The Tax Implications of Misclassifying Employees - Holbrook & Manter

The Tax Implications of Misclassifying Employees - Holbrook & Manter

The consequences of misclassifying an employee as an independent contractor can be costly. You could be liable for back taxes (including the employee’s shares of unpaid payroll and income taxes), penalties and interest. There may be serious nontax consequences as well. How important is this? Businesses must withhold federal and state income taxes and the employee’s share of Social Security and Medicare taxes from employee wages. They must also p…