Blog

In March the IRS announced it is hiring a staggering 10,000 new workers. In addition, the current administration's budget request seeks to provide $14.3 billion to the Treasury Department, including $12.6 billion devoted to the IRS. Those monies would result in the largest single-year funding increase for the IRS in over twenty years! 

Last month National Taxpayer Advocate Erin M. Collins released her annual report to Congress detailing IRS activities in 2021. The big takeaway is that if you think you can call the IRS and get help with your 1099 filing questions, then think again.

Many of you might have missed the fact that on December 27th the National Labor Relations Board (NLRB) announced that it was reconsidering the concept of who is really an independent contractor, and who is really an employee. This follows on the heels of a memo where the NLRB’s general counsel asked the NLRB's various offices to submit cases to her that raised the question of whether the very act of misclassifying workers as independent contractors was itself a violation of the National Labor Relations Act.

Have a 1099 question for the IRS? Good luck with that. You have only a one in four chance of the IRS even answering that call, and if they do wait times average over a half hour. From there, the odds of getting an experienced tax attorney or CPA online handling your specific fact and circumstances are near non-existent. Furthermore, if you are calling at any time of the year other than from January to March you can even forget that (as the IRS has repeatedly stated it does not provide tax support outside of filing season).

Late last month a California Court ruled that a 2020 ballot measure that exempted ride-share and food delivery drivers from a state labor law is unconstitutional. 

This ruling is grounded on strong precedent. As noted by the judge this is because the ballot measure unreasonably "limits the power of a future legislature to define app-based drivers as workers subject to workers' compensation law". This not only makes the entire measure unenforceable, but it is also likely to be upheld upon appeal.

On June 23rd the Electronic Tax Administration Advisory Committee (ETAAC) released its annual report to Congress, featuring 10 recommendations the IRS should implement. Among those recommendations is a new impetus for the IRS to further leverage 1099 information returns to reduce the annual tax gap (the difference between what the IRS is owed and what it takes in each year).

On May 5th the Labor Department killed the prior administration's attempt to make it easier to classify some workers as 1099 reportable contractors. This means existing rules under the 1938 Fair Labor Standards Act will continue to be the standard in terms of determining whether a worker should be classified as a 1099 reportable independent contractor.

The IRS issued a new report (2021-40-030) putting your 1099 backup withholding efforts on notice. The report found that, due to a lack of adequate processes, billions of dollars in underreported 1099 tax by employers were not addressed and taxpayers avoided payment of billions of dollars in backup withholding.

On Thursday, April 29th the U.S. Labor Secretary threw down a new gauntlet, putting businesses on notice that quite a few 1099 reportable "gig workers" should be classified as W-2 reportable "employees" who deserve work benefits.

Amidst unprecedented changes involving 1099/1042-S reporting and a dramatic increase in associated due diligence requirements under the law the IRS is about to get a massive enforcement boost. On April 27, 2021 it was announced that the current Administration is seeking a staggering $80 billion increase in the IRS enforcement budget.