Getting Down and Dirty with Form 1099-NEC

1099-NEC Misclassification Examples

When IRS form 1099-NEC is misused. . . bad things can happen.

Energy services employer misclassified workers.

Cable technicians were wrongly classified as independent contractors.

On November 19, 2024, Construction Citizen reported, “Five Orlando Residents Indicted For Scheme To Facilitate Evasion Of Payroll Taxes And Workers’ Compensation Requirements In Construction Industry.”

There are consequences for misclassifying an employee as an independent contractor. Below is a list of some of the most common problems you can face.

1099-NEC Ramifications

IRS audits.
In some states, state-level income tax violation penalties and interest.
Liability for employment taxes for misclassified workers.
Assessment of interest and penalties for federal tax violations.
Department of Labor investigations. (The U.S. Department of Labor’s Wage and Hour Division notifies employees of unpaid wages and works to recover them on their behalf.)
Obligations to provide leave under laws like the Family and Medical Leave Act.
Paying your attorney to handle your case, including defense concerning wage and overtime lawsuits brought by current and former employees.
Damage to your construction company’s reputation.
Loss of respect from peers, clients, and employees.

Three 1099-NEC Tips

Treating employees with the respect they deserve and subcontractors with the consideration they deserve allows your integrity to shine through.

Just as your mom did not respond favorably to the plea of “everybody’s doing it,” neither will the IRS!

Ambitious Construction Contractors look to The Profit Constructors to provide advocacy in dealing with:

Working with The Profit Constructors gives Construction Contractors the means to organize their operations in ways that help them:

Ready for action? Or want to know more? Get in touch today to schedule a complimentary discovery call. 866-629-7735

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