While Actions Have Been Taken to Address Worker Misclassification, an Agency-Wide Employment Tax Program and Better Data Are Needed
February 4, 2009
Reference Number: 2009-30-035
This report has cleared the Treasury Inspector General for Tax Administration disclosure review process and information determined to be restricted from public release has been redacted from this document.
Phone Number |
202-622-6500
Email Address | inquiries@tigta.treas.gov
Web Site |
http://www.tigta.gov
February 4, 2009
MEMORANDUM FOR DEPUTY COMMISSIONER FOR SERVICES AND ENFORCEMENT
FROM: Michael R. Phillips /s/ Michael R. Phillips
Deputy Inspector General for Audit
SUBJECT: Final Audit Report – While Actions Have Been Taken to Address Worker Misclassification, an Agency-Wide Employment Tax Program and Better Data Are Needed (Audit # 200730001)
This report presents the results of our review to evaluate
the effectiveness of actions the Internal Revenue Service (IRS) had taken and
planned to take to address the misclassification of employees as independent
contractors. This audit was part of our risk-based
audit coverage and was included in the Treasury Inspector General for Tax Administration
Fiscal Year 2007 Annual Audit Plan.
Impact on the Taxpayer
The misclassification of employees as independent
contractors is a nationwide issue affecting millions of workers that continues
to grow and contribute to the tax gap.[1] The IRS has taken and plans to take many
positive actions to address worker misclassification. However, it does not have an agency-wide
employment tax program to coordinate the decision-making process and efforts
among its business divisions. The limited
data available indicates that the worker classification issue is growing
significantly. When an employee is
misclassified, tax revenues are not reported or paid and the burden of
uncollected taxes shifts to other taxpayers.
Synopsis
IRS research indicates that employers often misclassify workers as independent contractors for various reasons. They might do so unintentionally because of a lack of knowledge or because of poor advice received. Some employers might have Section 530[2] protection and, as a result, can legally treat workers as independent contractors who would otherwise be employees. Finally, there are employers who deliberately misclassify workers to cut costs and to gain a greater competitive edge. These employers avoid paying their share of employment taxes as well as other expenses such as workers’ compensation, unemployment insurance, and other benefits. Misclassifying employees as independent contractors and not incurring the related costs can give these employers a competitive advantage over employers who treat their workers as employees. The IRS’ interest in this issue is not to reclassify workers from independent contractors to employees. Rather, it is to ensure that employers are making the proper determination and that workers are being treated appropriately. The IRS has dedicated resources to educate taxpayers regarding employee classification as well as to enforce tax laws related to this issue. Despite the many positive actions that the IRS has taken and plans to take to address the misclassification of employees as independent contractors, more needs to be done.
IRS business divisions
communicate and coordinate with each other regarding employment tax
issues. However, there is no single
point of accountability for employment tax below the IRS Deputy Commissioner
level, and there is no agency-wide strategy to coordinate the decision-making
process and efforts among the divisions.
Misclassified workers are a significant
portion of the employment tax gap. However,
because studies of the impact of worker misclassification on the tax gap are
over 20 years old, the IRS does not know the size of the problem today and is
unable to determine the overall effectiveness of its actions to address this
issue. The IRS’ most recent
estimate[3]
of the tax gap is approximately $345 billion.
The employment tax portion of this figure due to underreporting is
estimated to be about $54 billion with an estimated $1.6 billion being
attributable to worker misclassification.
However, the $1.6 billion estimate is based on Tax Year 1984 data. The
IRS conducted a preliminary analysis of Fiscal Year 2006 operational and
program data and found that underreporting attributable to misclassified
workers is likely to be markedly higher than the $1.6 billion.
Recommendations
We recommended that the Deputy Commissioner for Services and
Enforcement develop and implement an agency-wide
employment tax program to address the issue of worker classification to improve coordination among the business divisions,
improve compliance, and reduce the tax gap.
The Deputy Commissioner for Services and Enforcement should also consider
conducting a formal National Research Program reporting compliance study to
measure the impact of worker misclassification on the employment tax gap.
Response
IRS management agreed with all of our recommendations. The Director, Specialty Programs, Small Business/Self-Employed Division, will coordinate an effort with all business divisions, the Criminal Investigation Division, and the Office of Chief Counsel to develop an agency-wide employment tax plan that addresses worker classification along with other employment tax issues. The Director, Specialty Programs, Small Business/Self-Employed Division, will also work with the Research function to coordinate a study that addresses worker classification and other employment tax issues. Management’s complete response to the draft report is included as Appendix IV.
