Independent Contractor Compliance Blog - by Collabrus™

If you’ve been breathing air on this planet for the past six months, you should realize there is The Perfect Storm of Independent Contractor Compliance threatening American businesses. It’s on the horizon and swiftly approaching.

Governments at all levels are looking for more money

Politicians are looking for money because there is not enough in the budget to cover what they are spending. You don’t believe it? Just a day after California voters said “Enough!” by voting down every tax increase scheme proposed by the legislature in the special election (except the one meant to appease taxpayers with no pay raises for lawmakers in the years of a deficient) the California lawmakers are already looking for an “end run” strategy for increasing the money they collect from taxpayers.

For example, California Assembly Speaker Karen Bass said, “We obviously aren’t going to start with (tax increases), but that is possible to be in the mix…”

Republicans are calling for “deep cuts” while Democrats are saying they won’t compromise their values about government programs.

There is one thing both Democrats and Republicans almost always agree on.  The current tax laws can be enforced more aggressively when they need money. It’s one politically safe way to get more money without passing a bill to raise taxes.

As a result governments will soon be taking extraordinary measures to enforce IC compliance laws and collect every possible tax dollar.

At the federal level

In the past year the following bills have been proposed to help close the infamous “Federal Tax Gap” (reported at $345 billion per year):

• Employee Misclassification Prevention Act
• The Taxpayer Responsibility, Accountability and Consistency Act

• The Obama-Durbin Independent Contractor Proper Classification Act (That’s right!  Our current President was the co-author).

At the state level

In California for example, SB 1490, introduced last year, but sidetracked temporarily, would increase enforcement with the promise to bring in more money (For more details go back to my article on SB 1490 in July 2008).

The governor currently has a special “tax commission” looking at ways to “overhaul the California tax system”: I think it almost goes without saying, during a time of financial crisis, if you form a tax commission to discuss changes needed in California’s tax law…

The Perfect Storm of IC Compliance

This is why I call it the Perfect Storm of IC Compliance. The voters won’t let government raise the rate of taxation, so the politicians will find an “end run” to raise more money. IC Compliance is a popular route to increase tax collection.

You should prepare your company now

I’ve been recommending that companies ensure their compliance ship is seaworthy now, before the storm hits. If you’d like to know a lot more about this tax environment, and how to insure you are protected, why not sign up for my free seminar on June 3, 2009, in Mountain View, California.

You can find information on signing up on this website.