Locke Lord Team Secures Result in Favor of Client in IRS Audit Initially Concluding Hundreds of Workers Had Been Misclassified as Independent Contractors

Locke Lord was retained to represent a New Jersey-based company undergoing an IRS worker classification audit for alleged independent contractor misclassification affecting hundreds of service providers. Richard Reibstein (New York), who heads the Firm’s independent contractor compliance and misclassification practice, called in Tax Partner Buddy Sanders (Houston) to team up with him, as they had done in an IRS audit involving a different industry in 2019. After the IRS Examiner ruled that the workers had been misclassified, Locke Lord filed an administrative appeal about the time the pandemic began. Nearly two years later, the IRS appeals office reversed course and upheld the client’s long-standing classification of the workers as independent contractors, saving the client $5.7 million in employment taxes and interest. Last week, Reibstein and Sanders were notified that the IRS formally approved the paperwork upholding the client’s classification of the workers in question as independent contractors.
Posted on March 15, 2022