Article Review of: Will the IRS Audit You for Your Independent Contractors?, July 2015, University Business Magazine
The Affordable Care Act is cracking down on how higher education institutions classify their independent contractors. Because the act requires employees must be given health care benefits, many institutions will classify employees as independent contractors and issue them a 1099 at the end of the year as a way of circumventing this requirement. There have been rumors that the IRS is increasing its auditing of colleges and universities specifically to investigate misclassification of employees based on the description of the job they actually do. The article suggests that when in doubt, simply classify workers as employees of the institutions to avoid fines from the IRS.
I wholeheartedly agree with the IRS attempting to crack down on what should have always been an illegal process. Denying benefits to workers who perform the same or even more work than the actual employees is at best unethical and at worse, illegal. It is taking advantage of another’s time and failing to compensate adequately for it. Colleges and universities of all places should be the most progressive and ethical institutions in the country precisely because they cannot claim ignorance to the law and social issues that their practices create.
While the IRS crackdown is a first step, this auditing process should extend to unpaid and paid interns who also perform many of the same responsibilities and duties of their full-time counterparts, but with nowhere near the same benefits and compensation. Failing to compensate any American for their work and time goes against our principles as a country. This issue of universities actively seeking to avoid paying workers what they’re worth presents another very interesting question; with the increasing price of college tuition, where does all of the extra revenue go if not to the workers who provide services to the students enrolled?