Copies of this report are also being sent to the IRS managers affected by the report recommendations. Please contact me at (202) 622-6510 if you have questions or Michael E. McKenney, Assistant Inspector General for Audit (Returns Processing and Account Services), at (202) 622-5916.
Appendices
Appendix
I – Detailed Objective, Scope, and Methodology
Appendix
II – Major Contributors to This Report
Appendix
III – Report Distribution List
Appendix IV
– Management’s Response to the Draft Report
Abbreviations
|
CSP |
Classification Settlement Program |
|
IRS |
Internal Revenue Service |
|
SB/SE |
Small Business/Self-Employed |
The
misclassification of employees as independent contractors is a nationwide issue
affecting millions of workers that continues to grow and contribute to the tax
gap.[4] When
an employee is misclassified, tax revenues are not reported or paid and the
burden of uncollected taxes shifts to other taxpayers.
Social Security and Medicare taxes are paid to the
Department of the Treasury from two primary sources: 1) employment taxes consisting of amounts
withheld from employees and matching amounts paid by employers; and 2)
self-employment taxes. Employers are
generally required by law to withhold from their employees’ income the
employees’ shares of Social Security and Medicare taxes.[5]
One-half of the calculated tax amount is
withheld from the employee’s wages and the employer pays a matching amount. Self-employed taxpayers must pay the entire
amount of Social Security and Medicare taxes themselves in the form of
self-employment taxes (currently 15.3 percent of self-employment income). Therefore, the classification of workers as employees or as independent contractors
has a significant effect on the tax liabilities of the workers as well as the
employers.
Internal Revenue Service
(IRS) research indicates that employers often misclassify workers as
independent contractors for various reasons.
They might do so unintentionally because of a lack of knowledge or because
of poor advice received. Some employers
might have Section 530[6] protection and, as a result, can legally
treat workers as independent contractors who would otherwise be employees. Finally, there are employers who deliberately
misclassify workers to cut costs and to gain a greater competitive edge. These employers avoid paying their share of employment
taxes as well as other expenses such as workers’ compensation, unemployment
insurance, and other benefits.
Misclassifying employees as independent contractors and not incurring
the related costs can give these employers a competitive advantage over
employers who treat their workers as employees.
An employer-employee relationship generally exists when the person for whom the services are performed has the right to control and direct the individual who performs the services, not only as to the result, but also as to the details and means by which the result is accomplished. The IRS has the responsibility to administer this significant and sometimes politically sensitive area of the tax law.
This review was performed at the IRS Campuses[7]
in
The Internal Revenue Service Has Taken and Plans to Take Many Positive Actions to Address Worker Misclassification
The IRS has dedicated resources to educate
taxpayers regarding employee classification as well as to enforce tax laws
related to this issue. The IRS’ efforts
to educate employers and workers on employment tax issues include the
following:
·
The Form SS-8 Worker Status Determination program. This program was established to allow a
business or worker to request a determination letter from the IRS regarding a
worker’s Federal employment tax status as an employee or an independent contractor. Either the worker or the employer, or both,
can submit a Determination of Worker
Status for Purposes of Federal Employment Taxes and Income Tax Withholding
(Form SS-8) to request the determination.
·
Online services
and other publications. The IRS has
emphasized worker classification issues in its Headliner, Fact Sheet, e-News for
Tax Professionals, and IRS Newswire publications. It has also created pages on its web site, IRS.gov,
with links dedicated to employment taxes for businesses and independent contractors. Other publications include (Circular E), Employer’s Tax Guide (Publication 15); Employer’s Supplemental Tax Guide
(Publication 15-A); Independent Contractor or Employee… (Publication 1779); Are You an Employee? (Publication 4445-E); and Do you Qualify for Relief under Section 530? (Publication 1976). Each of these publications discusses various
aspects of employment taxes and worker classification issues.
·
Uncollected Social Security and Medicare Tax on
Wages (Form 8919). In response to a previously issued Treasury
Inspector General for Tax Administration report,[8] the IRS created Form 8919 for Section
530 employees[9]
and misclassified workers to report
their share of employment taxes. Workers who are employees but are treated as
independent contractors by their employer can report their income on Form 8919
and pay only their half of employment taxes rather than the full 15.3 percent
they would pay for self-employment tax.
·
Tax Talk
Today[10] and presentations to professional
associations such as the American Bar Association and the American Payroll
Association[11] on employment taxes and worker
classification. The IRS also discussed
employment tax issues including worker classification at its Nationwide 2008
Tax Forums.
