Also included in the MOU is a standardized form and decision tree which outline the required information for submitting employment misclassification referrals to the IRS. These additional resources are intended to help streamline the process of submitting and identifying instances of misclassification.
Following the release of the updated MOU, Principal Deputy Wage and Hour Administrator Jessica Looman said, “Renewing our memorandum of understanding with the IRS strengthens our existing partnership by improving referral processes and...
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