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58 • AUGUST 2012 • WORLD FENCE NEWS Avoid costly penalties for misclassifying employees as independent contractors continued from page 56 Be aware that you may have ac- cess to a "safe harbor" offered by the federal government (See sidebar below.) Maybe the task of accurate classification may seem daunting, but a careful weighing of how you interact with each employee can help you avoid costly errors. "Determining independent con- tractor status is not rocket science," says attorney Brady. "Ask yourself: Are these people in business for them- selves? What is their risk? What level of control do you have over them?" Above all, don't be greedy by try- ing to peg people as independent con- tractors who really are not. "No one likes to pay taxes," says Brady. "But sometimes it's the cheapest and best thing to do." Sidebar: Sail Into Harbor As mentioned above, the IRS does offer a so-called "safe harbor" for em- ployers which protects them if certain conditions apply. Are your workers employees or independent contrac- tors? Answering that question can be as difficult as it is necessary, because many times it seems that worker rela- Dura Hedge Maintenance-Free Privacy Hedge • CREATES A BEAUTIFUL HEDGE-LIKE APPEARANCE ON ANY CHAIN LINK FENCE • OFFERS THE MOST PRIVACY OF ALL LATTICE PRODUCTS ON THE MARKET TODAY • INSTALLS ON MOST MESH SIZES • NO TOOLS OR LOCKING PIECES REQUIRED Call today for product specifications and pricing information! Dealerships available! Artificial Landscaping Concepts Artificial Landscaping Concepts 840 Broadway • Newburgh, NY 12550 (800) 962-1010 • Fax (845) 561-2958 www.artlandco.com ™ tionships share elements of both. Im- properly classify people as independ- ent contractors, though, and you can get hit with penalties and fines that can cripple your business. Be aware that the Internal Rev- enue Service does offer what is called a "safe harbor" for employers. Section 530 of the Internal Revenue Act of 1978 protects the employer from fines and penalties for misclassification of most kinds of workers if the following three conditions apply: 1) The em- ployer has consistently classified a certain category of worker as inde- pendent contractor; 2) The employer has a "reasonable basis" for doing so; 3) The employer has faithfully filed 1099s when required. "Once you have proven these three points you do not owe a nickel on the classification issue," says attorney Nancy E. Joerg, managing shareholder and senior attorney of the St. Charles, Illinois office of Wessels Sherman Joerg Liszka Laverty Seneczko P.C. (www.w-p.com). "Unfortunately, Con- gress could repeal this safe harbor and that is what Obama, the IRS and many of the liberal legislators want to do." Editor's note: As always, consult an attorney, CPA or professional busi- ness advisor before taking any actions mentioned here. This article is for ed- ucational purposes only. 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