Although all of the primary IRS business divisions
are involved in the processing, assessment, collection, and enforcement of
employment taxes, the Small Business/Self-Employed (SB/SE) Division[12] is assigned the responsibility for providing
leadership on all of the IRS’ employment tax matters, including the development
of programs, policies, and procedures regarding worker classification. The SB/SE Division Employment Tax function
administers employment tax policy including the enforcement of those policies
through worker classification audits.
The IRS’ other enforcement efforts related to
employment taxes and worker classification issues include:
·
The Questionable Employment Tax Practices program.[13] The program
is a collaborative effort which seeks to identify
employment tax schemes and illegal practices and increase voluntary compliance
with employment tax rules and regulations.
The Questionable Employment
Tax Practices program consists primarily of Federal-State agreements which allow
the IRS and State workforce
agencies to share and exchange employment tax information. Within the past 3 years, the IRS has signed agreements with State
workforce agencies in 32 States to share employment tax compliance information. About 90 percent of the information shared
between the IRS and the States is related to worker classification issues.
·
The Employment Tax Examination Program is an annual computer extract which analyzes
Miscellaneous Income (Form 1099-MISC) and Wage and Tax Statement (Form W‑2)
forms filed by employers. The extracted data are analyzed for
indications of a worker classification issue.
·
The
Classification Settlement Program (CSP).
This is an optional program that provides some relief from liability
associated with worker classification issues and allows employers to resolve
worker classification cases early in the administrative process of an audit, provided
they agree to begin treating their workers as employees from the point of the
agreement forward.
·
The
Specialist Referral System allows a revenue agent[14] to make an online referral to the agent’s manager
through the IRS Intranet.
·
The
Service Wide Employment Tax Research System.
The IRS plans to implement the system in Fiscal Year 2009. The Service Wide Employment Tax Research System
is a web-based inventory selection and delivery system that will provide a
scoring system for employment tax returns.
Its goal is to increase workload efficiencies and provide a standardized
method of case selection. It will
extract data from existing systems to optimize the case selection process of
employment tax returns to provide a uniform and systematic method of employment
tax case selection. It will be used for
worker classification, nonfiler, and tip cases.
The Service Wide Employment Tax Research System will enable the IRS to
identify patterns of employment tax noncompliance and to select the best cases
for examination for all business divisions.
IRS interest in this issue is not to reclassify workers from independent contractors to employees. Rather, it is to ensure that employers are making the proper determination and that workers are being treated appropriately.
Despite the many positive actions that the IRS has taken and plans to take to address
worker classification issues, more needs to be done.
The Internal Revenue Service Does Not Have an Agency-Wide Employment Tax Program to Address Worker Classification
IRS business divisions
communicate and coordinate with each other regarding employment tax issues. However, there is no single point of
accountability for employment tax below the IRS Deputy Commissioner level, and there
is no agency-wide strategy to coordinate the decision-making process and
efforts among the divisions.
Office of Management and Budget Circular A-123[15] states that management is responsible for establishing and maintaining internal control. The Standards for Internal Control in the Federal Government[16] further states that internal controls should provide reasonable assurance that the objectives of the agency are being achieved in the following areas: effectiveness and efficiency of operations, including the use of the entity’s resources; reliability of financial reporting, including reports on budget execution, financial statements, and other reports for internal and external use; and compliance with applicable laws and regulations.
The
IRS has indicated that it is committed to reducing the employment tax gap. An agency-wide employment tax program is
needed to achieve this goal. Prior
efforts, including one initiated in Calendar Year 2003, were not
implemented. In the most current
initiative, the Employment Tax function
has been developing an agency-wide employment tax program since Calendar Year
2006 to coordinate employment tax-related activities throughout the IRS to
reduce redundancy, improve efficiency, and reduce the employment tax gap. To date, these efforts have resulted in an agency-wide
employment tax program letter and business plan. The business plan includes collaborative
initiatives to address employment tax noncompliance. While all of the affected business units are
involved in these plans and actions, the program has yet to be approved for agency-wide
use and implemented.
Each IRS business division makes its own
determination on priorities, develops work plans, identifies work, and sets
goals and objectives based on issues and factors unique to taxpayers within the
particular division. The processes vary
significantly between divisions, and there is limited coordination among the
divisions to ensure that the employment tax program is administered in a
consistent, efficient, and effective manner.
