You have read horror stories about how the IRS audits business owners and deems their 1099 independent contractors W-2 employees—and then assesses tens (or hundreds) of thousands of dollars in back payroll taxes, interest, and penalties.

Are you one of those horror stories?

Okay, let’s say you are one of them. You know that you are an IRS target because you have workers who really should be employees, but you treat them as independent contractors. And you are afraid that if you change now, the IRS will see that change, audit your prior years, and charge big bucks for your mistake.

What should you do? Keep the workers as independent contractors and hope the IRS doesn’t catch on? Or amend your past returns to show the misclassified workers as employees?

Depending on how many workers you have misclassified, and the number of years involved, that amendment process could be cost prohibitive.

But be happy you are reading this article. It will show you how the IRS offers a way for you to come clean, reclassify your workers correctly, and pay only pennies on the dollar for your past bad deeds. ... Log in to view full article.