For example:
Without an approved agency-wide employment
tax program, there is no cohesive and consistent approach for determining which
employment tax issues are the most critical; which programs or initiatives have
the greatest potential to address these issues to improve filing, reporting,
and payment compliance; which programs are most effective in bringing about
improvements in compliance at the lowest cost; and whether the programs are reducing
the employment tax gap.
The Questionable Employment Tax Practices program
and the Form SS-8 Worker Status Determination program previously discussed are
both examples of the good that can be achieved by a high level of coordination
of resources. The Form SS-8 Worker Status Determination program is a good example of a centralized program
that functions well and provides data to all of the business divisions. Similarly, the Questionable Employment Tax Practices
program is a good example of coordination between the IRS and State workforce
agencies.
Recommendation
Recommendation 1: The Deputy
Commissioner for Services and Enforcement should develop and implement an agency-wide employment tax program which
specifically addresses the issue of worker classification to improve coordination among the business divisions,
improve compliance, and reduce the tax gap.
Management’s Response: IRS
management agreed with the recommendation.
The Director, Specialty Programs, Small Business/Self-Employed Division, will
coordinate an effort with all business divisions, the Criminal Investigation
Division, and the Office of Chief Counsel to develop an
agency-wide employment tax plan that addresses worker classification along with
other employment tax issues.
The Internal Revenue Service Has Limited Data Regarding the Overall Impact of Worker Misclassification
The IRS’ most recent estimate[19] of the tax gap is approximately $345 billion. The portion of that figure attributed to the underreporting of employment tax is estimated to be $54 billion. Federal Insurance Contributions Act and Federal Unemployment Tax Act taxes were estimated to be about $15 billion of the $54 billion. However, the $15 billion estimate is based on Tax Year 1984 data that has not been recently updated.
The IRS also estimated[20] that approximately 15 percent of employers
(756,000 of 5.15 million) misclassified 3.4 million workers as independent
contractors in Tax Year 1984. The
estimated tax loss was $1.6 billion in Social Security tax, unemployment tax,
and income tax that should have been withheld from wages. This was the last comprehensive
estimate of the impact of worker misclassification on tax revenues and the tax
gap. In a report issued in July 2006,[21] the Government Accountability Office
adjusted the $1.6 billion estimate to $2.72 billion in inflation-adjusted 2006
dollars.
An agency-wide employment tax program, as recommended in the
previous section, which addresses worker classification is crucial to
developing current data on the impact of worker misclassification on the tax
gap. The Government Performance and Results Act of 1993[22] requires that plans have general goals and
objectives, including outcome-related goals and objectives. Under the Act, performance measurement is the
ongoing measuring and reporting of program accomplishments. The IRS needs to update its measurement of the
underreporting employment tax gap, of which worker classification is a major
segment.
In a prior report,[23] we reported that the reliability of tax gap projections is affected by the
age, completeness, and accuracy of the data used. We have also previously reported[24] that the IRS did not know the current level
of reporting compliance because the current employment tax underreporting data
for employment tax returns were unreliable and had a significant adverse impact
on developing an effective overall employment tax strategy. The Government Accountability Office issued a
report[25] with similar findings. The
IRS agreed with the findings and recommendations in our report and the Government
Accountability Office report. In
addition, the Department of the Treasury
issued a report[26] outlining a comprehensive strategy for addressing
the tax gap. The IRS then issued a report[27] that built upon the strategy outlined by the
Department of the Treasury and provided details on the steps it planned to take
to increase voluntary compliance and reduce the tax gap.
The IRS is considering new research projects
in several areas, including a
National Research Program employment
tax reporting compliance study, to update and provide more comprehensive data on the magnitude and sources of
noncompliance. This research is critical
in helping the IRS understand behavior, develop strategies, and measure
progress. The National Research Program has been
approved but has not yet been implemented.
The SB/SE Division Employment
Tax function conducted a preliminary analysis of Fiscal Year 2006 operational
and program data to determine whether the $15 billion figure was still
accurate. Initial results indicated the underreporting
tax gap attributable to the Federal Insurance Contributions Act and Federal Unemployment
Tax Act portion of employment taxes is likely to be markedly higher than the
most recent tax gap estimates suggest.
Misclassified
workers are a significant portion of the employment tax gap. However, because the IRS only has limited data on the impact
of worker misclassification on the tax gap, it is unable to determine the overall effectiveness of its actions to
address this issue. Periodic
measurements directed at the worker classification issue should be taken to
evaluate the effectiveness of programs and to determine progress.
Recommendation
Recommendation 2: The Deputy
Commissioner for Services and Enforcement should consider conducting a formal National Research Program
reporting compliance study for employment taxes that includes measuring the impact of worker misclassification on the
tax gap.
Management’s Response: IRS
management agreed with the recommendation.
The Director, Specialty Programs, Small Business/Self-Employed Division,
will work with the Research function to coordinate a study that addresses
worker classification and other employment tax issues. They have already
started the planning for the effort, which will begin early in Fiscal Year 2009.
Appendix I
Detailed Objective, Scope, and Methodology
The overall objective of this review was to evaluate the effectiveness of actions the IRS had taken and planned to take to address the misclassification of employees as independent contractors. To accomplish this objective, we:
I. Interviewed IRS management to identify the major issues involved; the actions, programs, and initiatives taken and planned to address those issues; and the financial impact that worker misclassification has on tax administration.
II. Conducted research to identify the major issues involved and the financial impact that worker misclassification has on tax administration by identifying, reviewing, and evaluating relevant material from the following sources:
A. IRS publications, including web site information.
B. IRS studies, including National Research Program data.
C. Treasury Inspector General for Tax Administration audit reports.
D.
Government
Accountability Office audit reports.
E.
Department
of the Treasury reports.
F.
Congressional
legislation hearings and testimony including any related to the modification of
Section 530.[28]
III. Identified
the actions taken to educate employers and workers regarding employee
classification and to enforce employment tax and worker classification laws.
Appendix II
Major Contributors to This Report
Michael
E. McKenney, Assistant Inspector General for Audit (Returns Processing and Account
Services)
Margaret
E. Begg, Assistant Inspector General for Audit (Compliance and Enforcement
Operations)
Kyle
R. Andersen, Director
Larry
Madsen, Audit Manager
Roy
E. Thompson, Lead Auditor
L.
Jeff Anderson, Senior Auditor
W.
George Burleigh, Senior Auditor
Appendix III
Commissioner C
Office of the
Commissioner – Attn: Chief of Staff C
Commissioner,
Large and Mid-Size Business Division
SE:LM
Commissioner, Small Business/Self-Employed
Division SE:S
Commissioner, Tax Exempt and Government
Entities Division SE:T
Deputy Commissioner, Large and Mid-Size
Business Division SE:LM
Deputy Commissioner, Small
Business/Self-Employed Division SE:S
Deputy Commissioner, Tax Exempt and
Government Entities Division SE:T
Director, Specialty Programs, Small
Business/Self-Employed Division SE:S:SP
Chief, Employment Tax Operations, Small Business/Self-Employed Division SE:S:SP:ET:C
Program
Manager, Employment Tax Policy, Small Business/Self-Employed Division SE:S:SP:ET:TP
Chief
Counsel CC
National
Taxpayer Advocate TA
Director,
Office of Legislative Affairs CL:LA
Director,
Office of Program Evaluation and Risk Analysis RAS:O
Office
of Internal Control OS:CFO:CPIC:IC
Audit Liaisons:
Deputy Commissioner for Services and Enforcement SE
Commissioner,
Large and Mid-Size Business Division
SE:LM
Commissioner,
Small Business/Self-Employed Division
SE:S
Commissioner, Tax Exempt and Government Entities SE:T
Appendix IV
Management’s Response to the Draft Report
The response was removed due to its
size. To see the response, please go to
the Adobe PDF version of the report on the TIGTA Public Web Page.
[1] The tax gap is the difference between the amount of tax that taxpayers should pay and the amount that is paid voluntarily and on time. It is composed of underreporting of tax liabilities on tax returns, underpaying taxes reported on filed returns, and nonfiling of required tax returns altogether or on time.
[2] Section 530 of the Revenue Act of 1978, Pub. L. No. 95-600, 92 Stat. 2763, 2885-86 (current version at Internal Revenue Code Section 3401 note).
[3] The National Research Program was a comprehensive compliance study of Tax Year 2001 individual income tax returns that was completed in Calendar Year 2006. It estimated the overall gross tax gap for Tax Year 2001 to be $345 billion, including $285 billion from underreporting, $33 billion from underpaying, and $27 billion from nonfiling.
[4] The tax gap is the difference between the amount of tax that taxpayers should pay and the amount that is paid voluntarily and on time. It is composed of underreporting of tax liabilities on tax returns, underpaying taxes reported on filed returns, and nonfiling of required tax returns altogether or on time.
[5] Certain members of the clergy are considered to be employees but are subject to the self-employment tax. Certain State and local government employees covered by qualifying retirement plans are not subject to either Federal Insurance Contributions Act or self-employment tax.
[6] Section 530 of the Revenue Act of 1978, Pub. L. No. 95-600, 92 Stat. 2763, 2885-86 (current version at Internal Revenue Code Section 3401 note). This section permits a taxpayer to treat workers as other than employees for employment tax purposes when certain requirements are met. It also prohibits the IRS from issuing guidance clarifying the employment status of individuals for purposes of employment taxes.
[7] Campuses are the data processing arm of the IRS. They process paper and electronic submissions, correct errors, and forward data to the Computing Centers for analysis and posting to taxpayer accounts.
[8] Social Security and Medicare Taxes Are Not Being Properly Assessed on Some Tips and Certain Types of Wage Income (Reference Number 2007-30-062, dated March 30, 2007).
[9] A Section 530 employee is one who was determined to be an employee by the IRS prior to January 1, 1997, but whose employer has been granted relief from payment of employment taxes under Section 530 of the Revenue Act of 1978.
[10] Tax Talk Today is a free, live, monthly interactive web
cast aimed at educating tax professionals on the most contemporary and complex
tax issues. It provides tax professionals
with the opportunity to interact directly with representatives of the IRS and
practicing professionals on current tax issues.
[11]
The American Payroll Association conducts more
than 300 seminars each year—anywhere from 1 day to a full week of seminar
training programs. Most of the seminars
include instruction on the proper classification of workers (independent
contractor versus employee).
[12] The SB/SE Division services all fully or partially self-employed individuals and corporations and partnerships with assets of $10 million or less.
[13] Questionable employment tax practices are employment schemes or tax practices which have no basis other than to evade State and/or Federal employment or unemployment taxes.
[14] A revenue agent is an IRS employee who conducts examinations of individuals, small businesses, corporations, partnerships, tax-exempt entities, and/or government entities, using accounting, auditing, and investigative skills to determine compliance with Federal income tax laws.
[15] OMB Circular A-123, Management’s Responsibility for Internal Control (revised December 21, 2004).
[16] Standards for Internal Control in the Federal Government (GAO/AIMD-00-21.3.1, dated November 1999).
[17] The Large and Mid-Size Business Division services corporations and partnerships with assets greater than $10 million.
[18] The Tax Exempt and Government Entities Division services a large and unique economic sector of organizations, which include pension plans, exempt organizations, government entities, and tax-exempt bond issuers.
[19] The National Research Program was a comprehensive compliance study of Tax Year 2001 individual income tax returns that was completed in Calendar Year 2006. It estimated the overall gross tax gap for Tax Year 2001 to be $345 billion, including $285 billion from underreporting, $33 billion from underpaying, and $27 billion from nonfiling.
[20] The Strategic Initiative on Withholding Noncompliance Study was designed to determine the extent of noncompliance in the withholding area. It involved thorough examinations of Tax Year 1984 employment tax returns of 3,331 employers and follow-up employee surveys of certain individuals identified in the employer surveys. The study addressed various aspects of withholding compliance, including the classification of workers as independent contractors or employees.
[21] Employment Arrangements: Improved Outreach Could Help Ensure Proper Worker Classification (GAO-06-656, dated July 11, 2006).
[22] Pub. L. No. 103-62,107 Stat. 285 (codified as amended in scattered sections of 5 U.S.C., 31 U.S.C., and 39 U.S.C.).
[23] Some Concerns Remain About the Overall Confidence That Can Be Placed in Internal Revenue Service Tax Gap Projections (Reference Number 2006-50-077, dated April 2006).
[24] Additional Work Is Needed to Determine the Extent of Employment Tax Underreporting (Reference Number 2005-30-126, dated August 2005).
[25] Tax Compliance: Better Compliance Data and Long-term Goals Would Support a More Strategic IRS Approach to Reducing the Tax Gap (GAO-05-753, dated July 18, 2005).
[26] A Comprehensive Strategy for Reducing the Tax Gap (dated September 26, 2006).
[27] Reducing the Federal Tax Gap: A Report on Improving Voluntary Compliance (dated August 2, 2007).
[28] Section 530 of the Revenue Act of 1978, Pub. L. No. 95-600, 92 Stat. 2763, 2885-86 (current version at Internal Revenue Code Section 3401 note) provides businesses with relief from Federal employment tax obligations if certain requirements are met. In general, it allows an employer to treat a worker as an independent contractor for employment tax purposes regardless of the individual’s actual status under the common-law standard.